Real Estate: What's Your Style?

[Stupub]

I prefer farmland. Never a vacancy.

I also like tax liens and self storage facilities when the deal is right.

 

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[EvanOkanagan]

I just became an investor in a rent-to-own property and I've gotta say it seems like the most stress-free form of real estate out there. There is a fair amount of monthly cashflow for a few years, and then when they purchase the house you receive a payout (usually in the 10's of thousands).

Major advantages:

1. Tenant pays and takes care of EVERYTHING. Repairs, insurance, utilities, etc.

2. After the initial purchase stage, your only job is to cash post-dated cheques and deal with bounced cheques. (Less than an hour a month of work, if that)

3. Risk is limited. They pay a substantial deposit which is not refundable if they default or don't want the house anymore.

4. The tenant takes care of the house as if its their own during the term, even doing renovations in a lot of instances.

Disadvantages:

1. You must sell the property at the end of the term (not sure if this is a big disadvantage as you receive a large payout)

2. Finding eligible tenants may prove difficult at times

 

[hatterasguy]

I like development and rentals, but I'll do anything. I really want to get into paid parking and commercial condo's.

This is a generic question though, it really varies from state to state. For example if I were down south I'd be interested in trailer parks, out west cheap sub $100k houses, NYC air rights, etc.

 

[Nate]

Hatterasguy, thanks for your ideas. What is "air space" that you are talking about in New York? I've never heard of that.

 

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[SkyRoz]

AnneC you are really good with your post... I went through the whole forum and found that it was ever best pot and was very useful for me..
I am happy to be at the right place. It is my first post here in this community and is expressing my happiness..

 

[JimPellerin]

I focus on rent to owns. I have done over 100 over a 3 year period. The nice thing is they are very low maintenace. Plus i used bird dogs and referrals to find the deals. The other interesting thing is i never had to use any of my own money or qualify for a mortgage. I also own several rental properties but am selling them all because they are a pain compared to RTO. Most markets are prime for RTO right now.

 

[hatterasguy]

Hatterasguy, thanks for your ideas. What is "air space" that you are talking about in New York? I've never heard of that.

Air space or air rights are more valuable in NYC than the dirt. They are the rights that allow you to build up.

Trump is very good at this along with a few other guys. He will buy a piece of dirt and work the air rights for years until he can get what he wants. Say a 75 story building vs a 20.

This is another example of how real estate is local, and varies hugely. Air rights don't exist in the mid west but in big cities like NYC you can use them to control a block. Its not different than with mobile homes or cheap houses, those are good investments in some parts of the country, terrible in others.

Be very careful when taking real estate advice from people, keep an eye towards where that advice is coming from. More so if they are trying to get you involved in a deal.

A lot of "guru's" make more money selling books than dirt, or at one time did but their advice is hopelessly outdated and slanted towards a particular market.

 

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[EasyMoney_in_NC]

Nate, Hatterasguy is absolutely right. I would also respectfully add that you should really spend some serious time learning all that you can about RE. It's very local so what style people take should mean nothing to you, doesn't matter if it won't fly in your area. There are basics to learn and then in depth lessons and then the real education starts.
I've been in single family rentals for 20 years and have learned a lot. You have to understand so much when doing what we do, ie: people and psych (how do people work and why), you'll need to be able to sniff out BS from truth in everything you do. You'll want to be well schooled in construction and your local ordinances. You'll need to be schooled in finance.

If you do ALL your homework, you'll be successful not matter what route you take. Not know what "air rights" are is not good, but that's ok, if you're young you have time. Learn, read, listen, talk to everyone you can, then repeat the list.

In case it matters, I'm now transitioning from years of long term rents, to short term beach rentals (you can see mine so far in my sig). They ain't making anymore beaches, so if you have the money and can risk the possible loss..........beach is where there is some real money (and I'm just hoping that statement applies to appreciation not to mention the weekly rates!).

GL with your quest....

 

[Investfourmore]

I am a Realtor and investor. I own 8 long term single family rentals and have done over 75 flips in the last ten years. The flips are great for income, but the rentals are where you grow your wealth long-term. I am also an REO and HUD listing broker and sell over 150 homes a year myself plus I have a team of 8 who help me out and sell houses too.

if I had to start all over I would buy single family homes as an owner occupant that need work (HUD is a great source) and live in them for a year and rent them out. You could also live in them for two years, sell them and basically pay no taxes on the profit. I would start buying long term rentals as soon as I could and flip when I had the capital built up to do it.

As far as multi vs sfr I like SFR because in my area SFR have much higher rent to purchase price ratios and cash flow better. This is not the case everywhere.

I also encourage investors to get the RE license because of the savings in commissions and it helps you get more deals.

I manage my properties myself, but I am setting up a property management company to do it as I don't trust any of them around here.

 

[100k]

Private gated communities.

 

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[Get Right]

Would you be willing to start a thread about how you do this? Typical terms, what you are looking for in a buyer? Sounds like an interesting plan in this market.

I focus on rent to owns. I have done over 100 over a 3 year period. The nice thing is they are very low maintenace. Plus i used bird dogs and referrals to find the deals. The other interesting thing is i never had to use any of my own money or qualify for a mortgage. I also own several rental properties but am selling them all because they are a pain compared to RTO. Most markets are prime for RTO right now.

 

[jtmoniii]

I want to reemphasize what zen******* said:

Just saw a HUD deal get done with 35-year amortization at 3.5% with 5% down-payment.

It's hard to NOT make money with that kind of loan structure.

Multifamily

Period.

150-500 unit size.

because at that size you can

1. get cheap government funding, thats a license to Print money
2. 4.5% interest rates NON recourse
3. 35-40 yr loan amortizations.
4. professional level management
5. GREAT 20% PLus Cash on Cash returns due to the leverage. (that means a 5 yr payback on risk capital)
6. due to the size, and scale, you can great hands off management for most all of it. and still have enough money left over to go play ALOT.


The only other one is a Note Investor,
the only down side for me there, is the all cash, no leverage (well not much) that you can get on notes.


Z

 

[EasyMoney_in_NC]

I also encourage investors to get the RE license because of the savings in commissions and it helps you get more deals.

As a previous RE agent, I would say the opposite. Not sure about your state's rules of conduct but here we have an ethics code that requires licensees to have to make a seller aware of a property's true market value as part of full disclosure. If you want to buy (steal or get great deals) properties, how can you when you are required to tell the seller what it should really bring. I saw the license as a liability and got out. Good friends with MLS access is a much better way to go. A great deal commission or not is a great deal IMO. And the seller is paying the commish anyway so who cares? The savings on being a good negotiator and creating a good deal usually far outweighs the commission saved. Maybe when you talk about million dollar properties its a different story, but for SFR rentals (sub $150K), your portion of the commission is nothing when sharing with the house compared to getting a great term or price out of a seller.

 

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[G-man422]

HUD has a 40-D program. don't be fooled its not easy the first time. the first deal could easily take 6-8 months to finance.

Zen, I'm having a hard time finding the exact 40-D item you're referring to. Do you have a link?

 

[Investfourmore]

The program is called the FHA 233b program. You can get 35 year fixed rate loans at 85% loan to value and then seconds are possible as well. There is mortgage insurance; upfront and monthly, and many other costs. http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/progdesc/purchrefi223f

I found a couple banks with info on it. http://www.csgfirst.com/wp-content/uploads/2012/09/CSG_TermSheet_HUD223f_11.15.12.pdf

 

[Investfourmore]

As a previous RE agent, I would say the opposite. Not sure about your state's rules of conduct but here we have an ethics code that requires licensees to have to make a seller aware of a property's true market value as part of full disclosure. If you want to buy (steal or get great deals) properties, how can you when you are required to tell the seller what it should really bring. I saw the license as a liability and got out. Good friends with MLS access is a much better way to go. A great deal commission or not is a great deal IMO. And the seller is paying the commish anyway so who cares? The savings on being a good negotiator and creating a good deal usually far outweighs the commission saved. Maybe when you talk about million dollar properties its a different story, but for SFR rentals (sub $150K), your portion of the commission is nothing when sharing with the house compared to getting a great term or price out of a seller.

In some cases you are correct. If I were to buy of market houses I would have to provide disclosures saying I am looking to make a profit and I may not be paying full market value for your home. However, I buy almost all of my properties off MLS right now (a few ag the trustee) and it gives me a huge advantage. I got a fix and flip under contract this week that was listed, I saw the home and made an offer within 1 hour.

I can work faster than anyone without a license and that gives me a hue advantage. Plus the competition here is Intense. Since in an agent I can pay more for homes than other investirs because I save that commission. 2 or 3% makes a huge difference as we all seem to have very similar criteria and price points.

Being an agent has saved me over $70,000 this year alone. Mostly on flips because I save 2 or 3% on the buy side and another 3% on the sell side. I've got 6 fix and flips going right now and purchased 3 long term rentals this year.

I am experimenting with direct marketing, but just in the beginning stages. I do disclose I'm an agent. It may hurt me to tell people what their home is worth, but I wouldn't feel good lying to them either.

 

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[biophase]

BTW, to add to your REI knowledge...

My tenant's toilet flapper broke, she was at work and when she got home there was 1 inch of water everywhere. I had an Allstate standard landlord policy.

When the adjuster came, they depreciated all the carpeting by 99%. What this means is that if the carpet cost $3000 to replace, they paid me $30. Yeah it's bullshit.

Carpeting has a 10 year lifespan, so because my carpeting was more than 10 years old it was depreciated to basically $0. Adjuster asked my tenant how long she lived there, she said 12 years, he then asked if the carpet had ever been replaced, she said no. So if you ever have a flooring claim or any claim, please talk to your tenant before the adjuster shows up so you can coach her a little.

I did try to argue their claim, but they said this is standard on landlord policies. If this happened to my primary residence they would have paid the entire replacement cost. I would reread your landlord policies. I feel that are pretty much worthless unless the house burns down. I'd probably get half the house replaced, who knows. I'm researching different insurance companies now.

Carpeting was the big item. But everything else like paint, drywall, insulation, etc... was depreciated according to their schedule.

The bill was $8500, Allstate paid out $4500.

 

[Steve37]

BTW, to add to your REI knowledge...

My tenant's toilet flapper broke, she was at work and when she got home there was 1 inch of water everywhere. I had an Allstate standard landlord policy.

When the adjuster came, they depreciated all the carpeting by 99%. What this means is that if the carpet cost $3000 to replace, they paid me $30. Yeah it's bullshit.

Carpeting has a 10 year lifespan, so because my carpeting was more than 10 years old it was depreciated to basically $0. Adjuster asked my tenant how long she lived there, she said 12 years, he then asked if the carpet had ever been replaced, she said no. So if you ever have a flooring claim or any claim, please talk to your tenant before the adjuster shows up so you can coach her a little.

I did try to argue their claim, but they said this is standard on landlord policies. If this happened to my primary residence they would have paid the entire replacement cost. I would reread your landlord policies. I feel that are pretty much worthless unless the house burns down. I'd probably get half the house replaced, who knows. I'm researching different insurance companies now.

Carpeting was the big item. But everything else like paint, drywall, insulation, etc... was depreciated according to their schedule.

The bill was $8500, Allstate paid out $4500.

Might want to try using a public adjuster if you have future claims. I had a very similar situation last year and was pleased with the results. You have to pay the adjuster 10% of your total payout but I'm pretty sure that my claim amount was much higher with representation rather than dealing directly with the insurance company. I think I end up pocketing $8k in the end. Will use public adjusters for any future claims.

 

[Bairn Rasik]

I have no real estate experience, but want to consider it for the future. I'd like to pose a question, for fun. You can play if you want.

If you were going to "do real estate" but for the rest of your life could only venture into one type, what would it be, and why? Acceptable answers would be things like, development, rentals (complexes or single-family or whatever), flipping, commercial, warehouses, heck, tax liens... etc. etc. Feel free to be broad, or more specific.

No need to complicate things; I know your answer might be, "Don't be dumb, it depends on so many factors!" I get that, just play for fun, if you want.

Sounds like you are depicting like a baby child that's cool
And for me Real estate is like flipping,, flipping and flipping as if after every flip there would be a different thing to see isn't??
Have a look here,,realtor Georgetown ky

 

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[Investfourmore]

BTW, to add to your REI knowledge...

My tenant's toilet flapper broke, she was at work and when she got home there was 1 inch of water everywhere. I had an Allstate standard landlord policy.

When the adjuster came, they depreciated all the carpeting by 99%. What this means is that if the carpet cost $3000 to replace, they paid me $30. Yeah it's bullshit.

Carpeting has a 10 year lifespan, so because my carpeting was more than 10 years old it was depreciated to basically $0. Adjuster asked my tenant how long she lived there, she said 12 years, he then asked if the carpet had ever been replaced, she said no. So if you ever have a flooring claim or any claim, please talk to your tenant before the adjuster shows up so you can coach her a little.

I did try to argue their claim, but they said this is standard on landlord policies. If this happened to my primary residence they would have paid the entire replacement cost. I would reread your landlord policies. I feel that are pretty much worthless unless the house burns down. I'd probably get half the house replaced, who knows. I'm researching different insurance companies now.

Carpeting was the big item. But everything else like paint, drywall, insulation, etc... was depreciated according to their schedule.

The bill was $8500, Allstate paid out $4500.

You need to talk to your insurance agent. There are different types of policies and endorsements. I had 4 rental properties damaged from a recent hail storm and they were all covered including depreciation. You can choose to have a policy that covers depreciation like with a personal residence or choose a cheaper policy that does not pay out on the depreciation.

 

[FutureWorldDominator]

Apartment/Condo Investments, SHOPPING MALLS COMMERCIAL (TONS O CASH) and running REIT's.... I live in Brooklyn and invest in NYC... the market is amazing here!