I’m seriously looking at making a career change and getting into some type of real estate investing such as rental properties. I’ve got about 250K that is very liquid and is what I would prefer to start out with without having to go the loan route. A couple of questions.
Thanks in advance for your help.
Rental properties are a tough investment process. There are a lot of fees involved (property mgmt). You should try buying foreclosures and flipping. You will definitley make the 6-7k that you are looking for a month.
I agree with the rental process ,its slow…You said you had 250k to spend, why would you use all your money on one property… I hoping in you area the prices is very low because if not thats a big NO NO…
Never use all of your money for a investment. always have back up money… 
There is no way I would use the entire amount on one property. I’m located in the midwest (Indy area) so the prices are not way out there like in CA.
As I mentioned I have 250k that is liquid and can use right away so with this amount I was hoping to get into 3 or so properties or get into the foreclosures and then flipping them if possible?
I have a bachelors degree in Finance and in college the big term that was constantly used is “leverage”. I agree with the other responses that were given. You want to use as little money down on each investment and diversify. You want to buy as much as you can with as little money down and finance everything! You get “loss” benefits, you get appreciation benefits and you get Time Value of Money benefits using this method.
Do any of you people know a Hard Money lender ?
Kaustin,
Hi. Ok, first I think it is important to point out that you can get involved with RE investing and not use any of your own money. AAM is right when it comes to LEVERAGE. LEVERAGE is a beautiful thing. I think the smartest thing to do is take some time to figure out what you really want to do. You said 6-7K mo cashflow right. Ok, now lets map out a strategy…this is the most important thing because I think rentals are going to be a great thing for you. Fix and flips and forclosures are great, but you will be busy and they take time. Trying to make 6-7k/mo doing this is going to take a really active role on your part (in my opinion. Maybe you mix that in. Rentals are an assett you will have that will be being paid off by OPM and eventually you will have as free and clear collecting checks as you sip on um… coca-colas on a beach in Hawaii, no wait…Tahiti, no well…you pick the spot! Ok, back to the topic…I think 6-7k mo with 250K in liquid will be easily achieveable with the right strategy! Maybe multi-families, maybe mobils, or industrial. There are a lot of ways to go. Good luck and please let me know if I can be of further assistance.
Successful Investing,
Mark
Thanks for the info Mark…base on what you mentioned what would be the best way for me to go? And it’s possible to clear 6-7k month after all expenses and etc. I’m looking to get started sooner rather than later, so what should be my first couple of steps?
KAustin,
The one thing I want to make sure I emphasize is please please please don’t just get out there and start buying everything. A lot of people have that kitchen drawer style of investing. You know that drawer that just has a bunch of stuff in it. Well, your investments are a vehicle. You need to make sure you have the RIGHT vehicles to achieve your goals. I sent you an IM with some personal info. Let me know if you don’t know how to check it. So lets try to make sure you have the right investments. Lets talk about your market and comfort level etc.
Check into HELOCS in your area and see how many banks only require a short amount of title seasoning… Quick question here is how one of my average deals!
For instence
I just bought a condo in Winter Park that I close on next week! less then 100 yards to the ski lift, It appraised at 225k I bought it for 135k now do to the fact that I bought it so far below market! lets just say that I was not going to pay cash! I would bump up the price by 26%have the seller pay 6% of closing costs and carry the 20% and then dismiss them at the time of closing leaving my with a 80% loan to value on that property with no mortgage insurance! this way the payment is only around 625.00 per month
on the other hand I will pay cash for the unit let it season for two months and then take my money out at 1.25% intrest on a heloc for up to 80% of the value or 385.00 a month for 180k… So use that $$ to buy my next house for 180k (which is about a 3 to 4 bed here and should rent for 1000-1200 per month that is a bad investment because???
It all depends on what you want to do!
I hate to ask the basic questions, but I’m just starting get into REI. First of all, how were you able to purchase a condo for $135K that appraised for $225K? Second, I don’t understand the part about bumping up the price by 26%. Are you bumping up the purchase price from $135K to $170K to cover the 6% closing costs that the seller would have to pay, and then somehow getting the other 20% out of purchase for your down? Third, does that mean that you now have a loan for $170K on the place that appraised for $225K. At 6% your P&I would be about $1,000 / month. Would you be able to rent it in that market for enough to break even?
Sorry for all the questions. I’m just trying to figure out how you experienced REI’s do this?
I would owner carry the 20% then at closing dismiss that 20% that way I only get a 80% loan from the bank! the other 6% is for closing costs! this way it is a no money down thing and I only owe 135k on this deal! Hope this helps
Oh and I found this deal thru a friend of a friend kinda a gimmie
Anyone here have any experience with section 8? How do they come up with what is a fair amount to pay in rent? Say I have a nice 3 bedroom 70K house how do I/they arrive at the amount the voucher would cover?
2 quick questions.
What is a short amount seasoning means?
Where you find 1.25 interest rate for HELOC? every where is doing Prime or 10 points below priime… with todays prime being 5.25% (I missed the 4% window earlier) the cheapest I found is 4.25 for 80% LTV.
Ant.
Kaustin,
Go to your city’s Metro Housing Authority (or whatever they call it locally where S8 is handled). They will give you a packet that will have most info enclosed, and more helpful is the monthly “new landlord” meeting they hold. The meeting is lecture style with endless time for questions in the end.
For your area there will be a form that will show the standard price per unit type:
1 BR efficiency = $XXX.XX
2 BR double/multifamily = XXX.XX
3 BR double/multi = XXX.XX
4 BR
2 BR single family house = XXX.XX
3 BR
4 BR
This listing will be accompanied by a list of extras, $XX.XX for owner supplied range, $XX.XX for owner supplied refridgerator, for owner paid A/C, for cieling fans, for owner paid gas, owner paid electric, trash, etc., etc.
Then they factor in average rents for the area your unit is in. They say they won’t pay more than a non-assisted tenant would pay, but that’s not always true.
Hope this helps. Try to make it to one of those new landord meetings.