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Updated almost 11 years ago on . Most recent reply
New Member in Southern Indiana
Hi everyone. I just got started here and have found so much information and helpfullness. I have only been investing for 3 or 4 years and know that I need to learn from those who have come before me. I would love to hear from eveyone. What is the best way to build a real estate fortune? My intentions when I began was to be financially independant by 30, "retired". Can anyone share how they made this happen?
Most Popular Reply
Welcome @Daniell Myers !
It's always good to see a fellow Hoosier join. I grew up in Mitchell, IN not far from you.
For me, financial freedom [now] means to have enough passive income to pay all of my monthly living expenses. I used to think this meant being debt free and having a large amount of cash in the bank. Now, I want all the "good" debt I can get and I think cash is trash. I get my passive income from cash flowing rental properties. This is accomplished via renting or leasing homes [mostly SFH] to tenant/buyers.
I prefer the lease option myself over renting because they self manage [no property manager to deal with and/or pay] and there is basically no maintenance. I've found that, for my area [Central Indiana], $800 - up rent areas will support this lease option scenario. Under $800 most people don't have the required down payment. In addition, I never own anything that rents for less than $700 now. This seems to be the cut off for the "real bad" riff-raf tenants.
If I need $5000 per month to live on comfortably, I shoot for $200 net profit [after debt service and all expenses] per door. That means I need 25 doors or SFH. I'm half way there and should be there by this time next year.
I use small local Credit Unions and State banks to fund me. I prefer to refi once I've bought with cash [private lenders] and then refi. This will always be more than my purchase price and it allows me to be into the property for "no money down".
With that said, I've been having success recently with the more rural areas and lease option homes, selling them as-is. I'm amazed at how many people don't mind if the home needs paint, flooring, walls or even a kitchen. They just want a home to call their own. I usually stay under a selling price of $65k and the lease on these range from $450-$750.
I'm sure in your area there are a ton of good people with jobs and a down payment but bad credit that desperately want a home. I know you can find HUD homes near you listed under $50k that you can pick up for as little as $15k...Just a thought.
I hope that helps a little.
If you haven’t already, please read/listen to these books ASAP!
Rich Dads Increase your financial IQ
http://flip2freedomacademy.com/ - free e-book
Flip2freedom episode 77 - podcast - LISTEN TO THIS TODAY!