STOP Paying Rent: Live For Free

[TonyStark]

What's your opinion on using AirBnB to generate income versus leasing it out to renters? @G_Alexander

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[TonyStark]

I completely agree! I wrote a very similar about paying yourself and not the landlord. I wish more people were into personal finance. I feel as though the topic is taboo or something. Every time I bring it up the conversation goes silent. I learned now not to give advice unless asked.

People don't know. Those that do, are getting rich.

 

[StuckInTheMud]

Has anyone got any experience of doing this in the UK?

I have found some suitable buildings in my area that were once large victorian residences, now converted into 4/5 units.

The numbers stack up.

For one example i am looking at:

5 unit block:
Purchase Price - £300,000
Deposit (down payment) Required @25% = £75,000
Mortgage Payment - 5% of £225,000 = £11,250pa or £937.50pcm
4 units rented out = £1850pcm
Cashflow (gross) = £912 pcm
Plus saving me the housing costs i currently pay...
(above figures don't include upkeep, communal area energy costs etc)

My mortgage broker says i will need commercial finance for the deal. (personal residential mortgage is not available if renting out other units here in UK)

I would love to hear from anyone who has made this work in the UK.

(Another option is to purchase a regular home and rent out a room or two to cover the mortgage... my partner is less keen on this idea

Also interested if anyone else who has had experience with this in the UK. Seems viable as long as the commercial finance holds up - will be researching more into this.
Thank you OP for such valuable information!

 

[Nomangee]

What's your opinion on using AirBnB to generate income versus leasing it out to renters? @G_Alexander

I recently saw a video on youtube by someone who does that. He hasn't bought the apartments, but rents them himself. Especially in frequent travel areas, when you rent long term, you can get some nice discounts. He is only using AirBnB as a traffic source and has completely automated all the necessary maintenance etc to make the business 99% passive income. Revenue was around 20k total for the month and the net profit was 6k. Already thought about doing it for myself.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[TonyStark]

I recently saw a video on youtube by someone who does that. He hasn't bought the apartments, but only rents them himself. Especially in frequent travel areas, when you rent long term, you can get some nice discounts. He is only using AirBnB as a traffic source and has completely automated all the necessary maintenance etc to make the business 99% passive income. Revenue was around 20k total for the month and the net profit was 6k. Already thought about doing it for myself.

Aren't you guys going through some government issues with using AirBnB to rent?

 

[Nomangee]

Aren't you guys going through some government issues with using AirBnB to rent?

Yeah in Germany it wouldn't work from what I have seen over the years, but for example the guy who does it, lives in Thailand mainly. So it seems he has no restrictions. I know some guys there, so it wouldn't be that hard to setup something like this, as basically everything is automated. I would visit it every now and then and as you get constant feedback from your customers, you know if something isn't working. It's a great business for nomads imo.

 

[lovecharm]

Yeah in Germany it wouldn't work from what I have seen over the years, but for example the guy who does it, lives in Thailand mainly. So it seems he has no restrictions. I know some guys there, so it wouldn't be that hard to setup something like this, as basically everything is automated. I would visit it every now and then and as you get constant feedback from your customers, you know if something isn't working. It's a great business for nomads imo.

What is the video? Let me see.

I need a place in NY and LA, because i got clients there. I won't be staying there full time, but will be spending significant time there, so thinking of renting places in both NY and LA and put them up on Airbnb while I am not there. Might cover the rent so I could stay there for free.

In the lease they do say that you shouldn't sub lease your apartment, I guess every one is turning blind to those. Has any one ever had problem with the leasing company when they tried to rent out in Airbnb?

LC

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Nomangee]

Searched through my Yt history. Found him finally and it seems he is doing it currently in LA. Thought he lives in Thailand, but that was only his vacation destination. Already asked him on youtube about more in-depth information on how he does it exactly. Hope to get an answer soon. Here is one of the videos, where he speaks about his total income for the month:

at 9:30 he starts to speak about the AirBnB business

 

[JDx]

Very interesting topic; saw someone from Germany who didn't seem too hopeful to join in on this. I'm looking around for similar options in NL, though will not be in a position to join in either before saving some cash.
I've always found renting to be the dumbest thing to do with your money, throw it in a black hole. This is a very interesting take on things.
Thank you for the extensive how-to @G_Alexander

 

[TheGrind]

Instead of doing this method, does anyone have experience with private money lenders to buy rental properties? Then pay back the loan with the rental income.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[snw771]

I am sorry if this was already asked or you already told us, but what did you personally do for the two-year work requirement for an FHA loan?

 

[G_Alexander]

I am sorry if this was already asked or you already told us, but what did you personally do for the two-year work requirement for an FHA loan?

I showed them my employment contract at the time showing that I was making $70K base salary + bonus (which you can't use bonus to qualify until you're actually paid one). Loan was from the bank I worked for, so that was helpful too.

But you should be fine with two paystubs and two years of tax returns (even if you were a student both of those years with a part time job).

 

[snw771]

That's awesome thank you!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Trud09]

Thought I would try adding a little value where I can. You don't have to use FHA anymore to do this. They charge extra with PMI that doesn't go away. If you can be approved for a conventional loan, some are going up to 97% LTV so only 3% down. I can't advertise nationally so PM me I might be able to find on in your state and see if I can help you find a loan. You can also get sellers to pay closing costs and other fees up to a certain percent. As long as you have the income needed to cover the loan payments and a decent credit score you can do this.

Instead of doing this method, does anyone have experience with private money lenders to buy rental properties? Then pay back the loan with the rental income.

Yes, depending on the state and property there are options. PM me for further details.

 

[Niptuck MD]

Fastlane brothers and sisters, I am here to show you the light should you so accept to see it. I’d like to offer some advice from my experiences and to share the wealth of living rent free.

This is not a revolutionary topic, and I am not a revolutionary human. Living rent free has been done by many. Living rent free with cash flow has also been done by many (including me). It is easy. It will likely end up costing you less than $10,000 (I only brought $5,900 to the closing table on my first property). It’s a no brainer move for those of you who are hungry and ready to forge your own path in life. Ever since I posted about my first 3-flat, members have reached out to me asking what type of financing I utilized, where I began, what books I read...this thread is a basic answer to many of those questions.

This thread is not intended to make you join the apartment investor Fastlane (although cash flow has severely addictive qualities, just ask @SteveO, @AroundTheWorld, @z*********, @RealOG, @CashFlowDepot, etc.). No, this thread is here to help you make one simple move that can stabilize your life as your pursue whatever Fastlane you choose. Stop paying the man each month (me) and start focusing on your goals. I hope that this thread will help even JUST ONE person on here to live without the constant cloud of having a rent / mortgage payment every month.

No longer will the excuse of “I have too many bills to pay to quit my job and enter the Fastlane full time” remain valid. We are building your shelter. We are building your money tree. We are building the castle from which you will wage your war.

This thread is targeted for those of you who currently have:

• A stream of income from your lame J.O.B., from your own business (need 2 years of 1099 history for this to work if self-employed), from your full blown Fastlane venture or from your sugar daddy/ momma (whatever) and
• Currently do not have an FHA mortgage

We are going to learn how to purchase a duplex, 3-flat or 4-flat with as little as 3.5% down that will cash-flow and pay for itself.

Are you tired of paying your landlord your hard earned wage each month and having nothing to show for it? Do you wish you had a money tree in your backyard? Good. Let’s rock and roll.

Let’s break down what you will need to do into a simple list:

1. Contact / engage a mortgage broker​

1. 1. Hop on Yelp! and search for the best mortgage broker in your city. Pick one who has high remarks in their reviews. Don’t get bogged down searching for the perfect mortgage broker. There are thousands in every city. Call a few and pick the one that pays attention to you (answers quickly, calls you back quickly, etc.)
   2. Obtain a mortgage pre-approval (broker will walk you through the steps) for an FHA mortgage (broker will walk you through all the documents they need you to sign)

i. An FHA mortgage is a tool that first time home buyers who will be owner-occupants (move into the property) can utilize

ii. Broker will run your credit (FHA minimum score threshold is around 550 I think, so hopefully you are a responsible, bill-paying-son-of-a-b*tch)!
​

3. Once you are pre-approved, the mortgage broker will get you the loan you need once your real estate broker (step 2) finds you the property you want. They will charge you a fee at closing (likely 1%, or 1 “point”) which can be rolled into your loan​

2. Engage a real estate broker​

1. 1. Same thing, head to Yelp! and pick based on reviews. Call a few and tell them what you are searching for:
      
   2. Tell your broker you want to look for owner-occupant Freddie Mac (HomeSteps), Fannie Mae (HomePath) properties that are between 2 to 4 units (our ideal number is 3 or 4 units)

i. The reason we like Fannie and Freddie foreclosures is because owner-occupant buyers have a 14 day window to bid on these properties before investors. This restriction is intended to keep real estate investors from driving up the price of houses on the home buying citizens of America. Which is good for you, Mr. first time home-buyer!​

3. Look at some properties (criteria)​

1. 1. Check out properties you think fit the size criteria, and that are in a good area of your city. Try to stick near big transportation hubs (trains) and try to pick an up-and-coming neighborhood (read: follow the hipsters)

i. Hipster neighborhoods are the next places that will “turn” economically in a given city, and are great spots to realize cash flow​

2. Hop on PadMapper.com (good for checking rents in an area) to see what kind of rents you can expect from the property you are looking at

i. Example (all made up): 3 unit, Seattle with all units having 2 beds 1 bath.

• Rents in the area are $1,000 per unit on average (same size, quality, finishes, etc.)

3. Take the gross amount of rents and apply a safe buffer of 50% for expenses:

i. 3 units x $1,000 = $3,000 per month gross rents x 50% = $1,500 expenses

• This means you keep $1,500 in your pocket (your “NOI” or Net Operating Income)

4. Figure out a buffer for your mortgage (and any possible cash flow)

i. If you paid $200,000 for this property @ 4.25% for 30-years and 3.5% down, your monthly payment would be ~$1,500. Voila, no mortgage

• This doesn’t take into account that most months you will not hit 50% expenses. Some will be 0% (very cash positive), some will be 150% (cash drain) so be sure to keep reserves set aside from the good months for when the bad months come around

ii. You make your money when you BUY not when you sell​

4. Pull the trigger!​

1. 1. I would recommend looking at 15 to 20 properties with your agent and getting a good feel for the market. You will start to recognize trends.

This whole process will only take 2 months or so and sets you up for months of lower-stress productivity. Stop subscribing to get rich quick mindset. Good things require process and take time.

If this interests you, just start calling people! Just because you talk to brokers doesn’t mean you HAVE to buy something. Good brokers will hold your hand through the whole process. If a property was recently rehabbed or isn't more than 10 years old...then use 40% for expenses when you do your quick-check math. If a property has under market rents...don't pay for what the property "COULD" be operating at. Pay what it is currently worth knowing that when you increase the rents you will cover your mortgage and realize equity appreciation. Just use common sense.

If you think you can spend your resources in a better place, or make the “jobless” leap without buying your “castle”, then please do. This thread is for people stuck in a job or who are too timid to take a leap of faith without first building a small form of support.

I did not even touch on the fact that you can utilize an FHA 203-k loan, and get rehab construction rolled up into your loan amount, or the larger fundamentals of apartment investing, but that is because I am not trying to teach you how to be a guru here, I am simply providing a path to ease your monthly financial burden.

If you are going to make this move and want to hit a home run, DO YOUR RESEARCH and take a dive down the rabbit hole. If you don’t want to spend a ton of time learning how to hit a home run, that’s alright because you must remember that singles, doubles and triples (pun intended) still put points on the board in the long-run. Just get moving NOW!

Read some apartment investing books over the course of a few weeks and then plan your path to freedom carefully. Don’t shoot in the dark, but make sure you do in fact shoot. No deal will ever be perfect. The timing will never be right. Pull the trigger now.

Note: I am not a financial advisor or a lawyer and this thread is purely an opinion that I hope you can draw from. Purchase property, or invest, at your own risk.

PS. Buy in the winter months if you want to get lower pricing and less market competition.

G

thank you for this info

@Keithrtay

 

[GMSI7D]

For sure. Check out the book "When Genius Failed" by Roger Lowenstein. Great example of extreme leverage going wrong, even when every single indicator was right.

the problem with big leverage is that it can backfires as well as making someone rich.

that's why i won't invest in the stock market , where we are at the mercy of human emotions who can destroy the entire stock exchange within hours.

i want solid, reliable plans based on logic, not on human stupidity , with low risks.

real estate is too complex at my level and i am not prepared to manage stupids humans who won't pay their rent and others things like that.


yes wealth has a price and the price is managing human stupidity but we'd better be prepared for that

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Greg R]

[/I]
real estate is too complex at my level

Real Estate is business 101.

If you can't even concieve yourself doing that, I'd consider starting at a lemonade stand.

If that is too complicated... not sure what to tell you.

Sent from my SM-G925V using Tapatalk

 

[GMSI7D]

Real Estate is business 101.

If you can't even concieve yourself doing that, I'd consider starting at a lemonade stand.

If that is too complicated... not sure what to tell you.

Sent from my SM-G925V using Tapatalk

i would prefer selling course, seminars and books on real estate management to would be investors. this is the real fastlane

selling shovels to gold miner is the only real fastlane in real estate

 

[Greg R]

i would prefer selling course, seminars and books on real estate management to would be investors. this is the real fastlane

Is it???

Your last two posts in this thread have been personal preference and personal opinion. Me me me me me me.

I'd suggest taking a step back, a deep breath, because what I'm about about to tell you may hurt.

The market does not care what you like or what you think.

The "real fastlane" is not a thing, a service, or a product.

YOU are the "THE REAL FASTLANE" my friend.

The shovels and the gold are both mediums.

People have made money selling real estate info products. People have also made money investing in real estate.

Stop dismissing everything so quickly and open your mind.

I'm out.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[4Ring_]

Thank you OP. Some straight Gold in here. Does anybody have experience doing this in the Greater Seattle Area? I've been searching for some listings and have found little to no luck in terms of quality/price. Am I late to the party?

Asking because the renter's market is so saturated and frothy that it irritates me as a renter. I can't imagine renting another year after throwing my money down the kitchen sink for the last 2 years already. Being an econ major, I was sure that once the fed would raise rates, the housing market would reel back a bit and offer some opportunities but they're just a bunch of lollygagging pussies; so the market rages on - fueled by borrowed money at practically 0%.

/ end rant

back to what I was saying... Am I late to the party? Renters are paying insane sums to landlords - why would they have any desire to sell their du/tri/quadplexes in the creamy renters market we have now? And those that are willing to sell (little to none), ask for insane prices for the quality you'd get.

Nonetheless, this is definitely possible, I would at the very worst be lowering my "rent" to a couple hundred bucks a month, which alone would be worth it. The Seattle Metro is one of the fastest growing economies nation-wide thanks to the tech boom and people all over the country are flocking here like migrant birds - driving home prices even higher.

I've searched on Zillow and multiple other sites and found nothing I can sink my teeth into. Granted, I've only searched for a couple hours. I'll have to ask my broker brother to see if he can find anything. Then the next step would be to just go hunting for multi-families in good neighborhoods and convincing the owner to sell.

Thanks for the GOLD OP.

 

[lowtek]

Thank you OP. Some straight Gold in here. Does anybody have experience doing this in the Greater Seattle Area? I've been searching for some listings and have found little to no luck in terms of quality/price. Am I late to the party?

Asking because the renter's market is so saturated and frothy that it irritates me as a renter. I can't imagine renting another year after throwing my money down the kitchen sink for the last 2 years already. Being an econ major, I was sure that once the fed would raise rates, the housing market would reel back a bit and offer some opportunities but they're just a bunch of lollygagging pussies; so the market rages on - fueled by borrowed money at practically 0%.

/ end rant

back to what I was saying... Am I late to the party? Renters are paying insane sums to landlords - why would they have any desire to sell their du/tri/quadplexes in the creamy renters market we have now? And those that are willing to sell (little to none), ask for insane prices for the quality you'd get.

Nonetheless, this is definitely possible, I would at the very worst be lowering my "rent" to a couple hundred bucks a month, which alone would be worth it. The Seattle Metro is one of the fastest growing economies nation-wide thanks to the tech boom and people all over the country are flocking here like migrant birds - driving home prices even higher.

I've searched on Zillow and multiple other sites and found nothing I can sink my teeth into. Granted, I've only searched for a couple hours. I'll have to ask my broker brother to see if he can find anything. Then the next step would be to just go hunting for multi-families in good neighborhoods and convincing the owner to sell.

Thanks for the GOLD OP.

FWIW, the wife and I are looking into picking up a 4 plex here in Phoenix.
It's not our first rodeo, so we think it's a reasonably smart buy - here's why:

It's a 1 minute walk from a happening part of town
Rents are around 10-20% below market, from what we can see
Building is only 12 years old, so no funny business with the pipes or electric. Roof is also likely to be intact
Pictures indicate the amenities are basic but adequate. We can come in and do some renovations and command some more premium rents and appeal to better buyers.

Currently it is 100% occupied. Goal is to bounce one of the month to month people and live rent free + a few hundo a month in our pocket

Criteria was:
Location - is it somewhere people want to be? Is it somewhere that people have money? Renting to the lowest common denominator of society is a viable business option, but not the route we want to go this time (been there, done that, hated it). Also, since we're planning on occupying one of the units, it means we want something more family friendly.

Rents below market - we want something that is profitable already with the possibility to raise the rents later and make some capital improvements on the property.

Age of property - stuff built in the 70s and 80s will just tend to have more issues due to age. The more modern the better.

Point of this is: even in a saturated rental market, there are good deals. Get a good real estate agent who specializes in multi family properties and has the experience to help you. There are a few moving parts to these deals, and it's good to have someone with some experience to buddy check your logic and math.

 

[4Ring_]

FWIW, the wife and I are looking into picking up a 4 plex here in Phoenix.
It's not our first rodeo, so we think it's a reasonably smart buy - here's why:

It's a 1 minute walk from a happening part of town
Rents are around 10-20% below market, from what we can see
Building is only 12 years old, so no funny business with the pipes or electric. Roof is also likely to be intact
Pictures indicate the amenities are basic but adequate. We can come in and do some renovations and command some more premium rents and appeal to better buyers.

Currently it is 100% occupied. Goal is to bounce one of the month to month people and live rent free + a few hundo a month in our pocket

Criteria was:
Location - is it somewhere people want to be? Is it somewhere that people have money? Renting to the lowest common denominator of society is a viable business option, but not the route we want to go this time (been there, done that, hated it). Also, since we're planning on occupying one of the units, it means we want something more family friendly.

Rents below market - we want something that is profitable already with the possibility to raise the rents later and make some capital improvements on the property.

Age of property - stuff built in the 70s and 80s will just tend to have more issues due to age. The more modern the better.

Point of this is: even in a saturated rental market, there are good deals. Get a good real estate agent who specializes in multi family properties and has the experience to help you. There are a few moving parts to these deals, and it's good to have someone with some experience to buddy check your logic and math.

I just finished a conversation with my brother who's a broker for Sotheby's and he said he has what I'm looking for. Somewhat of a drive from the metro area but the price is in the range that I'm looking for and rent is solid. I'll update once he sends me some information/links.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[4Ring_]

Point of this is: even in a saturated rental market, there are good deals. Get a good real estate agent who specializes in multi family properties and has the experience to help you. There are a few moving parts to these deals, and it's good to have someone with some experience to buddy check your logic and math.

I wish this was the case. Even after speaking with a few of my brother's colleagues that specialize in multi-family homes, here's the response I received:

"There's a lack of multi-family listings available. The good ones tend to sell off-market to private investors & will cost a pretty penny. Best option for you is to buy one that needs renovations and fix it over time."

The one to fix overtime would be ~$600,000 minimum (4-plex), next to a freeway, and old.

Got my hopes up for no reason! Was thinking there might be something feasible from a price perspective but it doesn't seem to be the case. It actually is as I deduced initially... I would have to search in more rural areas to make this happen.

 

[Zenoviy Kovtun]

@G_Alexander , how quickly should one start looking for tenants to fill the rents? It seems this must be done immediately? Or is this also covered by the maintenance fee and one should not worry about that ? Im very curious and want to take action as soon as possible, with due diligence of course. This question was not completely clear to me so sorry if it was already answered. Thank you for this thread btw. Truly gold status!

 

[FeaRxUnLeAsHeD]

So I've been saving money to do this for real, but don't know if it's going to work out according to my timeline.

- Living in Boston, but okay with buying within a 30 mile radius
- I have a job paying 40K Salary + 20K Commission that I worked at starting in July - I was a student before.
- I'm going to pull the trigger and try for pre-approval when I have around 20-30K in the bank, which will be around April.

What do I need to be approved by a bank for an FHA? I'm assuming my income isn't going to be enough.

The good news is, I'm about to double those earnings from my salary and will probably be employed for at least the next 2 years while I save capital for other investments and businesses as well, so if I have to wait until next January (2018), I can just report the 100K+ that I make in 2017 and will have more than enough money on hand as collateral if needed.

Thoughts?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[BrandO]

Hi guys, first time poster

I've been researching this and considering it as an option for quite a while. My question is in regards to how you're being represented when going down this path:

What are the pros and cons to starting an LLC, putting all of your investment money/capital into that business bank account, and then going from there? How would that effect getting an FHA loan? Is it better to just go in as an individual and not being fronted as your own company?

My situation is this: I make ~56k annually in an extremely stable IT job. I've got 401k, company stock and all that jazz. With my incoming tax returns and bonuses from work, I will have about 5-6k liquid to work with. Looking to move forward with this in the next couple of months as I continue to read up on rental property investing.

Any input would be appreciated

 

[EvanOkanagan]

Thank you OP. Some straight Gold in here. Does anybody have experience doing this in the Greater Seattle Area? I've been searching for some listings and have found little to no luck in terms of quality/price. Am I late to the party?

Asking because the renter's market is so saturated and frothy that it irritates me as a renter. I can't imagine renting another year after throwing my money down the kitchen sink for the last 2 years already. Being an econ major, I was sure that once the fed would raise rates, the housing market would reel back a bit and offer some opportunities but they're just a bunch of lollygagging pussies; so the market rages on - fueled by borrowed money at practically 0%.

/ end rant

back to what I was saying... Am I late to the party? Renters are paying insane sums to landlords - why would they have any desire to sell their du/tri/quadplexes in the creamy renters market we have now? And those that are willing to sell (little to none), ask for insane prices for the quality you'd get.

Nonetheless, this is definitely possible, I would at the very worst be lowering my "rent" to a couple hundred bucks a month, which alone would be worth it. The Seattle Metro is one of the fastest growing economies nation-wide thanks to the tech boom and people all over the country are flocking here like migrant birds - driving home prices even higher.

I've searched on Zillow and multiple other sites and found nothing I can sink my teeth into. Granted, I've only searched for a couple hours. I'll have to ask my broker brother to see if he can find anything. Then the next step would be to just go hunting for multi-families in good neighborhoods and convincing the owner to sell.

Thanks for the GOLD OP.

Have you thought of other options?

I'm just North of you in Kelowna, BC and the bread-and-butter when it comes to returns and cashflow is single family homes with a basement suite (can sometimes find w/ 2 suites). I live in one of my rental properties with this setup that nets $800 cashflow after expenses, so I'm getting paid while living for free.

The competition for multi-family in my area is very steep as well, so when something DOES come up it's snapped up quick and usually not generating near the returns of a SFH with a suite. Also optional is buying a SFH that has good "suite potential" because then you're not competing with as many investors who are looking for turn-key.

My Advice: Search high and low for a Realtor who owns multiple rental properties. It can be your one-stop-shop for advice, referrals to trades, creative deals and even off-market property.

 

[4Ring_]

Have you thought of other options?

I'm just North of you in Kelowna, BC and the bread-and-butter when it comes to returns and cashflow is single family homes with a basement suite (can sometimes find w/ 2 suites). I live in one of my rental properties with this setup that nets $800 cashflow after expenses, so I'm getting paid while living for free.

The competition for multi-family in my area is very steep as well, so when something DOES come up it's snapped up quick and usually not generating near the returns of a SFH with a suite. Also optional is buying a SFH that has good "suite potential" because then you're not competing with as many investors who are looking for turn-key.

My Advice: Search high and low for a Realtor who owns multiple rental properties. It can be your one-stop-shop for advice, referrals to trades, creative deals and even off-market property.

Evan, thank you for the advice and perspective shift. I'll definitely have to note this when I begin my search.

Check this out, I ran across a post in my LinkedIn feed of which some dude from Cali bought a 20 unit apartment for $275,000... how did he get it for so cheap? First of all, he bought in Eastern WA where the cost of living and annual income per household is significantly lower than what you find on the Western side of the Rockies (up and down the I-5 corridor)...

I have no idea how he got such a great deal on it but he's generating $9,500 in cash flow A MONTH and has permits pending to upgrade the apartment. It is currently fully occupied. With that type of cash flow he'll have it paid off in 3 years... my golly what an ice cream shop... this is one of his many many properties... dude has an R8 and just keeps growing his portfolio.

The point is, it's possible, maybe he got it off-market but the sale closed in Nov. so great deals are out there, you just have to pounce when they show up and be 100% prepared.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[letter9]

My understanding is that you need to put minimum 5% down on a mortgage for your first house in Canada. Your lender will likely do a 95% LTV (loan to value) at a higher interest rate than if you did more, and you may require a second mortgage (eg. 83% 1st mortgage @ 5% interest, 12% 2nd mortgage @ 12% interest, 5% down payment). Also, any mortgage with less than 20% down will require CMHC insurance, to protect lenders from default.

On another note, my Dad had ~30 commercial properties in the 1980s and had big cash coming in. He was heavily leveraged, and interest rates shot up to something like 25% at the same time that his tenants couldn't pay their rents. He ended up in bankruptcy after trying to sell properties to cover the cashflow shortage. I know other people have been talking about being careful with leverage, but it's probably important to read through your mortgage agreement carefully too... you don't want to get caught with a mortgage rate that goes up if you're not expecting it!

Very good insights! Finding good loan terms is one of the key parts to successful RE investing.

 

[Olie Sins]

My interest is piqued, I have enough money saved up for this. But I want to make cash flow, and not just live for free. The thing is I don't know anything about real estate, if I printed this off and showed it to the broker, do you think he would be willing to help me out? Or would he try and screw me?