In over my head!!!?

Question

Ok so we all thought about REI way too long before taking action right? So I'm in action...but actual action is a full time job in itself..lol..that was a fact I should have anticipated, right? Anyway, I'm real busy with my ventures, and meanwhile I have a day job (granted its a work from home on my own schedule - sweet gig) but it's been getting brushed further and further under the rug cause I'm just too busy to give it my all. Its only a matter of time before that gives. If they dont do it, I have to, because I just dont have the time anymore. So thats the last shred of security I have left here - but it came with 70k, bennies.....Once thats gone - I'm on my own- Just me, my two kids, 5k bills/month, and my passion for real estate to bring it all together. How's that for pressure, eh? I sure hope I'm doing the right thing. lol...maybe this belonged in the "psychology" section....

Matt H · Answer

Sounds crazy.

Consider this though. If you have to work for a living that means your trading your hours or your labor for dollars. The moment you stop putting in hours in your day job is the moment your cash flow stops. But if you focus on realestate and get some places bought and rented out then you'd have a monthly stream of renvenue coming in which will continue regardless of how many hours you put in. Rentals are basically on autopilot continuing to make money for you. So if I were you I'd focus on trying to buy your first apartment building. Even flipping houses isn't as good because you still have to trade hours for dollars. The moment you stop flipping homes is the moment you have no additional income coming in. So I'd try to get an apartment pinned down if I were you. Like for me I own my own business which does well. But I may have one more deal on the go right now, that if it goes through I'd be able to already match the income stream of my regular business from my apartment buildings. And this would only be my 3rd. And that's a lot of cash, like well over five figures per month. Actually if you found just one small 20 unit apartment chances are your cash flow could be getting close to 10k per month after all expenses and debt service. And if you factor in apreciation of the building you'd be making perhaps another 5k per month. So that's why I'm saying like getting into just 1 apartment building could turn your situation around and give you enough cash flow to not have to try to work so hard to make ends meet every month.

Minna Reid · Answer

Yeah I'm well aware of that one...I do have too many bills. But I guess to be more accurate that does inlude a $1300 mortgage which is paid by my renters, and a payment on my heloc (that is only temporary as its still sitting as liquid in the bank since I need it to fund a rehab I am doing this month) so its closer to $3000 in just personal expenditures. You know unless my rental sits vacant for awhile, or somehow I manage to lose real bad on this rehab. But yeah - paying down my debts is way towards the top of the list on my priorities.

Account Closed · Answer

r2d2, just curios are you talking from a specific experience?

It's pretty difficult to find a property that you can put only 10% down on and get a positive cash flow after taxes, and maitenance even if max price is less than 90 X monthly rentals. Maybe I'm not looking hard enough.

Lynn Z · Answer

I remember a woman selling a duplex about six years ago making the statement that although she'd owned rental property for 30 years she felt she didn't really make a lot of profit --- but it did help her out on taxes.   Others in the business 30 years really do live on borrowed money and buy and sell single family property to come out better just to  pay those enormous property taxes and insurance which can run $30,000-$40,000 if you have enough property.

I don't personally know a  lot of people living on their rentals--they have inherited property or have another job or other means.  It costs alot of money to upgrade apartments from window units to central heat and air and  
put storms on windows to conserve energy so that tenants can afford to rent from you.  Painting and roofing a few buildings in a year can make you humble as well.

Matt H · Answer

Robert - Yes I'm absolutely talking form experience. You can buy properties with no money down and still have them cash flow. I've bought a building with like 6% down one time. My friend bought a building with a 75% first and a 35% second and walked away from the table with the building and $17k in his pocket. And they usually cash flow as well.

Matt H · Answer

Get serious 5k per month to support a family? You got to be kidding. That's damn cheap and ultra frugal! That's not much of a lifestyle. That's like 1250 per person. That's ultra frugal.

N/A N/A · Answer

2 kids bills add up quick?

Frank Adams · Answer

Minna;

I've read a lot of your posts and I kind of had the impression that your investment thoughts were similar to mine.....BUT (you knew that was coming, right?), $5000 monthly bills????

You say your job pays $70K, whether that's gross or net you're spending way too much on lifestyle.

Just my $.02.

all cash

Lynn Z · Answer

do you have any cash flow on your rental are you just breaking even after considering property taxes and insurance?  I worked and raised a child and bought two triplexes in a year --- I thought it was going to kill me.  Just the financing.   Just curious.  Also, you're in CT, which is a very expensive state.

Minna Reid · Answer

I just break even. It wasn't the smartest decision of my life. Honestly as soon as the lease is up, I'm selling it. I need a rental that cash flows.