All Forum Posts by: Brent Baker

@Brant Richardson, thanks, that's a ton of great info. Glad I started this early. I have a lot to learn. As an aside, a buddy of mine in LA sent me an article talking about how Lafayette home values have been declining in value as the supply keeps going up. Seems I may have lucked out in more ways than one. I'm wondering if this is a sing of things to visit the rest of the country?  I guess we'll see. 

I was afraid you guys were going to say that. I guess because I already knew that was the answer. I even brought this answer to the misses and she said she wants to leave it be for now. She has a loyalty to her stepdad I guess and I won't dive into too deep but I guess she'd feel guilty for leaving his brokerage since he isn't doing as well as he used to.

I even thought about using it to build a penny stock portfolio there are probably different forums for that somewhere but yeah, what are you going to do with 500 bucks. I thought that maybe the crowdsourcing of REITS might be cool but even then, how much are going to earn really?

Oh well, I guess I'll let it sit.

I appreciate the input.

Brent

@Rob B. Thanks for the input Rob, I'll keep that in mind if I should ever dive into management. Hopefully I'll never need you ; ) 

@Marlon Fong Thanks so much for the kind words. Hopefully I can keep my initial pace. It seems like I really fell into something good without realizing it. I want to leverage my good luck going forward, hopefully I can do that. 

thanks for the info on that guys! I sure am glad I started posting here now and not two years from now when everything was coming at me at a thousand miles an hour. I have to apologize for the plebeian roots of my questions but I do appreciate the feedback. Its very helpful.

@Brant Richardson just to clear up my situation a little bit. I actually bought that house for 390k. It was a show home in 2016 and thus, on the high side (barley, by maybe 10k) of the neighborhood back then. We financed the house with a traditional mortgage so I put around 78k down and borrowed the remaining 312k. According to my mortgage company's latest calculations I have somewhere in the neighborhood of 294k left or as I see it, close to 100k in equity. Assuming their isn't a total collapse in the housing industry in the next two years I'm guessing if all things go according to plan, if I sell the house for close to what I paid for it, after the 3% commission the management company would get, I'm walking away with close to (give or take 5-10k or so) 100 k from the equity built up in the house. Does that make sense?

Now, to be sure, I would only pay on the profit right? Only what I make above my purchase price would be taxed at the capital gains rate right? I'm thinking that's only going to be 1-5 grand if I'm lucky. A lot of people in my neighborhood were taking loses on their house just to get out of them. That area of LA (Youngsville) just had so much new inventory that if you had a house built in the last 5 years good luck getting rid of it. I feel really lucky to have my tenants.

Finally, we lived in the house for 2 years and 11 months. We moved out at the beginning of July so I'm thinking my window to get out of the house without paying the capital gains rate would be five years from the second to last year we moved out right, or July of 2017 which would put the gains on that sale tax from until July 2022. Is that right?

I'm not sure if this is the right board or not so mods, please feel free to move if appropriate. My wife told me that she discovered her stepfather opened up a brokerage account for her almost 20 years ago. They seeded it with what is now close to 500 dollars (Not sure if they put very little in and this is what it has matured to of what?). Anyway, my wife said I can play with it if I want but the one caveat is that she does not want to close that account. I think she thinks it would be rude and kind of a slap in the face to her stepfather (who is the financial planner who opened the account by the way).

I discovered an article for real estate crowdfunding sites. It looks like a lot of these sites require very little to get started, around $500. I wasn't sure if I could invest in these sites through a brokerage account or not? If I can, does anyone have any experience with these sites? If I can't, can anyone recommend any kind of income producing investment I can do with this brokerage account? i was thinking maybe some sort of REIT or something like that but not sure where to begin looking.

thanks for the help,

Nevermind, I found Blanc's book, along with all of Erik's suggestions at Amazon. I have some reading to do!

thanks again

thank you everyone for the warm welcome and all the great information. I wasn't expecting so much so quick! I guess I'll take them one person at a time. 

Bryan: It sounds like the next step up is the multi-family. I'll start researching what the costs of those are, financing etc. Of course, as mentioned earlier, I have some time before making this decision but I'm going to start there.

Erik: I tend to agree with you regarding Robert Kiyosaki's books. I kept reading because I kept looking for the 'how to' portion of those books and they never do materialize. I also think the main take home points of all three of the books I read could have written in one, fairly quick read instead of the three, increasingly more dense, books he has. However, he did get me motivated/interested to start looking into this more, just as fate would give me the opportunity to turn my home into a rental so I'll give the nod for that. As for your questions:

1) Where do you plan to invest: locally or out of state or a combination? Locally, I hear you have more control and this reduces some of the risk. I do have a management company for my house in LA and i intend to keep using them. I've had good results with them, plus a full time job that I don't want to quit so relying on them seems wise for now but I think I'd feel better about future investments being local. 

2) How much knowledge do you have about land lord / tenant law in the locations you plan to invest? Very, very little, this will be added to my 'to-learn' list. The management company I'm using has been good about keeping me informed about some things and they seem to know (they better right) but it would be nice to have this insight myself. I guess for now while I'm renting one property its okay to lean on them but if I'm going to be serious I should dive in a bit more. Thanks for this recommendation, I hadn't thought of this. 

3) How deep are your pockets; do you have a "reserve fund" set aside? I have an emergency fund with three months of expenses is that what you mean? I don't see myself as having deep pockets. that's part of why I want to get into this. I like the idea of generating passive income to make them deeper. 

4) How familiar are you with ADA and FFH? If you don't know what
those are...time to get educated. Google is your friend. I'll
help..."Americans with Disabilities Act" and "Federal Fair Housing." I was actually a little familiar with these. Again, thanks to my property management company showing us some things we didn't know that needed to be done to comply with these laws. I do probably need to dive in more though. 

5) How are you with evaluating, hiring, and firing contractors? Terrible. 

6) What are your long-term goals and exit strategy? long -term goals are to generate enough passive income from assets that I could rely on them to weather a tough storm should one come (long-term disability, major illness, loss of job etc.). I'm not looking to become a millionaire doing this and I like my job so I don't anticipate quitting it but I do like the idea of not relying on it. If I get good at this maybe I'll re-evaluate later but for now, standing at the starting line, that is my immediate goal for myself.

Books are now on my 'to-buy' list. I can get through them pretty quick, thanks for the recommendations.

Clark: Thanks for the well-wishes. which book by Blanc are you referring, I did a quick google but didn't see anything related to real estate or investing?

Dan: what topic should I be googling, the idea of excusing my profit from taxes of course sounds intriguing. What key words should I be using. This brings up another question. I've always done my own taxes but have noticed they are about to get a bit more complicated. I'm not an accountant and tax law isn't something I'm well versed in but the at-home tax preparation software has, thus far anyway, treated me good. At what point would you guys recommend consultation with a tax attorney. Is one rental property still simple enough that I can prepare my own taxes or should I consider help from an expert at this point?

thanks again everyone, I really appreciate it!!

Brent

Hello everyone. I'm new to real estate investing. I have a rental property generating positive cash flow and have been bit by the bug. I'm interested in all assets that generate passive income as I'm trying to rely less on my day job and liking the idea of using passive income to cover expenses. I found BP when I was learning about how to rent my house. I've been reading the beginners guide which suggests posting here so here I am. I'm looking forward to learning more and becoming more involved in real estate investing. As mentioned on my first post on the beginner board I should have some money available in a couple of years when we sell the rental property. I want to keep the proceeds working for us and figure the best thing we can do is start our education now so when that money becomes available I'll already know where to put it, plus I'll be confident I'm making the right decision. 

My story real quick. My wife and I recently relocated from Louisiana back home to Florida where we're from. Our house wasn't selling, it was a very, very slow buyer's market where we were so even a full priced offer meant a loss on the house. But we weren't getting any offers at all, hardly any traffic. I remember someone I worked with moved and got a property management company to manage his house after he moved since he only lived in it for a couple of years.

I looked into it and was actually excited about the idea of this since at the time I was half way through Robert Kiyosaki's Guide to Investing. I had already read Rich Dad Poor Dad and The Cash Flow Quadrant.

Well, we got a tenant before the house even listed for rent and is currently generating, on average, $360.00 in cash flow after the mortgage and related expenses. My question is that our tenants have expressed great interest in buying this house after the two year lease they signed is up. I've run some numbers and if they do that, I should have something just north of a 100k to invest two years from now. With that much, where do people recommend investing. I like the idea of multi-family units and commercial property but I'm not sure if 100k is enough or if someone still so new to this should scale up so fast like that, e.g. one single family home straight to multi-family or commercial. Should I spend a few years with single family homes first?

As mentioned, I have a couple of years before I have to decide so I figured I'd start my education now. I've read through the beginners guide and they recommend posting here so I thought I'd get started on my education. Any thoughts or book recommendations or any resource recommendations are greatly appreciated.