STOP Paying Rent: Live For Free

[G_Alexander]

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, @zen*******, @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

 

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[G_Alexander]

When you become a landlord, people rely on you. You have legal obligations. When a tenant's AC goes out in July in Phoenix, it's your responsibility to fix it. Do you have the financial nest egg to do so? It's great to show the up-side of a scenario, with all it's shiny, glittery goodness -but there is the flip side, the responsibility side & it's often never shown because it's not glamorous or even favorable. These are ALL things to take in to consideration when you decide if this is something you want to do.
This idea has great potential, I almost did it myself back in the day when I bought my first house. Then I realized I didn't want to be a landlord & I didn't want to deal with the headaches of tenants. It simply wasn't for me. I've found my way through other means. This thread is a great example of possibility, but it's presented in an incredibly slanted manner where only the upside is shown. Maybe it's just me, but I like seeing both sides of the coin before I jump in with both feet.

I should have mentioned (I have in other threads). I live in the building, but I don't manage anything. I don't have time to collect rents, unclog toilets and sinks or chase tenants. That is part of the 50% expenses I mentioned above (8% to property manager and lease up fees). I didn't want to bog people down with the details. They can read a real estate book or some of my other threads (or SteveO's / RealOG's / JScott's) for that.

The expense ratio I mentioned also covers insurance expenses (1.5% of gross) in case you have a fire, or a hazard scenario (trust me, all lenders require insurance).

I painted a "rosy picture", but doing anything for yourself in this world has inherent risk. Better to try it than to say "what if?". Some people need a rosy picture or they will only focus on the negatives as a concrete-wall-of-an-excuses to not take action.

You think I was an expert before I bought? Guess again. School of hard knocks is one of the best schools there is. Ready. Fire. Aim.

I haven't dealt with one tenant headache in the last two years of ownership. I pay someone $125 a month to do that for me and to keep my building full. You have to be able to detach yourself from the operations to focus on your other projects.

A bank and the FHA won't let you buy a bad property. They hold the most risk. They have stringent inspection guidelines. They qualify you.

I mentioned in Step 4 to be sure to keep reserves, because not all months are good months, and some months you will be cash negative. I also mentioned that this is purely my opinion and to invest at your own risk.

I've enjoyed not making one rent payment in the last 2 years, and in fact, having a money tree print dollar bills for me no matter what I do.

I've also helped two friends buy 3-flats in Chicago since I closed in November 2012. Neither of them had any real estate exeperience. Both are cash flowing. One got a job in real estate private equity from his great "story" he was able to tell in interviews.

I chose not to sit on the fence. If I lost everything tomorrow, no one could take away the lessons I have learned and the network I have built.

 

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[SteveO]

I'm not hating. I just think what he's doing is slow lane I edited it to gather feedback on what you think is an acceptable ROI.

A rental property with a government loan is a waste of time to me.

Not slowlane at all. I turned a 4 plex into 16 units and rolled this into 52 units within 3.5 years. You have to start somewhere and this is a great way. The leverage is an added bonus.

This kid is brilliant. He will go far. He is taking the appropriate steps now in his youth.

 

[G_Alexander]

Posted by pro:

"I don't like real estate for personal use as an entrepreneur. Keep liquid if you're smart enough to earn over 10% on your money. If you can't earn over 10% then you shouldn't be an entrepreneur as many others can do it.
Owning random property even with a PM can distract you from the big picture. Be honest and this is more of a slow lane move.

To do REI fast lane you need to create an actual business around REI.

Any sector can be done slowlane or fastlane. eg Licensing property management technology = fastlane. Buying 1 property = slowlane.

I'm telling you like it is. Everyone likes to pat themselves on the back and think buying random investments is smart.

Also paying rent frees me time: hotel managers serve my needs. I never have to clean or cook. If I can't earn more than a cook or cleaner, I might as well give up as an entrepreneur."

What works for one doesn't work for all. Hotels might fit your style. I don't know of many members here who have reached out asking for information on hotel living, but feel free to post your own guide on it (sarcasm...in case you missed it).

I am not pitching the real estate Fastlane in this particular thread. I am simply showing people an avenue to pursue their chosen Fastlane with an ease of transition from the slow-lane. Call this strategy a "turn signal".

Fastlane is syndicating a $100mm equity portfolio of broken notes / multi-units with none of your own cash, and recapitalizing into a full ownership position.

Fastlane is writing a best-selling RE investing book.

Fastlane is scaling a fully sub-contracted valet-waste business that services apartment buildings (to increase their NOI) and exiting to the largest waste management company in the U.S. after three years for $250mm

But these are other methods we will save for another day, and another thread.

Not everyone here shares your 'fortunate' circumstances, but soon, some smart ones will have increased cash flow and equity coming in, no matter the road they choose.

Thanks for taking us off topic.

 

[SteveO]

What @G_Alexander has done here is started the process. He has a passion for real estate and plans big things. Most people don't just jump into large apartment deals from the start. There is a lot of knowledge and experience that comes from starting small.

A quick story about this kid (you can straighten me out if I misrepresent any details).

A number of years ago, this 18 year old kid gets in contact with me. He asks some questions and shares some stories about a big apartment investor in Chicago that he had recently met up with.

At one point he tells me that he is coming to Phoenix and would like to meet up. Well, RealOG, some of my family members and I happened to be having a get together at my house and invited him along. We had a very small party with pizza and ultimate fighting on ppv. He was 18 or so and had his dad drop him off and pick him up.

This is not something that you see from the typical kid that wants to go out and party or hang with friends. Instead, he was making efforts to talk to all the real estate doers that he could find.

Oh yeah, @biophase was there also. How could I leave him out of the story? Duh...

 

[biophase]

The example in the first post used simple numbers to illustrate basic valuation.

If I were more specific (like using current actuals from my first 3-flat deal) the numbers would be:
$1,000 - Garden Unit rent
$550 - My Unit (market is $1,000 but I only receive $550 because I have a roommate and live in the other half of this unit)
$1,350 - Upstairs unit w/parking
$100 - Other parking space
$40 - Monthly Laundry income
$3,040 Total Monthly Gross

Manager = -$117 a month
Mortgage/taxes/insurance/interest = -$1,570 (although MIP for FHA is about to get slashed big time, which is great news)
Misc expenses = $-50 a month

Cash flow = $1,303

So here, it is much better than just free. It's possible to do better (like in my case) than the numbers I posted in the first example (which was just illustrative to help people understand), and it's possible to do worse. This method works 10x better for you than handing your rent money away to someone else each month though.

Another way you can think of this, or the way I do it is. You get 3 different properties and they all cashflow $2000/mo combined. Then you go rent another property for $2000/mo and you live for free! Or you rent a place for $800/mo and pocket the $1200/mo income.

The main premise is to plan for your future.

I have a friend looking for a house now. He wants a nice $200k house. I'm telling him to get a $120k house that can rent for $900 a month. Two years later, he can rent that house out and get his $200k house then. So in 2 years, he will have 2 homes vs. 1 home. Repeat for 10 years and he will be sitting pretty. Add this to your fastlane business and you should be retired in 10 years.

 

[G_Alexander]

I'm not hating. I just think what he's doing is slow lane I edited it to gather feedback on what you think is an acceptable ROI.
A rental property with a government loan is a waste of time to me.

We don't care about YOU. We care about everyone. When you start thinking that way, you'll be off to your own Fastlane.

And if it will get you out of here...my ROI (stupid metric to measure an investment anyway) on my first 3-flat was 36.76% or $136,000k in 5 months. Slow lane enough for you?

 

[G_Alexander]

Let me get this straight because I think you clarified something.....this is only good for doing once, because you can only have one FHA loan, correct? Its not fastlane, but that doesnt matter because, in my mind, fastlane is also all about stacking the deck in your favor. Paying cheap or zero rent would definately qualify here. Also, what would one do if they wanted to do this more than once? Would this mean that any properties financed after the FHA loan would then need to be a more conventional loan requiring a larger down payment? I would think that it wouldn't be too hard to come up with that larger down payment if someone was living rent free and possibly bringing in an income.

Hey @biggeemac,

In short, and without getting into gray areas, yes. The program is there to let you use as little equity as possible to get into your first property.

That being said...if you have one FHA property and want to buy a second FHA property, there are a few ways you can pickup another property with only 3.5% down again. You just need a good argument:

• Moving to another state (easy to get the green light)
  
• Moving significantly closer to work (think along the lines of reducing your commute from 45 minutes to 5 minutes, easier to do in big cities and if you buy a little further from work the first time)
• Increase or change in family size (i.e. got married, had kids and family size grew, parents needed to move in etc.)
• Going from Multi-Unit to single family (can say "I didn't like having neighbors above and below")

...you get the picture. Learn to love getting creative!

I will also say that many people don't realize you can put down 5% conventional on a single family home (owner-occupant) and you won't have to pay mortgage insurance.

Don't forget to add some roommates to the unit you live in if possible, and to charge them fair market rents for their % of the apartment!

I have never worked in the mortgage industry, but as soon as you start making calls and find a couple good guys / gals to walk you through this stuff...you too will become an expert compared to most.

 

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[Michael Burgess]

I just wanted to bring a bit of life back to this thread - I haven't been on the forums for a while, but this thread was instrumental in developing my interest in real estate. Quite happy to say...

I just bought my first 4-plex!




----
It's in a small town in SW Ontario, and I'll be financing it with a low down payment and using CMHC insurance. I bought the 4plex for $152,500, and close on it at the end of January 2019. It is currently rented to stable tenants that have all been there for over a year, and is producing $2,650 / month in revenue. 3 of the tenants pay their own utilities, and the larger unit has utilities included.

The whole property (inside and out) is run down, and needs work - but I own a small landscaping company and plan to rebuild the outside landscape, and renovate the inside as tenants move out. I'll update the kitchens, bathrooms, flooring, paint, etc., and increase rents appropriately.

I plan to owner-occupy it, refinance it when I've built up some equity and forced appreciation (via renovations), take the refi money out, and continue investing in cashflowing rentals in the same area.

Also, if anyone's curious - I did a "split offer", where I actually sent two offers in to buy it; one unconditional a fair bit lower than asking price (it was on the market), and one at their asking price with a VTB. They weren't interested in the VTB, but signed back on my cash offer halfway - and I went for it!

Now I have to figure out financing, but with two months left until close, I'm confident I can make this happen and will own my first property. Stoked! Will keep things updated if people are interested in this. Definitely hope others are doing some house hacking / real estate investing out there

 

[G_Alexander]

I'm scaling an ecommerce company and investing in other companies that have significant growth.
I am trying to figure out if this concept can be made fastlane. I'm not just stirring things up or an internet debate. I used to think like OP and that used to slow me down.
Right now I'm bringing on an accounting and legal team team to do a lot of my time consuming work, so I can focus on fixing big problems, business development, and hiring.
To be honest, I'm looking to do something more useful than just sell widgets. So, while things are good, I'm student mode right now deciding what to do next.

All I got from this was "Blah blah blah business business business. Laywer,accountant, development, hiring".....non-sophisticated jargon. No real content. Doesn't sound like you're doing much.

Hiring accounts and lawyers in no way represents or relates to business success. You sound like a major poser. You sound like a noob.

PS. Selling widgets is VERY sexy. Boring = money. Just ask @JackEdwards ...... in the meantime, keep working on that "next great Facebook" idea you got. You might even think of the next Candy Crush app and really add some value to people's lives!

EDIT: PS. Stop going back and editing your posts 100 times, your quote is stuck in my response. Try thinking clearly and slowing down, both in this thread and in life. Maybe you should just keep your mouth shut a while and hopefully some wisdom will make it between those clogged ears of yours.

 

[IceCreamKid]

Funny thing is...I'm not selling anything at the end of my posts. I am simply giving back to the people that help me daily.

Even though you're not selling anything, I would actually offer to pay you for your expertise and help because it would still end up FAR cheaper than spending years making mistakes on my own and trying to put the puzzle pieces together. It blows my mind how many people don't want to give up 10% of their company even though it could potentially cause them to make far more money in a shorter period of time.

Speeding up failure and execution by having someone further along the road to help you is huge. There simply isn't enough time to master everything by yourself. Nobody is Superman.

Epic thread btw...should be tagged gold IMO. I like real estate.

If real estate is considered unsexy then by golly I want to be the unsexiest man alive.

 

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[Windsurfer]

This is a great thread. I sure wish I had started out this way. I would be living on an island now enjoying life. I own a bunch of duplexes and triplexes and wrote a book on how to do exactly what is in this thread. It is too big to upload here, but if you go to Amazon, you can buy it for $0.99. If you don't want to pay, feel free to PM me and I will send you the book for free (assuming you don't mind giving me your email). I can also send you my lease, ads I use, a spreadsheet to figure out if what you have is a good deal etc.

http://www.amazon.com/dp/B00E1GWKAC/?tag=tff-amazonparser-20

I am NOT trying to upsell anyone here either, so don't worry about that. I just REALLY believe in this idea. I wrote the book because my office co-workers saw me making some money at this and kept asking me questions. Thanks for starting it @G_Alexander !

 

[G_Alexander]

Yes, I'm being hard on the OP.

I would just like to see balance in a post like this, that's all I'm saying. YES, tell people how they can make money & live for free, YES, explain the success you've had and help open minds to it & YES, I love seeing success stories. But I would like to see a balance.

So you would rather start seeing members post things like....

"Starting a B2B distribution company in a stable and tired niche can be lucrative....but you might not want to start a distribution company, because you might have to make hundreds of phone calls, you might lose a major contract or all your supplier contracts, you might get sued if someone gets hurt using your product, you will have to go through tons of paperwork and incorporation and tax issues to protect yourself and THEN you still have to maintain and the books and finances and manage your cash flows. And none of it might work out at all! You could lose everything!"

....doesn't sound so good, does it? Sounds like the classic, pessimistic mindset to me. Focusing in on all the negative "what if's?".

My other threads have balance. Real estate investment books have balance. Using brokers with high reviews will provide you with balance (they have already provided value to other people, so you can feel good knowing they will help you).

@SteveO said it best already. Putting a roof over someone's head and making necessary repairs / treating your tenants with respect is what keeps them around. Real estate is a business. You still need to provide value.

While I do see where you're coming from...This is the FASTLANE forum, not handouts central. If someone here is motivated, they can take these steps and be on their way. Clarity comes from action. @IceCreamKid said it in another thread:

Once upon a time I had a crush on this pretty girl. I had her number and for days I hesitated to call her. By golly, she was so pretty I just had to do it. But ahh what would she think? Would she be annoyed? Would she be too busy? Would she wonder why I'm calling?

I called her. She was so happy to hear from me. All of those previous thoughts of mine faded away in 10 seconds.

I'm not here to hold your hand each step you take. But if you PM me I will be more than happy to help you if you need further guidance (I'm already doing this for others).

Funny thing is...I'm not selling anything at the end of my posts. I am simply giving back to the people that help me daily.

 

[Jamesdoesmith]

I have been reading alot from investors and folks that have lived this. It is house hacking. Essentially what it is called. you can get the FHA loan that low and get the perks of a live in and you only have to "live in" for a year at a time I believe. After that you take yourself out of one of the units and rent it out right at 100% occupancy. Then you can rinse lather repeat till you get to the max of 4 loans. Then take the the first two properties you have and out right sell them (having appreciation helping you out) and pay off your loans on your next two properties making them cash printers. Do this near somewhere where people NEED to live (downtown, colleges, hospitals) and you could have a mega buy hold portfolio churning out dollars monthly. You can get creative with how you finance it. Banks aren't the only folks with money, wet money, hard money, seller finance, rent to own. There are tons of ways to skins this cat. And make a killing in the process.


This post brought to you by the burning and selfish desire to move out of my parents house.

 

[AroundTheWorld]

I find it interesting that people are being so hard on the OP in this thread.

Yes, one must look at all angles when considering a deal.
Yes, one must plan for major repairs.
Yes, one must research the local market.

But... let me ask you... has Likwid24 disclosed every single thing he has learned on his journey?
Did bensonj disclose all of her knowledge and lessons on her gold thread?
Do you think Zen and Vig and all the other people here have shared all that they know?
MJ has written an entire book and do you think all of his knowledge is there?

OF COURSE NOT.
We will all learn from OUR OWN JOURNEYS. Listening to the experience of other's will only get you so far.
EACH and EVERY one of us is responsible for our own knowledge and our own thought processes.
To take the information contained in any one thread on these forums and consider it the end all, be all is absurd.

Why are people treating this thread as if it needs to be the end all be all of real estate before it is something that is of value? Maybe because it is real estate and real estate is scary? Interesting.

 

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[MJ DeMarco]

Hahaha, this is a slowlane way of coping, I'm driving the fastlane bruh.

I started this place 7+ years ago... and let me just say, this is gotta be the one of the biggest butthole comments someone has ever made around here. And even more sad, it's directed at someone who has accomplished more in his twenties than most people do their entire lives. SMH.

I've noticed a couple of posts here stating that this is not fastlane and a waste of time.

Obviously from the incredibly misguided -- we get a lot of those around here -- ya know, the types who think they can learn code in 4 weeks, and 4 months later they got the next hot social media property valued at $1 billion. Fastlane Bruh!

 

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[Red]

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

Every market is different & not all markets support this plan of action. While I applaud the "take action" mentality, what seems easy for you (a seasoned veteran) looks overwhelming to a newbie. There are also things that you know, being experienced, that you take for granted as an assumed variable that rookies will not factor in & have the potential to cause nightmares.

When you become a landlord, people rely on you. You have legal obligations. When a tenant's AC goes out in July in Phoenix, it's your responsibility to fix it. Do you have the financial nest egg to do so? It's great to show the up-side of a scenario, with all it's shiny, glittery goodness -but there is the flip side, the responsibility side & it's often never shown because it's not glamorous or even favorable. These are ALL things to take in to consideration when you decide if this is something you want to do.

This idea has great potential, I almost did it myself back in the day when I bought my first house. Then I realized I didn't want to be a landlord & I didn't want to deal with the headaches of tenants. It simply wasn't for me. I've found my way through other means. This thread is a great example of possibility, but it's presented in an incredibly slanted manner where only the upside is shown. Maybe it's just me, but I like seeing both sides of the coin before I jump in with both feet.

 

[RHL]

Everyone paying rent in the USA or other places where this math/system is legal, should have acted on this by now. This post was made last April. Nobody on FLF should be paying rent anymore. People keep asking where all the actionable content is, but then stuff is laid out, literally every single step is here shown to you and justified, and nothing is done.

 

[DeletedUser394]

Hahaha, this is a slowlane way of coping, I'm driving the fastlane bruh.

You're an idiot.

What big things have you done then? Oh that's right, nothing. A week ago you were crying about your parents forcing you to go to college, and you make money by working part time at some shit job.

Do you own property of any kind?

@G_Alexander is providing real value, presented into actionable steps that anyone could take. HE"S LIVING IT. The hell are you doing? Nothing. Who the hell are you? Nobody.

He didn't have to share his process with us.

Keep 'driving the fastlane bruh'. Joining a forum does not mean you're in the fastlane. Living in your parents basement does not mean you're in the fastlane. Working a part time job as your sole source of income is not the fastlane. Posting endless quasi-advice in other threads has nothing to do with the fastlane.

Keep stroking it buddy, because you aren't getting anywhere fast, especially if you think what he accomplished is the mark of a slowlaner.

 

[Michael Burgess]

Congrats!! You, my friend, are the reason I wrote this thread. You are on your way to the next level.

Huge fist bump for being an action taker

I just wanted to breathe a bit of life back into this thread, and thank @G_Alexander again for posting this thread. I read it first a couple years ago, and it definitely planted a seed that has taken a long time to germinate... but it FINALLY sprouted!

When I posted last, I got my first 4plex under contract - but went in with an unconditional offer, and next to no money. Needless, to say, there was a *lot* of challenges putting this deal together as a total rookie, but it's closed! I had a couple sleepless nights, some awkward phone calls to make, and a lot of convincing myself I could make it happen. Now that it's done though, I can really see that all of the barriers to owning this property were in my mind, and you can overcome obstacles if you're fully committed.

Here's some details about the building:

4 Unit, yellow brick building built around 1880, in structurally sound shape but outdated and in need of remodeling. Electrical systems are updated, roof and foundation look good, and each unit is separately metered for electricity. Located in Chatham, Ontario.

Purchase price was $156,000. Currently getting wrecked at 10% APR on a private first mortgage, which costs me $1293 / month - but it's still a manageable number, and is a short term solution until I renovate the building and refinance it through a conventional lender. Taxes are about $1,650 / year. Insurance is currently high at $300 / month (including personal coverage), but have new quotes for about $120 / month. Before I took possession, it was generating $2,650 month (and tenants are paying their own hydro). Now that I have the lower unit vacant to renovate, it's grossing $1,750 / month and gives me somewhere to live for basically free.

I figure that over the course of the next year or two, I will be able to remodel the entire home and fix the landscaping. If I spend a total of ~$45,000 on material and subcontractors (I think this number is quite high, but I would like to get this property in fantastic shape), I could see the market value being somewhere around $350,000 - that would be about the 1% rule with updated rents, and is supported by comparable properties in the community.

Either way - this project is exciting as hell for me, and I've got a ton of work to do. I'm trying to get my hands dirty here while also running my contracting business full time, and I just bought a farm property

Thank you Fastlane brothers and sisters. Keep pushing towards your big goals, work hard, ask for help when you need it, be a good person, and great things can happen.

Stoked!

 

[Michael Burgess]

Bump on this thread!



I sold my 4 unit building (see a page back for the story of buying it), and here's what I cleared after selling it - and this is AFTER I put a 2nd mortgage on it for another $30K a few months back, which I got to keep in my pocket. Bought for $156K, sold for $225K, minimal work in management or improvements.

Real estate has been the first business model I've worked with that's really given me a strong sense of traction, and has helped me to meaningfully change my life in a big way.

I turned this 4 unit apartment building (closed on it just over a year ago) into another apartment building, a farm property, a personal home in a great city, and more liquid cash then I've ever had before.

Big thanks to everyone who's started this thread and contributed to it!

 

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[DeletedUser2]

A rental property with a government loan is a waste of time to me.

SO, where is your thread outlining what you are doing that is so hyper efficient and effective with your time, and your resources? what are YOU doing that is kicking butt, and making action takers look small an insignificant?

what are YOU doing?

just curious, because you seem to know so much...

wondering what your returns are, and what your doing to scale...?

Z

 

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[Envision]

Got the house, I can now live for free and actually may make a bit of profit. Will do a full write up in this section when I get the time.

Thank you for inspiring the idea amongst others.

 

[Vegvisir]

Would like to give a big shoutout to @G_Alexander for giving me the steps/inspiration to get my first investment property under my belt. I got a very good deal on a duplex in a good part of town for only 100,500 dollars that has two units that will rent for 850 each(1700 total). My mortgage is only about 700 a month so this property cash flows very well. It does need some work but I budgeted that into the purchase price. For those of you out there thinking about taking the dive, DO IT. I now can live rent free or pay off my mortgage in about 4.5-5 years paying what i was in rent on my side plus the other units income putting it all toward the mortgage!

 

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[1milclub]

Fastlane brothers and sisters

Before I read any further, you deserve a standing ovation just for the address. The only historically known incident of using this address is by Swami Vivekananda on 9/11/1893 when he began - "Sisters and brothers of America!". At these words, Vivekananda received a two-minute standing ovation from the crowd of seven thousand at the Parliament of the World's Religions .

(Swami Vivekananda was influential in making the heart change of John D. Rockefeller. JDR was very insecure and miser, but after meeting with Swami he became the largest philanthropist.)

You may be on the path to change someone's life here ... kudos!

 

[Red]

Yes, I'm being hard on the OP.

When I see something like this posted, especially the part where he's "here to show you the light should you so accept to see it" it smacks of MLM/self-appointed-guru events (you know the ones, they advertise them on the radio & you enter an even where there's music to amp you up & a guy dressed like a preacher comes out & whips everyone into an emotional frenzy) where they teach you to "use other people's money to get wealthy!" & how you can be the "new rich"... I'm not saying the OP is this guy, I'm saying this is how it comes across to me.

The problem that I have with this type of thinking is it's all about getting the money. Do this, this & this & you can have ALL THIS! And while that may be true, they conveniently leave out the responsibility side of things. The laws you need to study to understand your obligations & legal duties as a landlord (even if someone else is managing it) are never mentioned. I'm not asking for every little detail on maintaining proper insurance or making sure your property is properly registered with the county assessors office -you guys are right, that is part of the responsibility of the actual "do-er" to make sure they're complaint with local laws & such. I'm just asking for balance in the presentation because, just like many things in life, just because you CAN do something like this, doesn't necessarily mean you should.

The reason I'm hard on these types of posts is because I have dealt with the not-so-glamorous aftermath of these types of "investor" guys for the past 5-6 years after our Phoenix real estate market went in the shitter. I get calls from people (usually friends of mine, I wasn't their broker) who's AC goes out in August & they can't find the landlord (his number is disconnected) & they have NO MEANS of getting repairs done. I look up the home & it's actually in foreclosure. What chance do you think they have of getting their AC fixed let alone their deposits back so that they can find a new home? Exactly. Or the landlord who brings out a guy to repair a water heater & the guy (who is no licensed, bonded or insured, btw) burns the house down from sweating pipe. The landlord didn't have proper insurance on the home & the tenants lost everything (yes, they had some responsibility here as well to maintain insurance). I know I'm layout out worst case scenarios here & they're rare, but they happen. And they affect peoples lives, sometimes in a very profound way.

I would just like to see balance in a post like this, that's all I'm saying. YES, tell people how they can make money & live for free, YES, explain the success you've had and help open minds to it & YES, I love seeing success stories. But I would like to see a balance. I would like to see the "You can make a ton of money this way & live for free" & ALSO make sure your tenants are taken care of properly. Aren't we all about providing value? And a good experience for our customers? Maybe some tips of finding quality property management (if you don't want to do it yourself) & the like. That's all I'm saying. It's great to see the roses, but people need to be made aware of the thorns so they can avoid them & everyone has a good experience.

 

[ck4750]

Haters gonna hate.

Living rent free while being able to pursue anything you choose? Sounds super slow lane to me......

Thanks again for the post.

 

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[G_Alexander]

i'm a little confused by the original post. If you have a 3 unit generating $1000/unit = $3000 x (.5) = $1500 net profit, where's the part where you get "free living with no mortgage" if you've rented out all 3 units? Where do you live?

The example in the first post used simple numbers to illustrate basic valuation.

If I were more specific (like using current actuals from my first 3-flat deal) the numbers would be:
$1,000 - Garden Unit rent
$550 - My Unit (market is $1,000 but I only receive $550 because I have a roommate and live in the other half of this unit)
$1,350 - Upstairs unit w/parking
$100 - Other parking space
$40 - Monthly Laundry income
$3,040 Total Monthly Gross

Manager = -$117 a month
Mortgage/taxes/insurance/interest = -$1,570 (although MIP for FHA is about to get slashed big time, which is great news)
Misc expenses = $-50 a month

Cash flow = $1,303

So here, it is much better than just free. It's possible to do better (like in my case) than the numbers I posted in the first example (which was just illustrative to help people understand), and it's possible to do worse. This method works 10x better for you than handing your rent money away to someone else each month though.

 

[GlobalWealth]

Add this to your fastlane business and you should be retired in 10 years.

As much as I appreciate the fastlane concept, there is nothing wrong with strategies like this to increase your cashflow. If you can buy properties to give you the ability to live rent free, I don't see that as a wasted effort.

I've noticed a couple of posts here stating that this is not fastlane and a waste of time. but who here doesn't live indoors? who here couldn't benefit from additional monthly cashflow? who here couldn't benefit from having additional assets?

 

[DeletedUser2]

although cash flow has severely addictive qualities

more than you know.
Z