Rental Property Investing
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Its only scary if you're uneducated on the subject.
And when they sell I'll buy their house and rent it. You're right, the days of RE going up are over. The boom days of buying a house and selling it a year later for a $50k profit are gone. But people will always need a place to live. The middle class is dead and will rent for the rest of their lives. I'd like to take that money.
You're looking at it all wrong. You want to turn them for cash now. I want to keep them for 20 years drawing monthly income from them. Its only rocky if you don't know what you're doing.
Thus why I am wanting to start a public REIT to leverage people with money but no access to cheap homes.
My $68,000 apartment generates $2500/mo in gross income.
I was surprised by the guy's comment too. I don't have a good answer for you but when you're talking with a guy who has personally built and managed thousands of units and currently pulls in (in my estimates - knowing of many of the properties he owns) $x,xxx,xxx per month, I trust the guy's judgment.
On a separate note, I also spoke recently with a local realtor who owns 8 single family rentals. All but one are paid for. He had some interesting insights on how he manages the units. He told me that, after interviewing tenants and doing a full credit/background check, he'll pick one and tell them something like this:
1. If you're a good tenant I'll be the best landlord you'll ever have. I won't raise rents as long as you pay on time and take care of the property.
2. In regards to repairs, you have two options - (a) I'll be available anytime, day or night, to fix your toilet/etc. and the rent will be $1,200/mo or (b) I'll purchase a full home warranty on the home and, when something happens, you call the warranty company, pay the $50 deductible and have it fixed and the rent will be $1,100/mo.
He told me that, without fail, the tenants all choose option (b). The home warranties will usually run, depending on how old the home is and the options you choose, from $300 - $600 per year. The nice thing is that you're completely free from maintenance at that point. If you're so inclined, fixing issues around the house may be worth it to you instead of the warranty option. I'm not so this idea is a technique I'll probably use with my rentals.
do you guys think it's a good time to buy in New York right now? (Manhattan)
I've always dreamed of a nice apartment in NYC but I can't afford paying a million...
I've always dreamed of a nice apartment in NYC but I can't afford paying a million...
Its pretty simple. Lets say you have 10 houses. And one day all the dishwashers go out on all the houses. So you call a maintenance man. He charges $100 just to show up (house call), times 10 houses thats $1000 just to show up, before he fixes anything. Assuming he works 1 hour (@ $100/hr) on each unit you're looking at another $1000. So $2k just to fix all your dish washers.
Now lets say you have a 10 unit apartment complex. The maintenance man makes 1 house call ($100) and spends the whole day fixing all your dishwashers at one location ($1000). So $1100 to fix your dishwashers.
If you have more than 10 units its in your best interest to just hire a full time maintenance man at $10-12/hr + reduced rent. Give all the other tenants his phone number. Now "maintenance" costs are pretty much built in. You take that maintenance cost, divide it over your units and make the tenants pay for it.
Anyone have experience with owning rentals in another state or a city far from where you live? My personal preference is to buy multi-family complexes but Vegas is a horrible market for this unless you want to buy in a war-zone. I'm thinking I'll either have to move or buy out-of-state. Buying out-of-state doesn't seem like a great idea from what I've been told unless you're a pretty big outfit...
I've been a landlord for 9 years to the same section 8 tenant. I had 3 single family rentals at one point but sold 2 and kept the third because the guy's been there for 9 years and has been guaranteed rent. I live across the country now, so it's a bit of a worry if he leaves.
I flipped a couple houses before the real estate boom and bust. At one point I made $47k from a townhouse in Maryland I flipped but lost on another house from hell. I'd replaced all the windows myself with a handyman, buying them for $120/each, wall to wall carpet, new outlets/lights/receptacles, and paint. When I pulled up the floor in a closet I found a toilet receptacle that was plugged with concrete and carpeted over. I chiseled out the concrete, ran a water line for a sink and added 0.5 baths to the main floor which was huge. I bought it for 60k from a coworker and sold it for $119k full price offer after remodeling. (within 30 days)
I bought a duplex and split it into 2 deeds(already had separate utilities/meters) after much effort(fireproof common wall) but didn't make as much as the other one I flipped even though they were much nicer, the market was already starting to sink just as I was wrapping it up.
When I lived in OH you could buy houses all day long for $30-50k that would rent for $550-$700/mo to section 8 tenants. I bought a foreclosure from the bank for $20k and used a credit card check to buy it, fixed it up and got a first mortgage for 40k, paid off the credit card and rented it for $450/mo ever since.
I think of houses as forced savings accounts that other people fill. It takes a lot of work and headaches, but my mom had 14 houses when I was in high school where I worked with her fixing them up. You can leverage money like nobody's business in RE, my mom would get money at closing to fix up the houses she bought, didn't have to part with a penny at closing, usually got 10k at closing to help get it rentable. She would target single women with enough kids to qualify for a 3bdrm, or older people with disabilities with subsidized housing vouchers. She sold them when she moved out of state and made a good 6 figures, in the second poorest county of OH....as a school teacher who bought up rentals for a few years.
In OH east of columbus, in a smaller town, the largest landlords(insurance agent, LLs, couple RE brokers and accountants in landlord association) in the city owned 100+ single family homes. The one guy had over 300 and he started buying houses that were 10k, renting them for $300/mo, then when he had 20+ he pooled them together (using paper value not what he could sell them for) and got a line of credit for 6 figures which allowed him to just start paying cash for houses quickly, pool them together and leverage them into another line of credit and kept going. He started as a slum lord but for the last 10 years he was just buying nicer houses and commercial buildings. Looking at the auditor website, he only has 2 pages of listings in his own name, but he had some 380+ units when I lived there 9+ years ago also has some in his kids name, wifes name, and LLCs. Coshocton County search for "lillibridge marvin" was his name.
Out here in Seattle though, much harder to buy investment properties because they cost 10x more and don't cashflow like the smaller shitty ones in small towns. But you get a lot more appreciation over time. My 20k house in OH will never be worth more than $50k(tax assessment value) but it cash flows twice the mortgage and didn't require shit to buy, even 20% down would have been 4k bucks had I not bought it outright. I did have to pay for 2 title searches, one when I bought it, the second required by the bank giving the first mortgage even though I'd just paid for one a month earlier.
I flipped a couple houses before the real estate boom and bust. At one point I made $47k from a townhouse in Maryland I flipped but lost on another house from hell. I'd replaced all the windows myself with a handyman, buying them for $120/each, wall to wall carpet, new outlets/lights/receptacles, and paint. When I pulled up the floor in a closet I found a toilet receptacle that was plugged with concrete and carpeted over. I chiseled out the concrete, ran a water line for a sink and added 0.5 baths to the main floor which was huge. I bought it for 60k from a coworker and sold it for $119k full price offer after remodeling. (within 30 days)
I bought a duplex and split it into 2 deeds(already had separate utilities/meters) after much effort(fireproof common wall) but didn't make as much as the other one I flipped even though they were much nicer, the market was already starting to sink just as I was wrapping it up.
When I lived in OH you could buy houses all day long for $30-50k that would rent for $550-$700/mo to section 8 tenants. I bought a foreclosure from the bank for $20k and used a credit card check to buy it, fixed it up and got a first mortgage for 40k, paid off the credit card and rented it for $450/mo ever since.
I think of houses as forced savings accounts that other people fill. It takes a lot of work and headaches, but my mom had 14 houses when I was in high school where I worked with her fixing them up. You can leverage money like nobody's business in RE, my mom would get money at closing to fix up the houses she bought, didn't have to part with a penny at closing, usually got 10k at closing to help get it rentable. She would target single women with enough kids to qualify for a 3bdrm, or older people with disabilities with subsidized housing vouchers. She sold them when she moved out of state and made a good 6 figures, in the second poorest county of OH....as a school teacher who bought up rentals for a few years.
In OH east of columbus, in a smaller town, the largest landlords(insurance agent, LLs, couple RE brokers and accountants in landlord association) in the city owned 100+ single family homes. The one guy had over 300 and he started buying houses that were 10k, renting them for $300/mo, then when he had 20+ he pooled them together (using paper value not what he could sell them for) and got a line of credit for 6 figures which allowed him to just start paying cash for houses quickly, pool them together and leverage them into another line of credit and kept going. He started as a slum lord but for the last 10 years he was just buying nicer houses and commercial buildings. Looking at the auditor website, he only has 2 pages of listings in his own name, but he had some 380+ units when I lived there 9+ years ago also has some in his kids name, wifes name, and LLCs. Coshocton County search for "lillibridge marvin" was his name.
Out here in Seattle though, much harder to buy investment properties because they cost 10x more and don't cashflow like the smaller shitty ones in small towns. But you get a lot more appreciation over time. My 20k house in OH will never be worth more than $50k(tax assessment value) but it cash flows twice the mortgage and didn't require shit to buy, even 20% down would have been 4k bucks had I not bought it outright. I did have to pay for 2 title searches, one when I bought it, the second required by the bank giving the first mortgage even though I'd just paid for one a month earlier.
Central Ohio is awesome for rentals, thus why I want to start buying more.
I'm open to receive any money if anyone wants
Just located a $24k duplex that will rent for $500/side.On a serious note though, Wayn33 and I are socking back cash to get the ball rolling on playing the rental cash game.
In OH at least they would have auctions for houses all the time by the owners, just as often as you'd see it listed by a RE agent, people would just have an auction, there were both absolute auctions(whatever it brings) and reserve auctions(seller sets a minimum).
My insurance agent's wife left him and got 60 houses which she auctioned off right away. Some were $10k multifamily, really bad shape but even a trailer rents for $300.
Once per month the sheriff sale listing for the next month of upcoming foreclosures would cover 2-4 pages in the newspaper, you could drive around to the addresses, snoop around, and every friday they'd auction them off at the courthouse steps.
I never got any that way(courthouse), the banks always sent a lawyer to buy it back for a lot more than it was worth. I got screamed at by one because I bid against him, he said he always will share what he's bidding up to before the auction. By bidding against him I reduced the liability of the people in default. But it was a cool house on an acre and worth the 25k I bid. If a house is worth 20k, and the bank loans 30k, if the people stop paying, the bank will buy it at sheriff sale for $30k+, put it on the market for $20k, and the people who lost it are on the hook for the difference between 30k, and whatever it sells for, 20k or less, so at least 10k plus legal fees. They usually file bankruptcy at that point. The bank writes it down as a loss.
If you do a realtor.com search for counties 43701 and 43812 for 50k or less you'd be amazed at the houses available. Section 8 in both those counties pays around $525-$550/mo for a 3bdrm, $450 for a 2 bdrm. Lots of poor people with shitty credit needing housing as well. They (subsidized housing) do a yearly inspection that requires no chipping paint, working windows/locks/smoke alarms in each bedroom, etc but it's been painless.
You wouldn't believe some of the houses I've seen for 7k, even a 4bdrm for $2500 in Zanesville lol. The banks will drop prices over time until it sells. The one I bought for $20k was originally listed at $34,900, I waited until it dropped several times to $24,9k and I offered them $15k. They countered 23, I at 16, them 22, me 17, them 22, me 18, until they countered at $20k and I accepted it.
You can be far more aggressive when dealing with the bank, they want it gone, the houses usually have damage (vandalism, kicked in walls, plugged toilets/sinks, etc) and they aren't in "move-in" condition by any means. The bank has to insure it, and in city limits usually have to mow the yard and maintain it. If you low-ball a homeowner who's selling they're far more likely not to even respond with counter offers. You always start low with the bank.
@schockergd Yeah I was east of Columbus zanesville/newark-coshocton and got my RE license from Hondros college in NE columbus. Great place to start out for sure. Cheaper than buying a car and eventually it's paid off, but in between you can leverage shit based off paper values and a solid credit history/income history. But each time you rent one out you can boost your gross income. In Coshocton, the bank I used said they'd give me loans for anything 50k or less where I had 20% down all day long. My mom's credit was much better and they gave her construction loans wrapped into it and she'd get money at closings.
You & I went to the same place........as did 99% of real estate agents in Central Ohio.
I work & Sell in Circleville, but have worked in all the surrounding counties (Franklin, Fairfield, Pickaway, even Delaware & Morrow). I have been working with banks & Foreclosure properties for over 6 years now and have done just about everything imaginable, from being the guy the bank sends to evict a person, to the guy helping the homeowner stay in the house & screw the bank.
It's fun, I just wish I had more money (Which I'm working on right now).
Most of the small , local banks are now requiring 30% down which is what puts me in a bind. They also will no longer pay for repairs on the property, so ideally , you need to purchase for cash & then refinance the property, that way you get your purchase + rehab costs back, and in many cases more.
A guy on biggerpockets.com wrote a book ([ame="http://www.amazon.com/1-Minute-Rental-Property-Riches/dp/1430308060"]here[/ame]) about RE investing, it's one of the best books out there, and he owns 25 to 50 rentals in Chillicothe.
Anyone can do well IF you build a system, and learn the ropes. It can be fun and extremely rewarding, or it can be disastrous.
I dont know how exactly bankruptcy law works half across the globe, but they want the money owed to them. To you, it doesnt matter whether youve just lost 10k or someone still technically owes it to you but will never pay. To a bank, it matters. They can invest a multiple of what theyre owed in other, much more lucrative, ventures.
Right but the original comment was that a 10 unit complex was just as easy to manage as 1 house, not 10 houses.
The point being that you have 10 renters calling you all the time vs 1 renter. If it's just you managing the property then no way it's ever "just as easy".
Obviously we all agree that it's easiest to get to the value position of having enough rental props to warrant a full time maintenance-man or company handling everything.
I could handle doing small repairs on a fixer-upper but fuck having a bunch of a-holes constantly calling me every time their garbage disposal breaker kicks. I've done the landlord thing and it sucks.
I have definitely been kicking around the idea of buying rental props and if I do, management will be built in to the equation.
@schockergd
Nice, it's fun and a great way to build passive income. Plus I love RE, fixing up stuff, finding cool stuff, etc. seeing stuff transform. Wonders of new drywall to cover ugly shit, etc.
If you ever look at farms with outbuildings, some are worth a lot(east half of OH, KY, western PA). I used to dismantle old barns/log cabins out in Amish country OH and some of the woods are basically extinct. Wormy chestnut and pre-blight non-wormy(rarer) is the most valuable, genuine heart-pine second most valuable, some buildings had a few pieces, others had the entire siding/floors/beams made from it. Sometimes you'd find walnut, cherry, etc used as floor boards, just giant wide planks (some 40" wide) worth thousands to the right people. Some of the old historical landmarks require old wood for repairs, "Monticello" and others in Virginia use it. I also had brokers hit me up looking to fill orders for rich country clubs and shit in new england that make authentic old shit and pay $20/ft for chestnut. The old hand hewn beams sold as mantles, or you'd cut the top inch off to make faux beams wrapped around cheap wood with the axe marks(patina) showing, and cut the inner core into wide plank flooring. I knew a couple guys with woodmizer mills, the hardest part was removing all the metal before cutting it up. Some of the really nasty shit would just be sold as paneling or architectural pieces.
Here's the first old barn (given to me free) I took down piece by piece with a sawzall and generator, I'm standing in the peak of the roof http://www.flickr.com/photos/etcite/542638991/in/set-72157601837295976 After gutting it I pulled the frame over with a come-along, chains, and an old dodge dart hatchback getting a running start. Disassembled the carcass, burned anything too rotted to use, denailed it at a station with various tools, and banded it up.
Here's some wormy chestnut used as siding on a barn: Wide chestnut | Flickr - Photo Sharing! That guy found me by word of mouth as I was taking down my first barn, everyone in town thought I was nuts, he said he heard of me and someone else taking down barns had been asking him to sell his barns. I ended up paying him $5k for the barn/buildings including his labor to take them down. Sold to a woodworker contact on woodweb for $7/ft wholesale.
The siding on my first barn was 18' long (rare) tongue-groove heart pine from 1890's (30 rings+ per inch looking at the end grain), I banded it up with the beams, loaded it on a semi truck I rented on Uship.com, and shipped it out here to Seattle. 53' semi | Flickr - Photo Sharing! My "partner" killed every deal we had, asking way too much, then sold it and stiffed me saying he paid for the rent for x months (while he kept killing the deals) and there wasn't any profit when he eventually sold it for what I'd lined up initially.
I also loaded a log cabin from 1830(carved into one log, bought for $100 from farmer) into a 24' uhaul which was a nightmare to get out. Took down several other smaller barns, and eventually just paid the amish ($0.30/foot) to take them down and denail them for me. But being long distance after eating dozens of airline tickets it's just too hard not being there to work out deals in person with buyers. On barns I had to buy, it usually worked out to around $0.30/ft was a good price, and it took another $0.30/ft average to dismantle it. $0.22/ft to throw it in the kiln to kill any bugs, worst part was transporting it all over/handling.
And some of the stuff is best suited to put some elbow grease in and further process it yourself, like people buying wide plank flooring want to see it, not some old wood that you tell them the mill will process into flooring. I'd made samples, but consistency is hard across buildings made at different time periods. If you get 2-3k feet of beams from the same building, spending $1000 to have them sawn into flooring and shaping a tongue/groove would more than triple it's value. But at the same time you don't want to spend money before you have a buyer, so it's a per-case basis depending on what you have and what you think it should be. The mill charged per minute for the sander/planer, as much as you could feed through, then per linear foot to shape the tongue/grooves. I'd found smaller 1 man shops that made custom doors for $130 that cost many thousands in cities to the "sustainable, green" yuppy crowd here in Seattle.
I had the idea to take down buildings after moving here and seeing they sell 5" wide oak flooring for $20/ft because it's "reclaimed". I got it all day long at $0.30/ft dismantled and 14+ inches wide. The old slate roofs are worth a lot here on the west coast but they weigh so fucking much to ship.
Nice, it's fun and a great way to build passive income. Plus I love RE, fixing up stuff, finding cool stuff, etc. seeing stuff transform. Wonders of new drywall to cover ugly shit, etc.
If you ever look at farms with outbuildings, some are worth a lot(east half of OH, KY, western PA). I used to dismantle old barns/log cabins out in Amish country OH and some of the woods are basically extinct. Wormy chestnut and pre-blight non-wormy(rarer) is the most valuable, genuine heart-pine second most valuable, some buildings had a few pieces, others had the entire siding/floors/beams made from it. Sometimes you'd find walnut, cherry, etc used as floor boards, just giant wide planks (some 40" wide) worth thousands to the right people. Some of the old historical landmarks require old wood for repairs, "Monticello" and others in Virginia use it. I also had brokers hit me up looking to fill orders for rich country clubs and shit in new england that make authentic old shit and pay $20/ft for chestnut. The old hand hewn beams sold as mantles, or you'd cut the top inch off to make faux beams wrapped around cheap wood with the axe marks(patina) showing, and cut the inner core into wide plank flooring. I knew a couple guys with woodmizer mills, the hardest part was removing all the metal before cutting it up. Some of the really nasty shit would just be sold as paneling or architectural pieces.
Here's the first old barn (given to me free) I took down piece by piece with a sawzall and generator, I'm standing in the peak of the roof http://www.flickr.com/photos/etcite/542638991/in/set-72157601837295976 After gutting it I pulled the frame over with a come-along, chains, and an old dodge dart hatchback getting a running start. Disassembled the carcass, burned anything too rotted to use, denailed it at a station with various tools, and banded it up.
Here's some wormy chestnut used as siding on a barn: Wide chestnut | Flickr - Photo Sharing! That guy found me by word of mouth as I was taking down my first barn, everyone in town thought I was nuts, he said he heard of me and someone else taking down barns had been asking him to sell his barns. I ended up paying him $5k for the barn/buildings including his labor to take them down. Sold to a woodworker contact on woodweb for $7/ft wholesale.
The siding on my first barn was 18' long (rare) tongue-groove heart pine from 1890's (30 rings+ per inch looking at the end grain), I banded it up with the beams, loaded it on a semi truck I rented on Uship.com, and shipped it out here to Seattle. 53' semi | Flickr - Photo Sharing! My "partner" killed every deal we had, asking way too much, then sold it and stiffed me saying he paid for the rent for x months (while he kept killing the deals) and there wasn't any profit when he eventually sold it for what I'd lined up initially.
I also loaded a log cabin from 1830(carved into one log, bought for $100 from farmer) into a 24' uhaul which was a nightmare to get out. Took down several other smaller barns, and eventually just paid the amish ($0.30/foot) to take them down and denail them for me. But being long distance after eating dozens of airline tickets it's just too hard not being there to work out deals in person with buyers. On barns I had to buy, it usually worked out to around $0.30/ft was a good price, and it took another $0.30/ft average to dismantle it. $0.22/ft to throw it in the kiln to kill any bugs, worst part was transporting it all over/handling.
And some of the stuff is best suited to put some elbow grease in and further process it yourself, like people buying wide plank flooring want to see it, not some old wood that you tell them the mill will process into flooring. I'd made samples, but consistency is hard across buildings made at different time periods. If you get 2-3k feet of beams from the same building, spending $1000 to have them sawn into flooring and shaping a tongue/groove would more than triple it's value. But at the same time you don't want to spend money before you have a buyer, so it's a per-case basis depending on what you have and what you think it should be. The mill charged per minute for the sander/planer, as much as you could feed through, then per linear foot to shape the tongue/grooves. I'd found smaller 1 man shops that made custom doors for $130 that cost many thousands in cities to the "sustainable, green" yuppy crowd here in Seattle.
I had the idea to take down buildings after moving here and seeing they sell 5" wide oak flooring for $20/ft because it's "reclaimed". I got it all day long at $0.30/ft dismantled and 14+ inches wide. The old slate roofs are worth a lot here on the west coast but they weigh so fucking much to ship.
Yeah , you can make a mint doing that. The apartment complex I mentioned above was at one time a funeral home. The floors are solid walnut, and the ceilings in several of the units is single-sheet copper. It's amazing how much that stuff can be worth.
The only economic way I could see you doing it would be to skip the uhaul and just getting to the point of a large semi, or several. Scheduling a semi shipment from OH-WA isn't too awfully expensive considering how much you can get into one truck.
The amish are quite cheap too many times. We know a lady that hired a whole team for $8/hr to install cherry floors in their $300k+ house.
Sucks to hear about your partner. I run into these barns all the time, many times I can get them for free, or almost free. If i had extra time I'd work on trying to do this and just send it out your way
There is a lot of good information and a lot of bad information in this thread.
I used to do decent volume in AFM but switched exclusively to flipping houses and buying rentals in 2009. I am at 97 units and collect just over 100k/month in rent (almost all of them are houses). My goal was to scale it up so I could have my own in house manager and we did that at about 60 units.
1. You need cash to start. The example of pulling 20,000 cash out of a rental and achieving positive cash-flow is very uncommon in this lending environment.
2. You need to live or buy in the right area. Rentals don't work in SF Bay, New York PERIOD.
3. You make money slowly. This community is so used to 100%+ returns on investment. In rentals that is near impossible. Flipping you can do it, but that is a different topic.
4. The tax benefits are great. My taxes are over 100 pages and I get tons of write offs. Some of them may not last, but I don't see depreciation or 1031 exchanges going away.
5. It is a more predictable business model. In 10 years, I have a rough idea of the returns my portfolio will generate. In 10 years, AFM is very difficult to predict. Not saying the good won't adapt and make a lot of money, just saying in real estate I don't have to adapt.
6. The keys to success: buying under current market value and creating leverage
If you want to buy a couple rentals:
1. Qualify for non-owner occupied government backed financing. You will get a 30 year loan with 20% down under 5%. You can buy up to 10 houses this way.
2. Target houses under 120,000 that rent for 1,500 or more. A good deal in my world is my total cost is 1.5% monthly rent. ($120,000 house rents for 1.5% = 1,800/month). If you can get 5% financing you can probably buy down to 1%. In the mid-west and Florida you should be able to get 2%. (50,000 house rents for 2%). Co
3. Buy within 2 hours of where you live and find a local investor to refer management company or manage your properties for a fee.
4. You will not make a ton of money monthly, but when those houses are paid off you will be very happy.
If you want to do it as a business:
1. Focus on buying properties under market value. 70% of current appraised value or less.
2. Have a lot of your own working capital or access to it.
3. Find a private investor or hard money lender that is willing to refinance your portfolio up to 65% of the appraised value (no matter what you paid). The interest rate is going to be high.
4. After a year + refinance those properties with a small local bank.
I used to do decent volume in AFM but switched exclusively to flipping houses and buying rentals in 2009. I am at 97 units and collect just over 100k/month in rent (almost all of them are houses). My goal was to scale it up so I could have my own in house manager and we did that at about 60 units.
1. You need cash to start. The example of pulling 20,000 cash out of a rental and achieving positive cash-flow is very uncommon in this lending environment.
2. You need to live or buy in the right area. Rentals don't work in SF Bay, New York PERIOD.
3. You make money slowly. This community is so used to 100%+ returns on investment. In rentals that is near impossible. Flipping you can do it, but that is a different topic.
4. The tax benefits are great. My taxes are over 100 pages and I get tons of write offs. Some of them may not last, but I don't see depreciation or 1031 exchanges going away.
5. It is a more predictable business model. In 10 years, I have a rough idea of the returns my portfolio will generate. In 10 years, AFM is very difficult to predict. Not saying the good won't adapt and make a lot of money, just saying in real estate I don't have to adapt.
6. The keys to success: buying under current market value and creating leverage
If you want to buy a couple rentals:
1. Qualify for non-owner occupied government backed financing. You will get a 30 year loan with 20% down under 5%. You can buy up to 10 houses this way.
2. Target houses under 120,000 that rent for 1,500 or more. A good deal in my world is my total cost is 1.5% monthly rent. ($120,000 house rents for 1.5% = 1,800/month). If you can get 5% financing you can probably buy down to 1%. In the mid-west and Florida you should be able to get 2%. (50,000 house rents for 2%). Co
3. Buy within 2 hours of where you live and find a local investor to refer management company or manage your properties for a fee.
4. You will not make a ton of money monthly, but when those houses are paid off you will be very happy.
If you want to do it as a business:
1. Focus on buying properties under market value. 70% of current appraised value or less.
2. Have a lot of your own working capital or access to it.
3. Find a private investor or hard money lender that is willing to refinance your portfolio up to 65% of the appraised value (no matter what you paid). The interest rate is going to be high.
4. After a year + refinance those properties with a small local bank.
