looking to start investing in real estate

General Real Estate Investing
1

i am 27 years old with 3 kids under the age of 2. not married but living with the mother of my kids. i worked in a auto body shop for about 6 years and played poker on the side. I hated my job and just was not working with the kids schedule so i quit. i just started playing poker full time this year.

my financial situation:
$115,000 cash
paid cash for my house (330,000) 4k in taxes per year
I rent my old townhouse to my parents for 700(150 goes to association dues) per month(house is worth 200,000 and is paid for. 2k in taxes each year)
2012 honda odyssey paid for
will be receiving $980,000 settlement in 2 years(will not have to pay any taxes)

i make roughly 3k a month playing poker which is enough to pay the bills but not nearly enough to what i want to make at some point. my goal is to start investing in real estate and to eventually have 6 or so rental properties.

looking to get another 2 properties this year for around 125,000 each and rent it out to a friend of mine and his gf for 1100 a month and the other place to my gf parents. im not sure how much money i am going to put down. just looking for any advice on what path i should take. i know i really cant do much until i get my settlement.

if it matters i sold my old car to a family member and will be receiving 350 a month for the next 3 years and also receiving 2000 a year for the next 10 years. thanks in advance

2

ochsy03,

What an introduction…! Good Poker players are more often very good negotiators…! They know how to keep track, observe people, and make thoughtful decisions. And then there’s the gamblers… j/k

Wow. First I would say, “Don’t quit your day job. Just move up to higher stakes Poker games!!!” :anon

Meantime, go marry your gf and adopt her kids so they can have a real dad, not a boyfriend for mom. Just saying. Frankly, the situation you’re maintaining doesn’t look good on paper and is a put-off in professional circles. So get that straightened out immediately. If you don’t love her enough to marry her and adopt her kids, then it’s time to move on, and give her kids a chance to have a dad with someone else.

Next, renting property to relatives without a contract (maybe not in your parent’s case) is a disaster in the making. It could go OK until it’s time for a major repair, and old Jr. fixes the pipe and it leaks forever and ruins the floors and costs thousands to fix, and he won’t pay for it; feels taken advantage of, because after all he volunteered to save you some money once, and this is the thanks he gets, blahyty blah, blah, blah-blah and …blah.

Instead, put all the relatives (except the mom’s and dad’s) on standard leases with deposits and call it a day. Too hard to put the in-law Genie back in the bottle? Well, in time, you’ll be the testimonial poster child for not renting to relatives on verbal contracts. You can trust me on this.

Favors done are favors quickly forgotten, especially with relatives.

And finally, you’re worth nearly a half a million at 27. OK, fantastic. You’ve been doing ‘something’ correctly up to this point.

I would suggest you buy units, and stop buying expensive rental houses that won’t cash flow without huge down payments. Units are easier to manage; easier to leverage; easier to recover from after hiccups, and allow better amortization of both maintenance and management costs, than just one unit offers.

With apartment investing you’re managing one roof, one plumbing system, and one manager (hopefully not yourself). At the same time, you’re enjoying several income streams, and not dependent on any one of them, as you might with a house.

How’s that sound?

3

If you are already in that good of a position in life at 27 why take the risk? Invest it in tax liens and make 12-21% interest on your money and don’t deal with any Tenant issues… Just my thoughts I have had rentals SFR and Multi and I hated them both… Just saying