Looking to get into real estate. What to do?

[bflbob]

Bozigian - you should pick up the book "making money with mobile homes" by Lonnie Scruggs. Great book on this topic. If I ever get back into RE, it will definitely be with mobile homes, not renting them out but owner financing them.

I have to agree. That is a GREAT way to make money in mobile homes, and a lot easier than becoming a landlord. But it still isn't easy.

 

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[Bozigian]

You can make money in RE for sure. But like most other ways to make a lot of money, it takes a lot of work - at least at the beginning like Runum stated.

Im ready for the works and the stress that will be involved.

IMO RE investing is not really passive. The only way to make it passive is to get such a great deal on the purchase price, you can hire a property manager and still be cash flow positive. While this too is possible, it is also about as elusive as the abominable snowman.

Ok Im a little confused on this. When you said you can hire a property manager and still be cash flow positive, do you mean that you get a cheap property manager and not expensive one to handle all the work for you?

 

[Bozigian]

I have to agree. That is a GREAT way to make money in mobile homes, and a lot easier than becoming a landlord. But it still isn't easy.

Im ready for the challenge, is the only thing you have to deal from tenants is maintenance issues and neighbor problems?

 

[Runum]

Im ready for the challenge, is the only thing you have to deal from tenants is maintenance issues and neighbor problems?

LOL Well, not always. Occasionally I'll watch one of those TV judge shows to see how bad it can really get. You have people that lose jobs, can't pay rent, and won't move. You have their car break and they can't pay. Their dog died and they can't pay. Their gout on their big toe hurts and they can't pay. They intend to pay, plan to pay, but can't pay. The dog barks too loud and often. It goes on and on.

If you do it enough and your margins are not too tight their excuses become humorous. When you are first starting out their excuses are a pain and it hurts your cashflow.

If you screen well you can minimize the headaches and losses. It is a learning curve.

 

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[Bozigian]

LOL Well, not always. Occasionally I'll watch one of those TV judge shows to see how bad it can really get. You have people that lose jobs, can't pay rent, and won't move. You have their car break and they can't pay. Their dog died and they can't pay. Their gout on their big toe hurts and they can't pay. They intend to pay, plan to pay, but can't pay. The dog barks too loud and often. It goes on and on.

Cant you just evict them so they can move out if they dont pay?

Are the reasons they may take you to court is because they feel you as the landlord was unfair to them on trying to get them move out?

If someone has a property and is planning to rent it out, can the landlord choose whether they will accept the tenant that is interested in renting their home even if just one tenant is interested? or is that discrimination?

Thats why I would like to have 2 mobile homes that way I will have two cash flow machines and not just one

 

[Bozigian]

Do you RE guys handle maintenance situation yourselfs? or do you have property managers?

If I rented out some homes just to get my feet wet, do you think it would be good to get a feel of how maintenance issues are and solve them myself (by calling services like plumbing etc) before if I decide to get a property manager?

 

[GlobalWealth]

Ok Im a little confused on this. When you said you can hire a property manager and still be cash flow positive, do you mean that you get a cheap property manager and not expensive one to handle all the work for you?

No, the last thing you want is a cheap property manager.

I mean you need to make sure you analyze the numbers very thoroughly to make sure you have enough positive cash flow to afford a great PM.

Remember, even if you don't have a PM, your time has value too. You need to factor in PM expense whether you do it or someone else.

If you cannot get a property at a price that offers enough positive cash flow, walk away. Don't let emotion drive your decisions.

 

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[CEBenz]

Guys. I would like your opinion on this idea of mines.

On this link I have a list of homes in apple valley
Apple Valley Real Estate - Apple Valley, Homes for Sale - Realtor.com®

Their is a small mobile home (2 bed, 2 bath) priced at 5,000.
The next mobile home (2 bed, 2 bath) is priced at 10,000.

If a person had money and wanted to start in RE investing. Would it be a good idea of the person bought the two mobile homes and then rented it out? It would only come to about 15,000. I dont know about the taxes and etc.

I also do not know how much a person should pay rent depending on the size but if I bought these two mobile homes and got tenants and they would pay $500 each month. Then I would get 6000.00 a year. And I would break my original investment price of 15,000.00 in 2-3 years.

What do you guys think?

Im sorry but I do not know about the taxes and insurance and all that so maybe I have things on the wrong picture since I have no experience in RE.

I'll chime in here.

I didn't get the link to work correctly.

Were the mobile's on lots already?

If so, cool. If not, another strategy could be this:

Talk to some of the guys that haul them, find a couple that you can buy for 5k (or even 3k) and do a little rehab work on (paint and such) and find a place to put them before you buy them.

Then you could rent them out. Nice thing about mobiles is that there isn't much worry over destruction. Not like when someone trashes a $300,000 stick built).

To answer your question, there are laws that require you to follow a process for eviction. It can take months and should be initiated at the first sign of late payment as it can always be cancelled if they pay.

I like mobiles from the aspect that they're low cost and can give you a way to generate income off land that is otherwise bare.

A friend of mine owns a very large mobile home park (2nd largest in Wa State as I recall).

Another nice thing is a mobile can actually, in some cases, decrease the value of real estate and thusly lower your taxes.

 

[Bozigian]

Can anyone give me insight on real estate license....

Are their different real estate licenses?
What are the benefits of having one?
Do any of you guys have them?

do you need one if you are going to do real estate (renting) in ca?

 

[hatterasguy]

Im ready for the works and the stress that will be involved.



Ok Im a little confused on this. When you said you can hire a property manager and still be cash flow positive, do you mean that you get a cheap property manager and not expensive one to handle all the work for you?

Lonnie deals are great, if you are young and ambitions and want to get into RE go for it. I normally hate low end rentals with a passion, but Lonnie mobile home deals are a FANTASTIC way to get into RE cheap.

Your 18, ambitions, and $15k ain't much, figure out how to get it its part of RE; than go for it jump.

As for management, don't worry about that now that comes later. You need to learn how to manage these yourself and make money first.

 

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[Metrix1234]

Can anyone give me insight on real estate license....

Are their different real estate licenses?
What are the benefits of having one?
Do any of you guys have them?

do you need one if you are going to do real estate (renting) in ca?

Im pretty sure the main purpose for a real estate license is to sell houses on commission (usually under a RE broker). Each state has their own particular laws and you would need to pass the test for the prospective state you want a license in. After two years with a RE license working as an agent, you can apply for a broker's license. You really don't need a RE license when dealing with your own properties interests i.e. renting your own properties.

 

[hatterasguy]

While I think the material is worth while and I would recommend taking the course you really don't want your RE license if your going to invest. It makes you easier to sue since you are held to different standards than a lay person, ie your a "professional".

I let mine expire.

 

[ReInvestor]

You are going to need to educate yourself about the rental market first. The most effective utilization of your cash will be to leverage it through other means of financing to acquire real estate. This does not necessarily mean go to a bank and get a loan. There are creative ways of financing real estate that will allow you to exceed the standard 5-6 property maximum that the banks will impose on you. (owner financing, subject-to, etc)

First things first: Determine what type of property interests you most. You can invest in sigle families, multi-family, commercial, land, etc. If you are looking to get in for monthly cashflow, you'll want to hone in on either single or multi families to start. My suggestion would be either single family, or multi-family up to 4 units (4 apartments in one building.) I have known investors who bought 35+ unit apartment buildings on their first deal and done very well, but the downside is that large real estate like this is not as readily liquidatable, meaning if you decide you no longer want to be a landlord, it can take much longer to sell a larger building because there are just less buyers. Now the advantages of say a duplex, triplex, or four unit over a single family house. Consider this scenario: You own a single family house that you rent out for $1200/ month. You have one tenant, and they decide to move out, or worse, lose their job and stop paying rent. You just lost 100% of your monthly income on that property. Now let's consider a four unit apartment building. You have four tenants who each pay $1000/ month. One of them loses their job and stops paying rent. You just lost 25% of your monthly income as opposed to 100% in a single family house. In other words, you are hedging your risk against loss of rental income when you buy more units in one bulding. Another benefit to owning a four unit apartment building is that you only have 1 lawn to mow and 1 roof to fix; ie the overall maintence expenses will be relatively less on a multi family apartment building versus a single family house.

If you are considering investing in rentals, you are going to need to get familiar with how to analyze the value of rental property. This is critical to your future success as a real estate investor. This step can make or break you. When looking at properties to buy, due dilligence will be the most important step. This is what appraisers call "cashflow analysis." It is essentially income versus expenses. The income side of this is your rental income from your tenants. In apartment buildings you can also generate income from coin operated washer machines, vending machines, renting out covered parking, extra storage, etc. On the expense side of things you have your PITI (principle mortgage payment, interest payment, taxes, insurance,) maintenance (usually 8%-10% of your gross rental income,) vacancies (empty apartments; check local vacancy rates from a property manager for an accurate figure,) marketing costs (to attract tenants,) and sometimes utilities. All of these things will need to be weighed in order for you to make a decision wether or not to buy a property. Determine what your investment criteria is, figure out how much you would like to make for monthly cashflow, what your exit strategy is (when you want to sell,) how much equity you would like when you buy (buying at a discount,) and then stick to your guns. Remember that investing is a numbers game. Do not become emotionally attached to any one deal. If you want to be successful at real estate investing, you must be prepared to walk away from any and every deal that does not meet your criteria. Also, make sure YOU are the one making the desicion. DO NOT leave you desicion whether or not to buy up to a real estate agent or the seller of the property. Remember that agents are looking for commission on the sale and usually are not too concerned with how your investment will be performing in 1, 5, or 20 years. I always say trust but verify. Often times sellers will say just about anything to sell their properties. This can include understating expenses, inflating income figures, etc. Trust but verify.

Now I could start to talk about methods of finding discount properties, but that a whole 'nother subject in itself. So I'll just say, get educated. If you are serious about investing in real estate, you are going to need to educate yourself. Real estate can make you a millionaire, but you need to feed your mind with the right information.

Best of luck with your venture, feel free to shoot me a message if you have any questions (I saw that you live in Austin, let me know if you'd like to do lunch to talk real estate sometime, I have opportunities available that would be great for your situation.)


Best regards,

-Ben

 

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[Bozigian]

REInvestor,
Speed+

What if I get shot and die while I have the properties in my name and have no will?>

 

[Red]

Im pretty sure the main purpose for a real estate license is to sell houses on commission (usually under a RE broker). Each state has their own particular laws and you would need to pass the test for the prospective state you want a license in. After two years with a RE license working as an agent, you can apply for a broker's license. You really don't need a RE license when dealing with your own properties interests i.e. renting your own properties.

Make sure you look into the laws of your own state. Arizona differs from the advice laid out above, as I'm sure California does. Make sure you know your Federal and LOCAL laws regarding Fair Housing & protected classes (for example: in Tucson, sexual preference is a protected class, in Phoenix, it's not).


The main purpose for obtaining a real estate license is so you may legally profit off real estate transactions (residential, commercial, whatever). If you're collecting a portfolio of residential properties, why not set yourself up to make an additional 3-10% or so off the deal?

I'm working with a local investor/developer right now & my license & the knowledge I've gained by utilizing it has set me up to be in a position to lead the charge on this opportunity.

Is it always necessary to have your license to do what you want? No. Can it be a good resource for information/understanding & minimizing liability & facilitating your own endeavors? Sure. To each his own, but I would highly recommend obtaining your license in your state, even if solely for the purpose of education regarding the field you're thinking of entering.

 

[458]

The best way to enter the real estate investment business is through becoming a agent/broker. But dont take my word for it, thats just Jim Randel talking through me.

 

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