All Forum Posts by: Prashant P.

In my opinion you have to stop thinking about how to make money and focus on saving money if you have no cash.

From my expierence, you can read all the real estate seminars and workshops you want but if you don't have a plan and some liquid reserves you are not going to last in the real estate world. Think about your potential investors, these guys mostly invest with cash or are using some sort of financing where they can make the most on their return.

Build a small reserve and then start investing.

Sharon R.: I have bought two houses from auction.com.

First they will call you on a Saturday. I placed a bid on a property that ended on a Saturday morning and they called me on Saturday afternoon. They basically check make sure your information is right and ask where they can send a contract via email.

The second thing I learned is regarding the reserve. I bid on a house for $15,000 and the reserve price had not been met. I thought it was like eBay and the auction ended without a bidder. Well acutally, Auction.com will still submit your bid to the bank even if the reserve has not been met. Just something to watch out for.

Also, it does take a while for all the paperwork to go through. So be prepared not to hear from anyone for a couple weeks.

Hey Sam, congrats on buying your first property. Here is my input. I started the same way you did. I bought a 2bedroom/bath townhouse lived in it for a year and then rented it out.

1. I think $300 a month is a good cash flow. You have to consider what your goals are. If I were you, I would take the $300 and put it into a savings account. Tnen at the end of the year you will have $2600. At the end of the second year you will have $5200. Combine that with your personal savings, you could use the cash to buy another property for more cashflow. This method also allow you to create an automatic reserve for any tenant or maintenance issues.

2. Pets - you can charge an additional $500 a month for pets but I think you will have a hard time finding a renter. It is alot of upfront cash for renters now a day. Most people have very little savings. What I do is tell them that I am automatically going to charge them $200 for carpet cleaning. You can explain that you need to have the carpets cleaned after they move because of allergies. I haven't had any issues using this method.

3. Mysmartmove is a pretty good website. Just be upfront with the tenants and tell them they will recieve and email to provide information. Another site I use is mytenantscreening.com better for lower income people who dont have access to computer.

4. I would not give any tenant my home address. I signup for PO Box at the post office. It costs $50 for the year. Pretty cheap.

5. Find a local real estate agent and have them do the comps for you. Good way to build a relationship.

6. You can claim your PO box, mortgage expense, mileage going and coming to your house, advertising, repair items, printing fees (like printing your lease)

Hope that helps.

Thanks for the information. I wasnt going to try anything big.

That was my thinking. An operating agreement would lay out the percentages each member contributed, buyout payments, etc.

I don't think I would work with anyone even my own family without some sort of agreement in writing.

How would you setup a real estate partnership with another investor?

I was approached by another investor at a local REIA meeting. Basically he wanted to combine my knowledge of investing with his pocketbook. I would manage the properties and he would provide most of the funds to buy and rent or buy and flip a house.

How would you setup this partnership? Would you create a new LLC with an Operatating Agreement?

I consider my showings for my properties as interviews. You are interviewing these people to live in your property and pay you rent on time.

Did they bring all the required documentation you asked for.

Can they provide evidence of thier job

What is their body language saying, when you are telling them your rules and regulations are the wandering around or are they paying attention to you.

When you are showing them around listen to what they are talking about with thier partner or roommate.
I have heard someone say that they wanted to paint a room and change the floor. That was a big red flag for me but I only knew about it because I was listening to thier conversation.

If I were you and was looking to buy a property and rent it out, I would buy a single family home that needs no repairs or just some painting.

There is alot more to buy and hold real estate then buying a property, fixing it up and renting it.

You will find that in the long run the hardest part will be managing your tenants. You need a solid method to advertise your property, screen tenants and attend to any problems.

One option would be to hire a managment company. In my opinion it is better to manage one of your own properties to know what goes on. This way the managment company and the tenant cannot screw you.

If you decide that you are ready to tackle four tenants at once, then that could be your second purchase.

Brandon Turner, the loans do show up on your credit report. I believe they show up as a credit loan, like a car.

I have asked Lending club to post a loan as an LLC but they told me that they only do personal loans at this time.

So if you cannot pay for the loan or don't have a plan this method is not for you. You can end up ruining your credit score.

When you buy the house, you own it free and clear. Lending club does not put a lien on it.

So there are some things to watch out for when using Lending club but it is a great tool for someone starting out which is why I used it.

Before using P2P lending make sure you have a solid deal or plan. Also make sure you have a good credit score so you get a lower rate.

In my case, I found a house for $17,500 and I knew I could rent it for $800 a month. I punched in my information and found out that I could get a loan for $25000 at 10% for five years. So I chose this option. I did this option because I knew I would have to make some repairs to the house.

Anyways my loan is for $25,000 at 10% for 5 years and my payment is around $570 a month.

After pruchasing the house, the tenant did not want any repiars so I had an extra $7000 in my bank account and his rent was paying the payment on the loan.

Before going the P2P route, make sure you can cover the loan payment amount if you have a vacancy or your tenant does not pay the rent.

As far as listing the loan, it is pretty easy. You cannot say certain things in the loan posting like how much money you will be making or how you are going to pay off the loan. Lending Club will send you an email telling you if something is wrong.

The loan funding is pretty easy too. It takes a week or two to fund the loan. The whole loan does not have to be funded for you to get the money. I think 60% has to be funded and Lending club will fund the rest.

You can have two loans using Lending Club. Each has to have a differnent email address.

The whole process is pretty painless. I would recommend it to others but just remember you are paying 10%+ interest. So you have to have a solid deal.