I have a cousin that has some cash on hand & would like to invest in real estate. He would like me 2 run things for him since his full time takes up all his time. What suggestions does bgol have 4 finding real estate. Foreclosures, raw land, court auctions are specific areas of interest. Thanks
Real estate investing help
- Thread starter glueguy
- Start date
Calm down. I am just bumping for my interest as well.
U got me thought u were replying
Before I can make recommendations, I need to know some additional information.
1)How much cash does he have?
2)What is the average sale price of homes in the desired area?
3) What is the low and high range of sale prices in the desired area?
4) What is his credit like?
5) What is the investment goal (to make long term cash flow/equity build-up or short term, larger, one time cash paydays)?
1)How much cash does he have?
2)What is the average sale price of homes in the desired area?
3) What is the low and high range of sale prices in the desired area?
4) What is his credit like?
5) What is the investment goal (to make long term cash flow/equity build-up or short term, larger, one time cash paydays)?
ok. i am going to talk to him this week and find out this information. thanks for reply
ok i am going to work on that this week and will be getting back to you. thanks for replying
1) he wouldn't tell me how much he cash he has on hand but I know he has at least 90k liquid to start with. He already has one place he rents in a so so neighborhood. he says he wants to start slowly, so he does not overextend himself. he is also open to mobile homes in rural areas
2) median home price is about 130k. (in south)
3)prices go from 154k-400
4)credit is great
5)goal is long term cash flows. (we both have other jobs)
I would suggest doing some lease options for starters, and if you really want to make cash flow your main priority start doing wholesale deals.
I prefer ugly houses (there goldmines) after the rehab you can then resell your rights to the house to another investor for a nice payday. I currently am starting off by doing some wholesale deals bet 2 to 3 deals a month...Have a few lined up as we speak...
I personally prefer using different creative real estate strategies, like for instance NO MONEY down to purchase my properties.
hope this helps!!!
I prefer ugly houses (there goldmines) after the rehab you can then resell your rights to the house to another investor for a nice payday. I currently am starting off by doing some wholesale deals bet 2 to 3 deals a month...Have a few lined up as we speak...
I personally prefer using different creative real estate strategies, like for instance NO MONEY down to purchase my properties.
hope this helps!!!
can you explain wholesale deals (either here or PM me) i think he wants to buy the property and retain it for long term income via renting. however i may be able to convince him otherwise if what you are talking about provides a different lucrative oppurtunity.
what are some creative finacing oppurtunities. how would you buy with no money down?
thanks
Based on what you told me, your way to long term cash flow is through acquiring rentals that provide meaningful cashflow.
In the real estate investment business, rentals are like a 401k, while rehabs and wholesale deals/assignments are like your weekly paycheck.
Rental properties are a slow buildup. Honestly, one or two rental properties doesn't put much money in your pocket today. Making $300 - $500/month in cash flow per property doesn't change your lifestyle overnight. DON'T QUIT YOUR DAYJOB.
Here is my view point from the properties that I own in Baltimore and the DC Metro area.
Cashflow
It's got to make money. Fuck breaking even or making $200 a month when everthing is going well. Owning property just for the sake of saying "I'm a landlord" is stupid. You'll realize that when you get calls from an angry tenant. There has to be just compensation for the pain in the ass factor. I don't touch any property (single unit) that doesn't NET at least $500 a month on debt service that is never higher than $1100/month. Most often my debt service is below $800/month. Without trying hard, I can divert some of the cashflow to paying off the property in 10 - 15 years.
It's got to have at least 35% equity from the start!
Assume you plan on owning it for the next 20 years. However, your situation changes in the next 18 months or even the next 3 months and rental properties is no longer a priorty in your life. Without equity, you can't sell or you have to write a check at settlement to get rid of it. With equity, you can at least break even or sell at a profit. Also, equity can and should be used wisely to acquire more properties.
It's got to be functional
There are some properties that are too quirky (a 1 bedroom, 1 bath room house) or oddly laid out, and the only thing it is good for is being a rental property. When you are in that situation, your only exit strategies are 1)Keep it forever or 2)Sell at a discount to another landlord. The retail sale to a homebuyer isn't ever an option for you.
It has to be a desireable neighborhood
The area has to be desirable with above average pride of ownership. The best areas are going to be neighborhoods where most of the properties are owner occupied. Think about how you treat a rental car. That's how people treat rental properties. Buying in an area that doesn't have good pride of ownership and won't attract homebuyers limits you to 1)Keeping it forever or 2)Selling at a discount. You always want to have a pot of gold at the end of the rainbow in case you want to cash out to retire or to upgrade your portfolio.
Have a plan of purchasing more than one
Rentals are like vending machines. When they are in good condition and placed in the correct location, they will consistently provide you with money. Owning 1 vending machine isn't a business.....it's a hobby. The money you make is trivial. However, the money becomes mindblowing when you increase the profits x5, x10, x20, x50. The same goes for rentals. At $500 per month cashflow, you can probably COMFORTABLY replace or equal a decent salary when you acquired 15 units.
Have your exit in mind
Acquiring 25 units over the next 5 to 10 years and having $12,500/month ($500 per unit) in NET income is realistic for anyone serious about doing it. Futhermore, paying down and/or eliminating the debt service of each property can turn your net income per month to $24,000 - $30,000 or more based on having the same 25 units. Who can't live off $24,000 or even $12,500 per month? Assuming you start at age 30: You got 25 units by the time you are 40. Your NET income is over $12,500/month. If you don't acquire any more properties, by age 50, your NET income has increased (debt service is being paid down or paid off) to maybe $18,500 - $24,000/month or more. Not bad? Now. Let's talk about the equity that you've got built up. This is the pot of gold at the end of the rainbow. You could start to systematically sell one property (owned free and clear) a year for the next 25 years, while you still enjoy cashflow on the remaining properties and you profit hundreds of thousands of dollars off of each sale. Assume every property in your portfolio is worth $100,000. You could profit nearly $100,000 from the sale of one property per year while making another $150,000 to $300,000/year from the cashflow of the remaining units. $400,000 a year in retirement is a great position to be.
The business is about the people, not the houses
This only works if your tenants are not going in and out like a revolving door. You've got to provide customer service to your tenants. It doesn't matter how many properties you acquire if most of them are vacant or have unhappy or non-paying tenants. Tenants dont have to choose your house, they can choose the one across the street. What are you doing to get them and to keep them? That is where is real money is made. Anything else is just busting your ass to break even. Having quality properties, but terrible tenants will put also put your out of business or make you want to quit.
Dont'....I repeat, Don't....quit your day job
This biggest mistake I see that prevents people from building wealth is that they don't re-invest into their rental properties. What if Marriott never spent money on maintaining or updating their hotels? Early on, don't spend the cashflow. Some people see an additional $1,000 a month coming in and they instantly decide on buying a car that cost them $600/month.
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real1 when you start to acquire rental property at which point do you consider hiring someone or a property manager? assume you're bringing in like 300-600 per property per month and lets say you're on your second and looking to get another one or two more ...when is it too much for one person to handle especially with a fulltime job? any insight on when to get a 3rd party involved in managing them all?
interesting, i wondered about coming into my rentals at 75% equity but they are in shitty areas all section8 is what im thinking but im 100% about the property manger @ 8% im wit it... write off
It's time to bring on help when managing your current rentals starts to make it hard for you to acquire the next property(ies).
However, I will say this, you've got to know your business, you've got to know your tenants, and you've got to know your properties. Start out doing it yourself and look at transitioning to a part time assistant and then into a property management company.
