Real Estate Investing

[Erikcooper]

Anyone here even remotely involved in REI? I've been studying it pretty intensely lately and I'm working different scenarios to start getting involved. I'm not sure yet if I'm gonna get into wholesaling, flipping, or buy and hold for rental. I'm learning all I can about the business before I dive in but I'm eager to get started and it all starts with figuring out financing for any deal I happen to find. I've grown to trust most of the brothers here and if anyone here had any insight to the industry at all I'd love to hear it.

 

[sean]

I used to work for CoStar Group, but that is all Comercial RE data... always thought it would be fun to own a small Multi-family set up.

 

[Angry Bill]

Real estate is a sound investment. I started out with a duplex, besides our condo and house, sold the condo and the duplex. Bought a fourplex, which still has all long term tenants. That is the important factor.

 

[cgraunke]

I've got a duplex. It wasn't a good choice as a rental property, income ratios weren't there, but I loved the house and planned to (and did) live there myself for a while. It's been 100% rental for over 5 years now, and I have a local guy managing it for me at a 10% take, but boy that's worth it. I'm in the process of refinancing as I bought at the peak of the bubble. Up to this point all associated costs add up to a little more than what the rental income is, but I still feel good about the investment. I figure, if the rent covers all the interest, tax, maintenance, etc., and still chips away at some if the principal, I'm still going to come out ahead, even if I've been putting a couple hundred a month in out of pocket. There will continue to be more and more people in this world, but buildable land is somewhat finite, so I figure through all the dips and dives, long term, it's got to increase in value.
You're ahead of the game. You're doing the research and thinking about it as a business. You're going to do fine!

 

[ZippoGeek]

which still has all long term tenants. That is the important factor.

^^^ This! You can take what I know about real estate and put it in a shot glass. But what I do know is that friends with rental properties all wish they had done their due diligence before leasing to crappy tenants.

Good luck Erik!

 

[luckysaturn13]

Imo rental would be better than empty land. Your income will mostly pay for the property over time then you will have the property as an asset and rental income on top of it. Even if we get hit with a recession you should be able to wait it out for value to rise agaon and with the current economy more people are renting now than ever before.

 

[ckay]

All I can say about REI is work out the numbers to ensure you are net positive(if that is your objective), and know the demographic(average rents, quality of tenants, tenure of your tenants.) You also should consider whether or not you want to be involved in the maintenance and management of the property. For example, handyman duties and collecting rents.
In my area of metro NY, there is turnover on lease expiration and the space is renovated for the next tenant as it is a competitive market so you may also need to factor that into the equation.
Consider looking at multi-units in big university towns with beat up property values. It doesn't take much to entice a college student to move off of campus and it is much more simple to forecast your tenants, their ability to pay rent(student loans/parents), and how long they are going to stay. That will also give you paid rent for the month(s) they are not occupying the space in order to do any necessary repairs/paintwork for the next tenant.

 

[mdwest]

Ive owned a couple of rental properties over the years.. and made some decent money.. but had to put a whole lot of work/effort into it... and ended up selling the last house I had about 12 years ago when I decided to relocate to another city..

with the exception of the house that I live in today, every piece of property or raw land I have ever owned has been a foreclosure or was being quick sold for some reason or another.. the key is patience (or at least it was for me..).. and only buying if there is a serious deal/opportunity on the table..

I just bought some more raw land out in Colorado a few months ago.. I was able to purchase it for about 60% of the original list price/appraised value.. because I was patient.. when the sellers got desperate to get out from under it (almost 3 years after they initially put it up for sale).. I bought it..

My first house was a foreclosure.. I wasnt super picky about the neighborhood (wasnt going to live in the ghetto.. but wasnt too worried about where in the city it was, as long as it was a decent part of town).. didnt have kids at the time, and wasnt married.. what I was worried about was the price.. and how much work would need to be done to move in.. My original intent was to move in, live there for a year or so, fix it up, and then flip it... I ended up living there almost 6 years (was hard to beat the tiny little mortgage.. and I ended up getting married and having kids while I was there and didnt want to leave the area)... but when I sold it, I cashed out almost 50% over my original investment..

Ive thought about buying a couple of duplexes or maybe a small apartment building a few times recently.. but have talked myself out of it.. real estate is a good way to make money if youre willing to put some time into it.. and are careful to strike only good deals (you can also get burned if you dont know what youre doing).. but my time is pretty limited right now.. so.. its not likely going to happen anytime soon..

 

[BoneYard]

I own several vacation rental properties in Florida. If you have a good location, VRs are great ROIs. I have lots of resources for this if you're interested in this route.
There are so many REI get rich quick schemes out there, be careful of these, ITS ALL BUNK. Common sense and knowing your market inside out is the best advice I could give you. Being really good at one or more aspect of the business that you would otherwise have to pay someone else to do is in my mind essential. For me that's renovations and management which I do almost entirely myself. Like others have said, this takes a lot of time, for me it's full time.
Multi unit rentals are a great way to go especially if you can live in one of the units.

 

[Erikcooper]

I've been listening to a ton of hours of podcasts on the subject and learning a lot. About as much as I can before I get some hands on learning. I'm going to be attending the local REIA meeting next week and start networking with established investors so that I can get a foot in the door and I'm looking nice into getting my real estate license so that I can find and purchase properties easier. I live in a good area for the business and actually got started thinking about it when I started the process of the home I just bought. I closed yesterday on my house that was a foreclosure and I'm in at $111k on a house that will appraise for ~$135k after I do some repairs that I have $5k in escrow money to do. It's not a huge win in value but it is some.

@BoneYard My area definitely isn't a vacation area but multi unit properties is something I definitely want to get into and I'm working on different ways to find financing to get into that market, probably starting with duplexes and the like.

 

[BoneYard]

If you really want to make a go of it, one thing you could try is helping an investor as an aid. You can learn a ton from doing this. And a lot of investors advertise for help in classifieds. A lot of this business is about connections, make them! I feel duplexes can be a little tricky, I like 3-4 plexs because they tend to spread out your risk of income loss due to vacancy. I also like them for holding longer term. I own a great 3 plex that has performed very well. Sounds like you are doing a lot of the right things. One thing is, I have never been disappointed by paying more or buying less, in a better location. Good luck bro, shoot me a pm if you want too

 

[TraderCigarCo.]

I've known a couple of folks that got into the wholesale market and hit it pretty big. My wife's family is into flipping. From what I've seen and researched it's a great business to get into if you have the drive/motivation and the market for it. Kudos man! Good luck.

 

[Erikcooper]

@BoneYard I'm hoping to make some good connections at the local meeting next week and helping someone out any way I can is something I aim to do. Good advice all around.