Just out of sheer curiousity where does one buy an investment property for 5k to 15k?..Except Detroit or Buffalo that is…Are these trailers?..And what kind of cashflow are we talking about here?..I would ask where you get financing from but at those levels Im assuming you just use your Amex to buy them…Surely it must be tough to get financing conventional or Hard Money at those prices…
We’re in MS. None of our properties are trailers, although one of my friends is talking about possibly starting a trailer park here. Not talking huge wads of cash like it sounds like you make, but the properties all take care of themselves financially and are on 10 yr notes so we’re not dragging out the financing forever. We use a local bank for financing. Our banker likes it when we roll a couple properties in the same loan so he’s not doing all the paperwork for a 15k loan.
There are many areas of the mid-west and south where you can buy houses really cheap.
Our business model is to have around 20-25k in a house that’s fixed up which will rent for 500-650/mo and just replicate. That’s the start. Hope to get into other things later on.
ty for the detailed answer Justin…Sounds like a viable business especially being that you are a hands on owner…Thats the way to make money…And it makes sense the bank will back you if you package a few properties at once…What is your ROI coming in at ?..I did well with my residential units but I used a property manager who is acutally doing a decent job but I just dislike the drama,water bills,repairs etc that comes with it…I figured my cash on cash at around %17 (assuming the property had no mortgage) If I leveraged the properties my ROI would be much higher…
By not really putting anything down on most of our properties, the ROI equation doesn’t tell much about the situation. When considering cash on cash and assuming the property had no mortgage, some of ours are around 17% but others get up around 25% or so. In the beginning, we had to put some down as well as loan the business some money for rehab costs. By buying at the rate we have over the past couple years, extra money from rent generally just goes into the next deal. I do like the principal pay down on the mortgages on the 10 yr notes though. At least half the payment goes to principal so we get a couple grand in debt reduction each month. I know a lot of deals on this site have been evaluated based off 30 yr amort, but I want to get these properties paid off quickly as part of my retirement plan.
You’re right. You definitely earn your money as a LL. 90% of my headaches come from 10% of my tenants. The rest aren’t too bad.
Justin,
FWIW, Being that you are investing for retirement. You can buy investment property in an IRA account if you structure it properly. You’d make out much better tax wise if you do. I plan to look into doing this myself.
JP
I’ve seen a few posts on here about that, but don’t really know anything else about it. If we max out our Roth IRAs each year, not sure what else we can do there. Also not sure about any restrictions about getting any money out prior to age 59 1/2.
When I say I’m doing this for retirement, I’m meaning this is our way of striving to become full time investors when I retire from the military. I should bring home about 36k/yr in military retirement. Looking to make other income from REI to bring our total earnings somewhere over 100k/yr. Can be from rental income until we’d have enough equity to move up into a better investment. That’s the goal at least. Trying to be semi-retired by age 45. Have a LONG way to go, but the rentals seem to be a good start. Looking for options to not have to punch a clock for someone else every day.
I like Chihuly glass. However, I never buy anything that needs to be dusted.
The type of people who lose in the stock market are the type of people who are too lazy to do their own research and to make their own decisions. They invest on “advice”, not on what they have learned.
So it doesn’t matter where they invest, they are going to have their money taken from them. They’d lose in stocks, real estate, art, beanie babies, or worm farms. It doesn’t matter. Those who turn their money over to someone else are very likely to lose their money.
The people who make the effort to learn the market that they intend to invest in are the ones who end up with the money, be it stocks, real estate, art, or worm farms (I suspect that the only one who made money in beanie babies was the manufacturer)
Don't dismiss a good deal just so you can say "I bought a house for 5k." During the time it took you to do that, I bought 5 of them for 15-20k...and they'll cash flow just fine
Being on the east coast, I can’t even find houses at those prices in the war zones. Besides, I don’t go for cash flow, I look for flips that put cash in my pocket quick!!
Here are a few little known powerhouses who arent feeling so bearish…
I always appreciate your market insights, NYC. Thank you.
I wondered who Tony Robbins was talking about, I think that it’s a guy named Paul Tudor Jones II. Obviously, I could be wrong. Important if true?
Paul Tudor Jones is a hedge fund manager. At the height of the fund’s worth, it was around 21 billion, right now he manages around 12 billion. In 2007, he was ranked as the world’s 369th richest person, according to Forbes.
He got stung in the freeze when Lehman went under, apparently, he still has holdings that he’s trying to sort out.
It looks like his hedge fund, Tudor BVI has been buying up gold., the question seems to be: does he suspect that deleveraging will ultimately lead to deflation of the dollar, or is he doing this to hedge against inflation? Given the poor performance of many hedge funds this year, it’s hard to know if even these guys have a strong suspicion of how all of this will ultimately shake out.
Robert Kiyosaki points the following conditions out in his online book “The Conspiracy Of The Rich:”
Warren Buffett, through Berkshire Hathaway, owns a 13% stake in Moody’s Investors Service, which Stated that the ‘distance-to-downgrade’ has in all cases substantially diminished,” referring to the Aaa-rated United States Treasury bonds.
http://www.nytimes.com/2010/03/16/business/global/16rating.html?_r=1
The Chinese have already downgraded United States, British, German and French treasury bonds.
Definitely a lot of mixed opinions going on, whether it’s that of the lucky artist or the seasoned investor.
IRO
The tough part anytime for the masses attempting to follow hedge fund traders is this…Many top trading firms and hedge funds use what’s called reverse trading …They have one group appearing to buy while they have another group building massive short positions…Especially when it comes to commodities we never know what the exact intention is when they use the media…Take for instance Soros…In one month he made two conflicting statements about Gold…In one conversation he was bearish and in another he was bullish…You also don’t know if these purchases are used as hedges because gold is the best hedge there is pretty much…Many large hedge funds use a market neutral trading strategy which is simple in theory but complex to execute…Its easier to follow someone like Buffet or Cascade investments …But to follow the hedge fund guys watch out…They routinely use the media to unload and build massive short positions…They use insider buying and selling also…You have to realize these guys control the markets…One guy controls %1 of the daily Nasdaq volume…Steve Cohen…SAC Trading…And he is a genius…Just be careful how you decipher this info…One last thing when commodities correct they can easily shave off %30- %40 during a correction…Thats why I’m petrified of commodities and always have been…