All Forum Posts by: Brian Johnson

Wow I have not logged on here in some time but I find this story interesting.  I have read real estate in Michigan was cheap and from the sound of this it is still very cheap.  Those prices you are picking up properties are very impressive in these times.  Even for the great toilet paper crisis of 2020 or Covid-19 whatever you want to call it. 

Even when I lived in Lexington Kentucky during the housing bubble it was difficult to find amazing deals.  I am for sure not as aggressive as  @Fay S. is in her testimony.  That is some amazing time managing skills even at that Fay.

 I would consider the land prime.  The asking price for less than a lot was $115,000.  I wish it was less than $50,000, I would not even need a loan.  I know I can get land cheap but I wanted to buy into location.  I even ask if I could get a loan with intent to build with a loan on a new construction.  It is a shame. 

Real Estate license is not needed.  I would only become a Realtor if you want to do it as a career or you are buying a lot of properties or making a lot of real estate transactions.  I got my real estate licenses once and did not like it.  So you will have to make that decision.  

I first want to say congratulations on your investment!  In my opinion the duplex is the best 1st time investment purchase. I purchased one and lived in one side as well.  It is a great move on your part.  Living in one side you get lower rates on insurance and the mortgage as well.  

As a new landlord you will have great advantage on many things.  Just as stated above, take care of your property and fix it the right way.  If you are not a handyman I highly recommend you try and learn to do as much as you feel comfortable.  YouTube is a great tool to learn DIY.  

I also recommend buy a filing cabinet or use a drawer and keep all your receipts.  Even if you are doing repairs on your side you live in.  Use them as your deductions.  Mileage is also big! Even driving around town try to keep a mileage journal.  This will be a great advantage on your tax return.

Another is if you ever plan to do a big renovation with a few thousand in mind.  Go to Lowes/ Home Deput and open a contractors account.  Tell them you are a landlord and you own properties.  Trust me they will open it.  Once you do that you will get a great discount on a big purchase.  I have saved 10 and even 20% before on projects (buddy up to the guys in the contractor area of the store).  If you buy more properties the big box stores will become your friend and you will be visiting alot if you become the handyman.  Once again keep ALL RECEIPTS.  Even when you eat lunch.  Over years it will add up to thousands of dollars.

Just like everyone else says.  Avoid carpet flooring if possible.  Another idea you can do and it is popular for large apartment communities do in Florida.  If the carpet is stained when a resident moves out.  They bill the past resident for carpet replacement and if they do not pay.  They sell the bill to a collection agent.  They do not go to court to get a ruling, they just send them to collections.  I am sure they only get half the amount they claim but they do get some back. ( Which me coming from Kentucky I found very odd that they can send someone to collections without a ruling in court). 

Did I get off the subject a little?

@Andrew Alexander Young II I would first figure out what type of real estate business do you want to be in.  A investor is totally different than flipper.  A flipper is totally different than wholesaling.  It depends on if you have money to invest which takes thousands of dollars (depends on your market)  If you want to flip you will need a hard money lender that trust you and if you are not good the construction side you will need a general contractor.  This is in my opinion the most risk and possible the highest reward. 

The wholesaling is basically like a real estate agent without licenses or the middle man.  This is very tough if you do not have any knowledge in home value and sells. 

I suggest you start saving 20+% of your monthly income and start reading and researching like you are on Biggerpockets.  Learn and save until you figure out how much money you need and willing to use.  This will be a good start.  Then when you have a idea of which direction you want to go.  You can narrow your questions down on BP to get the answers you need to move forward. 

I hope this helps. 

I wanted to bring this thread to the top again because I had this wild idea to buy land and was shocked by what I found.

I have purchased several homes in the past and sold several homes.  So when I thought it would be good to buy land in a prime location and build what I want. I thought this will be great and thought it was something anyone can do. 

When I called my loan officer I was shocked and surprised to hear that you can't get a loan on raw land.  I thought I was going to need more money down but had no idea that banks do not lend for raw land. 

I even called a business friend and he kind of laid it out in a tough luck learning lesson.  He said raw land is considered high risk for a loan standpoint and the only way I can get loans are at a much higher interest rate between 10% and 15% with a 5 year balloon loan. 

Has anyone got any input or similar story?     

Interesting meetup, let me know how it goes.  I might want to attend at a later date.

Thank you @Brian Eastman for your time too  wright the response.  I thought that I was wishful thinking on this idea.  It is a shame that the system is setup for people to blindly invest in the stock market.  Like sheep's to Slater.  Fortunately economic is my hobby and I do have a elevated understanding of stocks.  I just prefer a tangible asset over paper.  

I wish I could tap into my IRA to use the resources. Do you know of any IRA holding companies that I can borrow from myself. Like how some 401k funds allow you to borrow from?

I have been reading up on this self directed IRA for some time. I understand the general concept of forming the IRA LLC and the funds needs to be dispersed to the IRA fund. I am a bit confused about how a person can take out from their IRA to buy a business and they do not have to pay a penalty but if you buy a apartment building you can not manage or operate the business hands on.

I have a scenario- What if I create a "property management company" and purchase an apartment building of 5 units or more. Can I buy this business using my IRA without paying penalties and can I use one of the apartments as my office to run my property management business from?

Basically I am very hands on with my rental properties. It is discouraging to be sitting on a large sum of money in my IRA investing in stocks that I do not trust but I can not use it to invest in rental properties that I love and really enjoy remodeling and repairing myself. How can I get around this issue so I can make my IRA money work in a rental business that I have a passion for?