Real estate

[Eziekial]

I'm kicking myself for not buying gold 3 years ago when I saw this cycle start
I'm trying to find a property in south Florida and the market here is way over-valued ($250+/sq ft) but the fact remains that this area is still appealing to a larger amount of people than the supply of homes so prices will continue to go up until a balanced is reached. It just amazes me how many people can afford a $600k home note.

[Martrae]

It just amazes me how many people can afford a $600k home note.

They can't...that's the problem. People don't know how to handle money anymore. Everything is instant gratification (credit) and pay for it later. No one know how to save or reuse anything anymore.

[KaiineTN]

Yeah, Americans suck with money. When deflation hit Japan it wasn't as bad as it could have been because they are net savers. We, on the other hand, tend to be net borrowers and spenders. Similar economic circumstances would (and will) be devastating in the US.

Also, when deflation sets in, all assets decline in price, including stocks and even gold. The only thing that doesn't decline is cash or cash equivalents. Treasury bills are better than cash and are relatively safe because your money will be out of the hands of a bank, which could fail. Also, investing in foreign companies or currencies is always an option.

[Yamori]

For you real estate people out there, how feasible is buying numerous rentable properties via loans and then simply making money from the rent's net gains (after paying loan interest with it) - as opposed to the traditional methods of buying/selling and hoping to make a profit in one large clump?

Seems like that might be much more stable in crappy markets (or even preferable, given the cheaper purchase prices), but I'm not too knowledgable about the field so I could be missing something.

[Tossica]

You'll usually take a loss on the rental income but theoretically, the money you make from the appreciation of the property will far offset any losses.

[Goose_Man]

For you real estate people out there, how feasible is buying numerous rentable properties via loans and then simply making money from the rent's net gains (after paying loan interest with it) - as opposed to the traditional methods of buying/selling and hoping to make a profit in one large clump?

Seems like that might be much more stable in crappy markets (or even preferable, given the cheaper purchase prices), but I'm not too knowledgable about the field so I could be missing something.

The problem with buying property with loans using your own credit and money is that you will only be able to borrow so much. Believe it or not banks will cap you after your borrow XX amount of money.

Think of it this way.. you buy a rental and put some cash down or maybe even do 100% financing. You might and I say might be able to cash flow 100 a month here in San Antonio. That 100 a month you better be socking away and be ready to use in repairs and to pay your mortgage when your house is left vacant. The buy rent hold strategy is more of a long term investment and you better have some cash reserves close at hand. But it most certainly has its place. I plan on owning and renting out quite a few properties in the near future but I have my eye on more multi family units, Duplex – 4 plex and maybe even a small apartment building or two.

I used to chase foreclosures to make a quick buck but that’s just not my style anymore. If I happen across one yeah I'll do what needs to be done to make the money but for the most part I don’t actively take part in those.

I do a lot of buying slightly used properties (3 years or younger) by purchasing the house “Subject to” the existing financing. I basically help people get out of their house without having to worry about all the unnecessary closing costs and fees involved with selling. This way I get the deed to the property but I do not become personally responsible for the underlying debt. Here in San Antonio I can usually pick up a property this way and walk away from the closing table with 20-30k of equity. (and yes I disclose EVERYTHING to my sellers and buyers, I think I over disclose)

I then sell the house on a short term all inclusive trust deed (usually have it sold in under 3 weeks, my record is 2 days) and collect a sizable down payment up front, cash flow a couple hundred bucks a month off of the house then 1 – 2 years down the road I wake up and collect a big fat check…

Now I’m sure I’m going to get a lot of skepticism here but that’s fine, this type of thing isn’t for everyone but it does work and it works very very well. Last week I deposited a $25,000 check in my account. Merry Christmas right?

I also have a group of folks who go out and hunt me down ugly vacant houses, I then track down the owner and make them an offer to purchase, get it tied up under contract then sell my contract to a rehabber for a quick 5-10k.

Real estate is awesome and the ability to make so much with so little invested is incredible and you don’t need a fancy degree or education to do it!

[The Kizzy]

Yamori, many bank swill only allow people to have a maximum amount of investment loans. If you were to walk into my bank that I used to work at, and we pulled your credit, and say that you had 11 mortgages, we wouldn't even go any farther. However, for the landlord who only has 2 or 3 rentals, all the bank sI have worked for go 1 of 2 ways. The first, they take 75% of the amount you get in rent monthly (this only works if you already have rentors or have someone who has signed a lease to rent when the purchase goes through) and then back out the PITI payment. Whatever is left, gets put towards your income in qualifying for the loan. The second, is to look at your income tax returns, most people write evrything they can off, and if they are still in the black after wrting everything off, that gets used towards your income.


I would never own a house to rent, and here is why. Rentors. They suck. I know this because I rent. and I suck. But seriously, so many people don't pay there rent on time, and you are responsible for when they up and leave and destroy the house, sure you got a security deposit up front, but that rarely covers the cost s of cleaning all the carpets and scrubbing the crayon off the wall. Then you have to worry about what if someone falls and breaks their neck beause your tenants didnt plow after the snow, and they sue YOU because you own the house and you have it insured. THere are a million things that could happen.

[Minrott]

Owning rentals is like your Roth or 401k. You put money into it over 15-20 years, use them to write off whatever tax you can, and use rental income to pay the property off. That's when you can a) make money on rent, say 80% (and 20% going towards property tax, upkeep, insurance) or b) sell them off for their appreciated value.

You won't make any money, or at least very little until the note is paid, but afterwards it's well worth it.

I'll be following my pop's model, he owned 4-5 rental properties, around 20 units, and we did all the work ourselves, and in the end, he retired at 54. Pretty good deal I think. He had trouble with renters, of course. But small claims court took care of most of them.

The hardest thing to deal with is ever changing ordinances and codes.

[Tikker]

For you real estate people out there, how feasible is buying numerous rentable properties via loans and then simply making money from the rent's net gains (after paying loan interest with it) - as opposed to the traditional methods of buying/selling and hoping to make a profit in one large clump?

Seems like that might be much more stable in crappy markets (or even preferable, given the cheaper purchase prices), but I'm not too knowledgable about the field so I could be missing something.

unless you outright own the properties (ie, no mortgages) it's tough to make a good dollar renting, or flipping properties

[The Kizzy]

Owning rentals is like your Roth or 401k. You put money into it over 15-20 years, use them to write off whatever tax you can, and use rental income to pay the property off. That's when you can a) make money on rent, say 80% (and 20% going towards property tax, upkeep, insurance) or b) sell them off for their appreciated value.

You won't make any money, or at least very little until the note is paid, but afterwards it's well worth it.

I'll be following my pop's model, he owned 4-5 rental properties, around 20 units, and we did all the work ourselves, and in the end, he retired at 54. Pretty good deal I think. He had trouble with renters, of course. But small claims court took care of most of them.
The hardest thing to deal with is ever changing ordinances and codes.

I'm skeptical about that and here is why. I have seen SO MANY customers through the years that have the mindframe of Fuck it, what are they going to do?

Meaning that you can waste your time and money going to court and getting awarded $569 in damages, but you can't MAKE me pay you. Then it goes on their credit, and sometimes, 5 years later when they go to buy a house, they will pay you, but sometimes, they will either get it wavied because it is so old, or just say screw it, we will keep renting.

[Goose_Man]

If you do rent you need to have a good property management firm take care of ALL of that for you.

Dealing with renters really isn’t that big of a deal if you have a good manager managing your properties. Its their job to put quality people in the house and for the most part if they are good they will find quality folks to put into your rental property.

There will most certainly be your headache or 3 every now and then but it’s not the nightmare that people make it out to be.

A basic strategy for long term rents and holds is this…

Buy as many properties you can in the median house level for your area. (try and pick up like 20+ if possible) Rent them all out for 10-15 years. Sell half of them off at the appreciated rate. Use the money from the half you sold to pay off your other half so you own them free and clear. Live off the rental income from your 10-15 free and clear houses. In most areas owning 10 houses free and clear means a monthly income of 10-25k. That’s a pretty comfortable retirement if you ask me.

[Goose_Man]

Owning rentals is like your Roth or 401k. You put money into it over 15-20 years, use them to write off whatever tax you can, and use rental income to pay the property off. That's when you can a) make money on rent, say 80% (and 20% going towards property tax, upkeep, insurance) or b) sell them off for their appreciated value.

You won't make any money, or at least very little until the note is paid, but afterwards it's well worth it.

I'll be following my pop's model, he owned 4-5 rental properties, around 20 units, and we did all the work ourselves, and in the end, he retired at 54. Pretty good deal I think. He had trouble with renters, of course. But small claims court took care of most of them.
The hardest thing to deal with is ever changing ordinances and codes.

I'm skeptical about that and here is why. I have seen SO MANY customers through the years that have the mindframe of Fuck it, what are they going to do?

Meaning that you can waste your time and money going to court and getting awarded $569 in damages, but you can't MAKE me pay you. Then it goes on their credit, and sometimes, 5 years later when they go to buy a house, they will pay you, but sometimes, they will either get it wavied because it is so old, or just say screw it, we will keep renting.

Kizzy I hate to be mean but honestly what qualifies you to give investment advice? How much money have you made off of real estate investments and rentals?

I know you work in the biz but like so many others who are "in the real estate business” you don't actually DO any investing. The scary thing is that you know enough to be dangerous and you know enough lingo to make you sound like you know what you're talking about people will listen to you.....

You make some valid points but they are all moot. Investing is about long term cash growth. In the long term rental properties will out perform most any other assets you can put your money in and do so with relative safety.

Once again I’m not saying this to be mean but please watch what you say and who you say it to regarding financial advice.

[The Kizzy]

I answered a question of which I have much personal knowledge about. What makes you an expert, because you read a book and started doing this a year ago? YOu are a success story, it doesn't happen to everyone. I have been involoved in MANY transactions where small claims court judgements came up on credit report, and I have seen many times when the bank lending the money will just waive it because it is so long ago. Credit is a scary thing, and credit reporting companies don't do a good job at keeping track and record of things, I see it day in and day out. So just because YOU have had good experience after good experience doesn't mean that everyone will. Everyone should be made aware of the dangers as well as the gains from rentals. I know a guy who followed the same plan you did, and now he has to file bankruptcy because he is getting sued left and right.

[Goose_Man]

I answered a question of which I have much personal knowledge about. What makes you an expert, because you read a book and started doing this a year ago? YOu are a success story, it doesn't happen to everyone. I have been involoved in MANY transactions where small claims court judgements came up on credit report, and I have seen many times when the bank lending the money will just waive it because it is so long ago. Credit is a scary thing, and credit reporting companies don't do a good job at keeping track and record of things, I see it day in and day out. So just because YOU have had good experience after good experience doesn't mean that everyone will. Everyone should be made aware of the dangers as well as the gains from rentals. I know a guy who followed the same plan you did, and now he has to file bankruptcy because he is getting sued left and right.

I've been doing this for 2 years now one year full time. Yes I am a success story because I educated my self. The guy you know who is getting sued did it the wrong way and didn’t educate him self.

Heck yeah there are pit falls you need to watch out for most certainly but that doesn’t mean to not go out and do anything at all because you are too scared.

What qualifies me to give advice is that I've been there and done that and I’ve come out a head. Its not luck. I’ve made mistakes and I’ve learned from them. My credit is very much in tact and I make very good money doing what I do. I have people who work for me solely for the purpose of learning from me.

Have i been sued? No. Will I? Maybe but I have all my ducks lined up so in case that happens Ill come out on top. There is a right way and a wrong way to approach real estate investing and a lot of what you are preaching is what you've seen from people doing it the wrong way.

But if they listen to you and never get into the business then they will be missing out on a great way to make money and improve their life.

Education is the key just don’t jump in with both feet and your blinders on.

[Lyion]

As someone who has rented out property, and used a supposed 'reputable' management company, my advice is unless you do the Property Management yourself and know the entire situation, like Minrott, avoid it like the plague. Its a great long term investment, but it's a pain in the ass and also you can take a bath with a few bad renters.

Kizzy is actually making a good point. I did renters for years on multiple properties and was fucked over and lost most of what I made due to two bad renters.

Does Texas have timeframes for reselling property? I thought they did, but can't remember.

[Donnel]

My dad has done it for over 10 years now. I've been involved with it in helping him. He does his own managing and own work.

You CAN make them pay Kizzy, it's called wage garnishment. It's the next step after a judgment.

[The Kizzy]

My dad has done it for over 10 years now. I've been involved with it in helping him. He does his own managing and own work.

You CAN make them pay Kizzy, it's called wage garnishment. It's the next step after a judgment.

Not in all states.

[The Kizzy]

Oh, and if I remember our talks last year correctly,. what you do is illegal in some states, and there is a law in congress as we speak trying to outlaw how it is you do business. Maybe that's why you moved to Texas? Because they have bass ackwards lending/housing laws. *shrug*

[Goose_Man]

As someone who has rented out property, and used a supposed 'reputable' management company, my advice is unless you do the Property Management yourself and know the entire situation, like Minrott, avoid it like the plague. Its a great long term investment, but it's a pain in the ass and also you can take a bath with a few bad renters.

Kizzy is actually making a good point. I did renters for years on multiple properties and was fucked over and lost most of what I made due to two bad renters.

Does Texas have timeframes for reselling property? I thought they did, but can't remember.

If you mean seasoning laws then yeah thats depending on the lenders. There are TONS of ways around this though and not really an issue.

[Jesus]

I helped my father with his rentals when I was old enough to. We can do most of the cleanup / repair work ourselves and have everything else sorted through by a property management company (five properties in midstate NY managed by one & 3 properties in CT managed by another). The properties are located in a high demand area and we have the right to inspect the property with 24 hours notice and terminate the lease if the leasee is damaging / failing to maintain the property. Drop in about once a month for the first 2-4 months just to check out the property.

As far as what Yamori asked, you need to have a past history as a landlord before most banks will permit you to take a loan out on an investment property and go beyond your DTI ratio. You might find someone who will do a portfolio loan on your speculations, but those are rare.

-Adam

[Goose_Man]

Oh, and if I remember our talks last year correctly,. what you do is illegal in some states, and there is a law in congress as we speak trying to outlaw how it is you do business. Maybe that's why you moved to Texas? Because they have bass ackwards lending/housing laws. *shrug*

Negatory it’s not illegal anywhere and there is no congressional bill trying to make it so.

The reason I moved to TX to do is for TAX reasons. Washington State has some fucked up excise transfer taxes.

Plus the market in San Antonio kicks ass

[Captain Insano]

I answered a question of which I have much personal knowledge about. What makes you an expert, because you read a book and started doing this a year ago? YOu are a success story, it doesn't happen to everyone. I have been involoved in MANY transactions where small claims court judgements came up on credit report, and I have seen many times when the bank lending the money will just waive it because it is so long ago. Credit is a scary thing, and credit reporting companies don't do a good job at keeping track and record of things, I see it day in and day out. So just because YOU have had good experience after good experience doesn't mean that everyone will. Everyone should be made aware of the dangers as well as the gains from rentals. I know a guy who followed the same plan you did, and now he has to file bankruptcy because he is getting sued left and right.

I've been doing this for 2 years now one year full time. Yes I am a success story because I educated my self. The guy you know who is getting sued did it the wrong way and didn’t educate him self.

Heck yeah there are pit falls you need to watch out for most certainly but that doesn’t mean to not go out and do anything at all because you are too scared.

What qualifies me to give advice is that I've been there and done that and I’ve come out a head. Its not luck. I’ve made mistakes and I’ve learned from them. My credit is very much in tact and I make very good money doing what I do. I have people who work for me solely for the purpose of learning from me.

Have i been sued? No. Will I? Maybe but I have all my ducks lined up so in case that happens Ill come out on top. There is a right way and a wrong way to approach real estate investing and a lot of what you are preaching is what you've seen from people doing it the wrong way.

But if they listen to you and never get into the business then they will be missing out on a great way to make money and improve their life.

Education is the key just don’t jump in with both feet and your blinders on.

yah and if he gets sued I'll go bust some grills of the witnesses and everything will be npnp.

[Captain Insano]

I'm going to start a property management company called: "My FIST UR FACE ontime monthly rental collections services."

[The Kizzy]

As someone who has rented out property, and used a supposed 'reputable' management company, my advice is unless you do the Property Management yourself and know the entire situation, like Minrott, avoid it like the plague. Its a great long term investment, but it's a pain in the ass and also you can take a bath with a few bad renters.

Kizzy is actually making a good point. I did renters for years on multiple properties and was fucked over and lost most of what I made due to two bad renters.

Does Texas have timeframes for reselling property? I thought they did, but can't remember.

If you mean seasoning laws then yeah thats depending on the lenders. There are TONS of ways around this though and not really an issue.

You just said it yourself, you get AROUND the seasoning laws. You manipulate the system.

[Lyion]

Maybe Goose is really Tom Delay?

I've done resales and made a bit of coin, but where I live it's not worthwhile to do what you do, Goose. More power to you if you make good coin, though.