Any Real Estate Investors in the House?

Off Topic
21

[quote]Waittz wrote:

[quote]dmaddox wrote:

[quote]Waittz wrote:

[quote]dmaddox wrote:

That is who I work for, and yes I buy Rental Real Estate.

Your finances look really good and in shape. Learn how first then go get you one. Full Disclosure I work for the company I linked. I also did what they teach and retired myself using rental real estate, but went back to work so I could give back. I only work part time so I still have a life.[/quote]

Knew it was you! Hah thanks again.

Yeah, the plan is right now to educate myself fully and start small and local with condos. Have my first 4 books on the subject on the way and my real estate agent i used for my house has a few clients who she sevices just for rentals so I am going to meet with her soon just to get some ideas on lending practices etc.

[/quote]

I am not a fan of condos for rental properties. You only own the paint inward so really all you own is air.

JewBacca owning more than 50% has a leg up because he controls the condo association, so they can not do anything without his permission. I owned a condo, and the association fee went from $150 a month to $350 a month in one year. You also could get hit with an assessment like my mother did on her condo for $6,000. Also her monthly maint fee went up $100 a month.

The only rental property the founder of my company has ever lost money on is a Condo. You want that type of property like a condo buy an apartment complex.[/quote]

That is some solid information, thanks. [/quote]

I think my main point was I already owned a unit, knew the building because I lived in it, and there was a staff to fix things. So basically, I was doubling-down on something I already knew to be good and would be close to to monitor — but didn’t have to deal with the piddly crap because there is a super in the building already — something I could not afford to do time-wise, being a busy lawyer.

I also wanted to be in control of who lived there because, well, I was a young widower with 4 daughters.

And yes, gradually coming to control the the building was intentional.

22

[quote]dmaddox wrote:

[quote]Waittz wrote:

I first got the notion when I got hooked on the Rich Dad series of books and wanted to start increasing my cashflow, which is why i never thought about flipping, always wanted rentals for the cash flow and let the renters pay down the mortage and build up the equity to eventually sell all consolodate and move into bigger stakes with apartments/commericial etc and repeat the cycle. Just figure if I do not start now either educating myself and making action steps it will stay on the back burner. [/quote]

I like Kiyosaki’s books, but his program is WAY TOO expensive for what you get $40k I have heard. We have people all the time come into our offices after going to his boot camp and wondered why they did not sign up with us first because Lifestyles Unlimited gave everything and more for $500.

I am not trying to sell you guys on my company’s program, so if I am coming across as such please let me know and I will stop. I am just passionate about rental real estate and wanting people to get educated for a reasonable price.

I will say there are no new secretes in real estate so if anyone tells you there is they are trying to sell you something. You can learn everything you need from books at the public library for FREE.[/quote]

For sure!! I had actually called on their ‘coaching’ program a few years back and realized it was a suckers game. Dont get me wrong, I LOVE his books and teachings, but I prefer to always read as much as I can from multiple sources on a subject(in this case wealth and personal finance) and make my own conclusions.

I will definately check out your program, and I work in sales, if you truley beleived in the company you work with and their product/service, you would be doing me wrong by not recomending it.

I also agree with your last paragraph. I just want to make sure I lean all that I can to avoid money losing mistakes along the way, as well as identify who is a good and who is not a good source for information and to work with when it comes to lenders and agents.

23

[quote]Jewbacca wrote:

[quote]Waittz wrote:

[quote]dmaddox wrote:

[quote]Waittz wrote:

[quote]dmaddox wrote:

That is who I work for, and yes I buy Rental Real Estate.

Your finances look really good and in shape. Learn how first then go get you one. Full Disclosure I work for the company I linked. I also did what they teach and retired myself using rental real estate, but went back to work so I could give back. I only work part time so I still have a life.[/quote]

Knew it was you! Hah thanks again.

Yeah, the plan is right now to educate myself fully and start small and local with condos. Have my first 4 books on the subject on the way and my real estate agent i used for my house has a few clients who she sevices just for rentals so I am going to meet with her soon just to get some ideas on lending practices etc.

[/quote]

I am not a fan of condos for rental properties. You only own the paint inward so really all you own is air.

JewBacca owning more than 50% has a leg up because he controls the condo association, so they can not do anything without his permission. I owned a condo, and the association fee went from $150 a month to $350 a month in one year. You also could get hit with an assessment like my mother did on her condo for $6,000. Also her monthly maint fee went up $100 a month.

The only rental property the founder of my company has ever lost money on is a Condo. You want that type of property like a condo buy an apartment complex.[/quote]

That is some solid information, thanks. [/quote]

I think my main point was I already owned a unit, knew the building because I lived in it, and there was a staff to fix things. So basically, I was doubling-down on something I already knew to be good and would be close to to monitor — but didn’t have to deal with the piddly crap because there is a super in the building already — something I could not afford to do time-wise, being a busy lawyer.

I also wanted to be in control of who lived there because, well, I was a young widower with 4 daughters.

And yes, gradually coming to control the the building was intentional.[/quote]

I always find your posts and general mindset on thigns very pleasent.

24

[quote]drunkpig wrote:
I have been looking at rental real estate for the last 7 years. I have two very profitable businesses right now which allow me more free time than I deserve, but the prom won’t last forever, and I would love to have a cash flow equivalent to that of one business as an insurance policy against getting left high and dry should said business go belly up.

You are saying you purchased 6 homes over a 2 year period with 25K seed money, correct? Is it reasonable to assume that someone with 100K seed money could have 24 homes in the same time frame?

Geez, DM - this thread just kicked my ADD/OCD into high gear.

Thank you, OP, for starting this thread.

[/quote]

Every house is different, and now that the real estate market is starting to move ahead pretty quickly it might take a more cash per property than when I started buying. The getting is still good, but not as good as it was 2 years ago.

I live in Houston and we have a really good rental market, but housing prices are moving higher very quickly. My primary residence just went on the market yesterday for $429,900 and it hopefully will sell in 2 weeks. Two other houses in my neighborhood have gone pending in one week. Two years ago I only got one offer in 6 months for $320,000. Amazing how things are changing.

25

[quote]dmaddox wrote:

[quote]drunkpig wrote:
I have been looking at rental real estate for the last 7 years. I have two very profitable businesses right now which allow me more free time than I deserve, but the prom won’t last forever, and I would love to have a cash flow equivalent to that of one business as an insurance policy against getting left high and dry should said business go belly up.

You are saying you purchased 6 homes over a 2 year period with 25K seed money, correct? Is it reasonable to assume that someone with 100K seed money could have 24 homes in the same time frame?

Geez, DM - this thread just kicked my ADD/OCD into high gear.

Thank you, OP, for starting this thread.

[/quote]

Every house is different, and now that the real estate market is starting to move ahead pretty quickly it might take a more cash per property than when I started buying. The getting is still good, but not as good as it was 2 years ago.

I live in Houston and we have a really good rental market, but housing prices are moving higher very quickly. My primary residence just went on the market yesterday for $429,900 and it hopefully will sell in 2 weeks. Two other houses in my neighborhood have gone pending in one week. Two years ago I only got one offer in 6 months for $320,000. Amazing how things are changing.[/quote]

Yeah, I am a bit worried that I might have ‘missed the boat’ so to speak. The way things are moving ill be more tempted to sell my primary then rent it, but I do beleive that cash flow is more important than cash in hand. Real Estate, much like all investments are cyclical though and there is always a ‘black swan’ on the horizon.

26

[quote]Waittz wrote:

[quote]dmaddox wrote:

[quote]drunkpig wrote:
I have been looking at rental real estate for the last 7 years. I have two very profitable businesses right now which allow me more free time than I deserve, but the prom won’t last forever, and I would love to have a cash flow equivalent to that of one business as an insurance policy against getting left high and dry should said business go belly up.

You are saying you purchased 6 homes over a 2 year period with 25K seed money, correct? Is it reasonable to assume that someone with 100K seed money could have 24 homes in the same time frame?

Geez, DM - this thread just kicked my ADD/OCD into high gear.

Thank you, OP, for starting this thread.

[/quote]

Every house is different, and now that the real estate market is starting to move ahead pretty quickly it might take a more cash per property than when I started buying. The getting is still good, but not as good as it was 2 years ago.

I live in Houston and we have a really good rental market, but housing prices are moving higher very quickly. My primary residence just went on the market yesterday for $429,900 and it hopefully will sell in 2 weeks. Two other houses in my neighborhood have gone pending in one week. Two years ago I only got one offer in 6 months for $320,000. Amazing how things are changing.[/quote]

Yeah, I am a bit worried that I might have ‘missed the boat’ so to speak. The way things are moving ill be more tempted to sell my primary then rent it, but I do beleive that cash flow is more important than cash in hand. Real Estate, much like all investments are cyclical though and there is always a ‘black swan’ on the horizon. [/quote]

With interest rates low and not a lot of houses on the market you can still cashflow but you are going to buy a house near retail prices. Just watch out on how much the rehab is. That is where you make or break a property, but if it cashflows it can cover up some mistakes. It is all about the cashflow.

27

www.reiclub.com You’re Welcome!

28

How do you guys calculate the cash flow before buying? Is it simply the amount you expect to receive in rent payments minus the monthly mortgage payment (including insurance, real estate taxes, etc.)? Are you estimating how much rehab costs will be needed? Are you calculating how long it will take to break even on the initial cash outlay? Are you at all factoring in any possible months you will not have renters?

I’m a bit too risk averse at times so I get caught up thinking there must be something I don’t know.

29

Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?

30

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

You have to find areas where the rental market is tight. The small college town where I have just made my first property and future rental has an extremely tight rental market. Houses are stupid cheap, and everyone wants to rent.

Closer to my home, it is the opposite. Still a college town, but everything I saw listed was at least 25K more than what I paid. And these houses were in much worse shape than the one I bought.

I’m not a member of Lifestyles unlimited, but it seems to me that, in order to get the cash flow you need in a market where RE prices are going up, you might need more equity in the house than in a stagnant or depreciating market.

I’m looking forward to buying my first paint bucket and white coveralls. Oh, and a small sized pick up loaded to the axles with ladders and air compressors, joint compound, and sewer snakes.

No. Really. I’ve been looking for a reason to justify white coveralls for quite sometime.

31

[quote]LankyMofo wrote:
How do you guys calculate the cash flow before buying? Is it simply the amount you expect to receive in rent payments minus the monthly mortgage payment (including insurance, real estate taxes, etc.)? Are you estimating how much rehab costs will be needed? Are you calculating how long it will take to break even on the initial cash outlay? Are you at all factoring in any possible months you will not have renters?

I’m a bit too risk averse at times so I get caught up thinking there must be something I don’t know.[/quote]

You got it on the Cashflow. I estimate a rehab when I go see it for the first time. Once I get it under contract I have a GC come in and give me the actual rehab cost. At that time if the actual is below my estimate I move forward on the property if it is above I redo my numbers to see if they still work. I usually factor in only 2 months without a renter. All of my houses have rented in 1-2 weeks and the rehab only takes 2-3 weeks so I have someone ready to move in before the rehad is done. I have their deposit and the first months rent in the bank. Rent is due upfront, and mortgages are in arrears.

Banks are also risk averse (we can argue this statement), but prior to 2008 banks were risk averse. They would lend you 80% of a property (30years and a fixed rate), but only lend you 50% (margin account variable rate and short time frame) on stocks. Which asset do you think is less risky?

32

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.

33

[quote]dmaddox wrote:

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.[/quote]

I’m assuming hard money works best on a property that you’re getting a great deal on, is that correct? For instance, the lender is giving you 75% of ARV which may cover the total initial purchase price of the house, leaving you only to pay for rehab costs out of pocket. Yeah, I definitely see what you’re saying about the numbers adding up.

Thanks for the responses, guys, I’ve always been a bit interested in real estate.

34

[quote]LankyMofo wrote:

[quote]dmaddox wrote:

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.[/quote]

I’m assuming hard money works best on a property that you’re getting a great deal on, is that correct? For instance, the lender is giving you 75% of ARV which may cover the total initial purchase price of the house, leaving you only to pay for rehab costs out of pocket. Yeah, I definitely see what you’re saying about the numbers adding up.

Thanks for the responses, guys, I’ve always been a bit interested in real estate.[/quote]

You’re an accountant right?

35

[quote]Waittz wrote:

[quote]LankyMofo wrote:

[quote]dmaddox wrote:

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.[/quote]

I’m assuming hard money works best on a property that you’re getting a great deal on, is that correct? For instance, the lender is giving you 75% of ARV which may cover the total initial purchase price of the house, leaving you only to pay for rehab costs out of pocket. Yeah, I definitely see what you’re saying about the numbers adding up.

Thanks for the responses, guys, I’ve always been a bit interested in real estate.[/quote]

You’re an accountant right? [/quote]

Yup.

None of this stuff seems like rocket science but like I said, I’m always under the assumption that there is something I don’t know and the only people I know who are successful in real estate are handymen.

36

[quote]LankyMofo wrote:

[quote]Waittz wrote:

[quote]LankyMofo wrote:

[quote]dmaddox wrote:

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.[/quote]

I’m assuming hard money works best on a property that you’re getting a great deal on, is that correct? For instance, the lender is giving you 75% of ARV which may cover the total initial purchase price of the house, leaving you only to pay for rehab costs out of pocket. Yeah, I definitely see what you’re saying about the numbers adding up.

Thanks for the responses, guys, I’ve always been a bit interested in real estate.[/quote]

You’re an accountant right? [/quote]

Yup.

None of this stuff seems like rocket science but like I said, I’m always under the assumption that there is something I don’t know and the only people I know who are successful in real estate are handymen.

[/quote]

Honestly, I think most people are too lazy or ignorant to take the dive. They see it as a risk instead of weighing the risk/reward like any person who has financial intelligence.

37

[quote]GhorigTheBeefy wrote:
www.reiclub.com You’re Welcome![/quote]

This is a good site to find local clubs, but get ready for wholesalers pitching deals, real estate agents pitching deals and vendors just selling stuff. Not a lot of education. This is My Opinion.

38

[quote]Ripsaw3689 wrote:

[quote]LankyMofo wrote:

[quote]Waittz wrote:

[quote]LankyMofo wrote:

[quote]dmaddox wrote:

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.[/quote]

I’m assuming hard money works best on a property that you’re getting a great deal on, is that correct? For instance, the lender is giving you 75% of ARV which may cover the total initial purchase price of the house, leaving you only to pay for rehab costs out of pocket. Yeah, I definitely see what you’re saying about the numbers adding up.

Thanks for the responses, guys, I’ve always been a bit interested in real estate.[/quote]

You’re an accountant right? [/quote]

Yup.

None of this stuff seems like rocket science but like I said, I’m always under the assumption that there is something I don’t know and the only people I know who are successful in real estate are handymen.

[/quote]

Honestly, I think most people are too lazy or ignorant to take the dive. They see it as a risk instead of weighing the risk/reward like any person who has financial intelligence. [/quote]

It is not so much laziness. It is FEAR. Fear of messing up, or fear of being made fun of or called a slum lord.

I have been made fun of by my friends all the time. My tenets stay with me a long time so I am not a slum lord by any stretch of the imagination. When you show them your balance sheet they start to shut up and listen. I no longer try to get my friends to invest in real estate. I want it all for myself. I tried, but they would not listen.

39

[quote]dmaddox wrote:

[quote]Ripsaw3689 wrote:

[quote]LankyMofo wrote:

[quote]Waittz wrote:

[quote]LankyMofo wrote:

[quote]dmaddox wrote:

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.[/quote]

I’m assuming hard money works best on a property that you’re getting a great deal on, is that correct? For instance, the lender is giving you 75% of ARV which may cover the total initial purchase price of the house, leaving you only to pay for rehab costs out of pocket. Yeah, I definitely see what you’re saying about the numbers adding up.

Thanks for the responses, guys, I’ve always been a bit interested in real estate.[/quote]

You’re an accountant right? [/quote]

Yup.

None of this stuff seems like rocket science but like I said, I’m always under the assumption that there is something I don’t know and the only people I know who are successful in real estate are handymen.

[/quote]

Honestly, I think most people are too lazy or ignorant to take the dive. They see it as a risk instead of weighing the risk/reward like any person who has financial intelligence. [/quote]

It is not so much laziness. It is FEAR.
[/quote]

I’m terrified of making a big mistake on such a large purchases, lol. No argument there.

40

[quote]LankyMofo wrote:

[quote]dmaddox wrote:

[quote]Ripsaw3689 wrote:

[quote]LankyMofo wrote:

[quote]Waittz wrote:

[quote]LankyMofo wrote:

[quote]dmaddox wrote:

[quote]LankyMofo wrote:
Also, how do you find homes with positive cash flow? Typically rentals in my area go for monthly payments that are comparable to the mortgage payment, which leads me to believe the only people making money on their rental properties are people who bought before prices increased.

Also, dmaddox - when you say your lender, do you have 1 bank you deal with or do you use a broker for each property?[/quote]

I have used Banks, mortgage brokers, and Hard Money on all of my properties. Hard Money will give you the purchase price and rehab dollars in one loan upto 75% of the After Repaired Value (ARV). Then you get the lease signed and then refinance into a 30yr fixed rate loan at 75% of the Appraised Value. Less money out of your pocket. In this market though Hard Money is getting harder and harder to use because the numbers are not working. It is sometimes better to use conventional lending up front with the 20% down and paying the rehab out of pocket.[/quote]

I’m assuming hard money works best on a property that you’re getting a great deal on, is that correct? For instance, the lender is giving you 75% of ARV which may cover the total initial purchase price of the house, leaving you only to pay for rehab costs out of pocket. Yeah, I definitely see what you’re saying about the numbers adding up.

Thanks for the responses, guys, I’ve always been a bit interested in real estate.[/quote]

You’re an accountant right? [/quote]

Yup.

None of this stuff seems like rocket science but like I said, I’m always under the assumption that there is something I don’t know and the only people I know who are successful in real estate are handymen.

[/quote]

Honestly, I think most people are too lazy or ignorant to take the dive. They see it as a risk instead of weighing the risk/reward like any person who has financial intelligence. [/quote]

It is not so much laziness. It is FEAR.
[/quote]

I’m terrified of making a big mistake on such a large purchases, lol. No argument there.
[/quote]

Zig Ziglar calls FEAR, False Evidence Appearing Real. It is only a number Lanky. “Put all your eggs in one basket and spend your entire life making sure no one knocks over your basket.” Andrew Carnegie