New Member from Rhode Island/Massachusetts - New Investor = Clueless!
Rehoboth, MA · Member since 2014 · 6 posts · 4 votes
Hello BiggerPockets Family!
My name is Elizabete and I am a real estate agent (part time) in MA and RI. My full time job is a field applications scientist for a biotech company located in California.
I have been in the real estate market for 2 years and truly enjoy it.
I always wanted to own rental properties, multifamily units, single family homes yet get STUCK in the minutiae! Do many get a conventional 30 year loan and pay it every month with the excess rent money? How do you get ahead with more properties that way?
If you have someone that wants to invest in a home with you to flip how do you go about that? If you are the agent and they are the laborer.
Do you operate as an LLC, LC or corporation? Tax implications.
I have looked at my local REIA and will be attending that meeting next month.
I am hoping to learn more through you all that have experience. I will share everything and anything that I know.
If you want to know Hockey or soccer or microbiology or flow cytometry or how painful an online MBA program is, I can help you with that!
Thank you!
Liz
Welcome to Bigger Pockets! I invest up in Vermont.
Personally I buy, rehab, and rent out long term. Have generally used small local banks and commercial loans, allowing both purchase and rehab funds to renovate properties. Yes, the rent pays the mortgages, generally 15 or 20 year terms. I never do 30. I've also used some owner financing over the years to purchase properties.
I don't use a LLC, just a personal umbrella insurance policy, and the taxes are done on Sch E.
Hope that helps and good luck!
- Tom
Welcome to Bigger Pockets! I invest up in Vermont.
Personally I buy, rehab, and rent out long term. Have generally used small local banks and commercial loans, allowing both purchase and rehab funds to renovate properties. Yes, the rent pays the mortgages, generally 15 or 20 year terms. I never do 30. I've also used some owner financing over the years to purchase properties.
I don't use a LLC, just a personal umbrella insurance policy, and the taxes are done on Sch E.
Hope that helps and good luck!
- Tom
Welcome to BP, Liz
You will find a plethora of information in the forums here, as well as many professionals offering advice. Sounds like you are on the right path being a RE agent already!
To answer a few of your questions, as I understand them, many people use the 30yr loan to minimize the mortgage payment, thus increasing the monthly cash flow. The experts on the forums also use private lenders once their portfolio is large enough and has produced profits. After a few years in the business lenders get to know you and trust their own money with you. Depending on your bank, you can also have multiple mortgages on different properties to expand your portfolio. I have one property I own with a friend and we do not have an LLC currently. If you plan on having multiple properties in the near future, it may be worth setting one up. It depends on your business model, really.
Set up your keyword alerts to include "LLC", "flip", or "partnering" if these are topics you are interested in following.
Have fun!
Hi Elizabete,
I run the R.I. Real Estate investor group. If that is the REIA you'll be going to, I look forward to meeting you.
You asked a number of excellent questions but it would require a book to answer them. Fortunately the book was written and it is titled," The Ultimate Beginner's Guide to Real Estate Investing." I'd urge you to check it out. It is free and can be found under Bigger Pockets REI resources.
Warm Regards,
Rick Cohn
Welcome to Bigger Pockets! I invest up in Vermont.
Personally I buy, rehab, and rent out long term. Have generally used small local banks and commercial loans, allowing both purchase and rehab funds to renovate properties. Yes, the rent pays the mortgages, generally 15 or 20 year terms. I never do 30. I've also used some owner financing over the years to purchase properties.
I don't use a LLC, just a personal umbrella insurance policy, and the taxes are done on Sch E.
Hope that helps and good luck!
- Tom
Hi Tom,
Go UVM Cavs and Purple Knights! played lacrosse at st mikes. How is college rentals there? med school students good bet?
Hi Liz welcome to BP!!
Hi Liz,
Being an agent in both MA and RI will definitely help if you are open to investing in both places. Given your location you might want to look into RI for rentals as my impression is that you can get in at lower price points generally and get better cash flow.
I assume you are looking at the REIA meeting in Taunton? You should look into @Richard Cohn 's meeting as well since that should be pretty easy for you as well.
Lot of other ones in South East MA (The Cape, Plymouth and Rockland off the top of my head) and many more as you get to Boston and North.
BiggerPockets will be a great resource to network and learn. Read all the articles, listen to the podcasts and be active in the forums and you will learn a lot about anything you want to know about in real estate.
Welcome Elizabete . There are a lot of super helpful people and great advice on this site! I’m a ‘fix and hold’ investor from the Bay Area in CA, and loving it! A lot of others doing flips, wholesaling, notes, everything.. A few tips..
You can tag people by typing @ before you type their name, then clicking their name when it pops up at the bottom of the message box. You can click on the ‘vote’ button if you like someone's post or is helpful, and there are ‘awards’ to earn on your profile. The "Learn" link across the top navigation bar has lots of great info, and most importantly, the BP members! Welcome to BP, and good luck on your investments!
Hey @Elizabete De Lima welcome to the site! Great to have you here! If you haven't checked out the The BiggerPockets Podcast yet, I highly recommend it!
If you have someone that wants to invest in a home with you to flip how do you go about that? If you are the agent and they are the laborer.
Thank you!
Liz
First, I recommend you choose a type of investing you are interested in, and stick with that just to start with. Let's take, for example, your question above about flipping.
Read all the books you can, even if outdated. (if it's more than a couple years old, take what they say with a grain of salt, much of the advice will be simply wrong)
Do a bunch of searches on BP for forums, blogs, articles and podcasts on rehabbing and flipping. You will start to absorb how it works, then have more specific questions that BP will be able to answer for you. Subscribe to keywords and forums on fliipping and rehabs.
As an example, the question you posted above has such a comprehensive answer, that answering it could fill an entire book, as there is MUCH more to rehabbing and reselling than being an agent or a laborer:
Finding the deal
Analyzing the deal
Structuring the partnership
Negotiating the deal
Contracting for the deal
Funding the deal
Deciding on scope of work and finish level
Managing the contractors
Buying the materials
Doing the actual work
Staging the property
Selling the property
So as you see, you need a better framework before you can ask questions to which you will get helpful answers. Spend a few months reading on BP.
Elizabete, you asked a lot of questions here.
The Bigger Pockets book @Richard Cohn (Rick) recommended, and the REIA meeting he hosts, are both excellent resources.
Even though, as Rick pointed out, it would take a book to answer your questions, I'll try to give a few quick thoughts.
I'd say start where you are comfortable, get some early successes there (and keep your mistakes small and recoverable), then branch out when you feel ready.
It sounds like you have a demanding job(s), so if you're interested in owning rentals, I'd suggest starting with a single family or duplex. The mindset of tenants in 3+ family properties is very different (worse) in my experience. You usually pay more per unit for a single family, but often have the least headaches so that or a duplex may be better for you.
(You always have to screen your tenants though, no matter what kind of property; see http://www.biggerpockets.com/renewsblog/2013/01/27/tenant-screening/)
A conventional fixed-rate 30 year loan is usually only available to owner-occupants, though there may be exceptions. If you can get a fixed rate and intend to hold for long term, by all means do so. Since you're an agent, talk to a mortgage broker you like, or ask your broker for a recommendation, and do some research.
Like "buy low, sell high", it's not rocket science - get the lowest rate you can, fixed if possible or if not, with the longest period possible between rate adjustments.
Entities (LLCs and corporations) are a huge topic and there are pros and cons to each, and it also depends on your individual financial, tax, and personal (i.e., free time to devote to things like entity formalities) situations.
I recently read a surprisingly good book, Tax-Free Wealth by Tom Wheelwright, that covers some of the tax implications of different entities well. It only covers that side - the other side of entity choice is liability protection - but I had low expectations and was surprised at how many good ideas it presented.
I'd recommend researching your entity options here (in the Bigger Pockets forums) and also maybe browse through / buy a book or two at a local bookstore (if there are any still around - I think Barnes & Noble in Warwick is still there ;).
I'd also recommend talking to some other real estate investors, such as the ones at Rick's or Ann's groups, and then consulting with one or two professionals - ideally, an attorney with a tax background. At that point you'll know enough to ask her/him intelligent questions and really benefit from paying for her/his advice.
Hello Elizabete,
Thanks for your post. It's great to connect with a local realtor who is interested in learning more and of course, flipping a house. I'm in the same position here, looking for a realtor/partner to flip with. If you would like to discuss further, please get in touch. Hope to see you around!
Karen Lee