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GOLD! STOP Paying Rent: Live For Free

Discussion in 'Real Estate Investing' started by G_Alexander, Apr 21, 2014.

  1. G_Alexander
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    G_Alexander Does it Cash Flow? Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    @UnrealCreative - To do the deal through FHA and preserve your equity capital (i.e. have a lower down payment), you will need to live in the property for 1 year. Then you can move out after that. So you are not "stuck" long term.

    People sometimes completely circumvent this by putting the property's bills in their name and never actually 'moving in'. I wouldn't recommend that... but it does happen.

    To answer your question directly:
    You can either hire a property manager or manage from afar.

    I manage from 'afar'. I live in the same city as my 3-flat, and have no one else in charge of it. Even still... I only visit the property 1 or 2 times per year to empty quarters out of the laundry machine. I am thinking about making laundry free and not visiting at all anymore.

    Other than that, all I do is extend the leases each year. If someone moves out, I have a real estate brokerage firm list the property and lease it for me. If something breaks, I text a local maintenance guy and he goes and fixes it and sends me a picture after and a bill. My lawn/snow care company goes bi-weekly and cleans the property up and cuts grass or shovels.

    Super easy. Very hands off in my personal experience.
     
  2. G_Alexander
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    G_Alexander Does it Cash Flow? Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    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 :fistbump:
     
  3. Zenoviy Kovtun
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    Zenoviy Kovtun Contributor

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    @G_Alexander what are you thoughts on interest rates at the moment / the market as a whole? I have spoken with many people who are very concerned with the coming new year etc. And are holding off buying property. Many think we are at the top or close to the top of the market. Is it just a matter of underwriting the property to include these concerns or would it be better to potentially save more capital and remain liquid in anticipation of changes to come? Unfortunately the risk of not taking action at all then exists.
     
  4. G_Alexander
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    G_Alexander Does it Cash Flow? Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    @Zenoviy Kovtun Don't worry about timing the market. You will just get stuck on the sidelines doing nothing.

    Just ALWAYS focus on the cash flow. If interest rates went to 10% tomorrow, but your property still cash-flowed $1,000 a month - would you pass the deal up? I would hope not.

    Rates and prices will always fluctuate. The golden days (2010-2014) are gone. If you want good yields (high cash flow) stick to the up-and-coming hipster areas. Or, if you're SUPER ballsy, buy property in the ghetto. You will cash flow like a M'Fer (but I would NOT recommend that haha).
     
  5. Zenoviy Kovtun
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    Zenoviy Kovtun Contributor

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    Good insight. Appreciate the feedback! Have been focusing on the up and coming neighborhoods as mentioned, but in a city like Chicago, you know how over priced some of these assets can get. Have looked out for areas that are technically the ghetto but changing haha. As you mention, the cashflow is attractive and price is better but it comes with its own set of risks.
     
  6. Siddhartha
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    Siddhartha Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Extremely interesting thread; what's more interesting is that Nathan Latka seems to have copy-pasted this flow into his new book.

    For this process: since foreclosures are the main targets, how much time and investment money is usually needed to fix up a foreclosure to rentable standard? In my area, people have a knack for even ripping out the carpets on their way out.
     
  7. WJK
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    WJK Gold Contributor Speedway Pass

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    About FHA. That's a Federal loan program. If you do not live in a property that is financed through that program, it is fraud and the FBI can investigate. Be sure you keep your commitment.

    I've never had long distance investing work out for me. Stuff happens. I like being close enough to take care of things. And I've experienced the truism that people tend to cheat, especially when I'm too far away. Good for you IF you can make it work.
     
  8. G_Alexander
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    G_Alexander Does it Cash Flow? Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    @Siddhartha

    How close is his flow to mine? Does it seem like he plagiarized?
     
  9. Siddhartha
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    Siddhartha Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    I wouldn't say plagiarize, but it's about a kiss away; he doesn't specify to look at HUD housing/foreclosures but that's the only real difference.
     
  10. Raoul Duke
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    Raoul Duke Tallest Lannister Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass Summit Attendee

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    G_Alexander likes this.
  11. Michael Burgess
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    Michael Burgess Bronze Contributor Speedway Pass

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    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 :eek:

    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!
     

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  12. holmzee
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    holmzee Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    It's been four years since I first came across this thread when I was a broke college student. Now that I'm debt free, have 2 years of solid income and a good chunk of change to invest I'm looking into investing in my first multifamily property.

    House prices in the area where I am are exorbitantly expensive so I was thinking of moving to an area with a better real estate market. This isn't the only reason, I'm also not a fan of where I'm living at the moment.

    I would obviously need to find a new job in that new state so I can get approved for a loan.

    Does anyone have experience with moving to a new state, finding employment, AND getting approved for a loan in a short amount of time? Would I need 2 years of income at this new employer or as long as there isn't a huge employment gap it wouldn't matter?
     
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  13. Michael Burgess
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    Michael Burgess Bronze Contributor Speedway Pass

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    Take this FWIW, but in Canada I've had brokers tell me as long as you're "in the same line of work" eg. retail to retail, or construction to construction, they're willing to take a new job as a reliable form of income as long as the rest of your picture looks good. Find an investment-oriented mortgage broker and they'll be able to help you craft a good financing story!
     
  14. holmzee
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    holmzee Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I did some additional research on it as well and came to a similar conclusion. For now I'm going to start analyzing deals in my area and see how the numbers play out. Worse comes to worst I gain some valuable experience that I can translate to other areas if I do decide to move. Progress updates to come..
     
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  15. meridian_blue
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    meridian_blue Contributor I've Read UNSCRIPTED

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    Hi @G_Alexander, thank you for the post - it adds a ton of value.

    Quick question. Do you still recommend looking for multi-units through Hompath/HomeStep? I'm looking at buying in the major metro area I live in, and between these two programs they only have 10 properties listed in my area, all single-family. Also, any other tips for picking location? I know you mentioned looking for the upcoming "hipster" neighborhoods but in my research the prices all seem to reflect that its an open secret that these areas are up and coming.

    Thanks again for the thread!
     

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