All Forum Posts by: Account Closed

Hi Maegen,

I live in Minneapolis. IMO, this is NOT a strong market for cash-flow. At the beginning of 2016 we looked into buying a duplex and living in one half thinking that the rent from the other side would cover the mortgage. We quickly realized that plan would not work in this market. The 1% rule currently does not apply in Minneapolis/St. Paul. For example, our very small home (less than 1000 sq ft) appraises for around $250K and we could only get $1500-$1600 if we rented it out. At $250K, we would need to get $2500 in gross rent to cash flow. SO we decided to stay in our current home and we now invest in buy-and-hold SFHs out of state in markets with strong cash flow...oh! Haha, one of those markets we purchased investment property in is Indianapolis, where I now see you are from! We have two rental properties in Indy--both of those properties are MUCH newer and MUCH bigger than our home and we paid less than HALF of what our current home in Minneapolis would sell for. :-/

I am so sorry to be the bearer of bad news. It's POSSIBLE if you went 45-60+ minutes out of the metro area, you might be able to find something that would cash flow, but I don't know how strong those rental markets are. If you message me, I can give you the name of a real estate agent who does a little investing himself who MIGHT be able to give you some direction. When we changed tack we ended up not using him, but he was very nice and had excellent follow-up, so it might be worth shooting him an email... 

I'd be happy to answer any other questions that you have. We LOVE it here in Minneapolis, we just can't figure out how to make it work to invest for cash flow here right now...

Erica

My lenders have always asked for the two most recent bank account statements. I have heard it said that the account needs to be "seasoned" for about four months. If they see a big deposit in the statements that you are required to send, you're right, you will have to explain where that money came from.

If you have enough equity in your primary home, a HELOC is always an option. Many investors get started that way!

Hi Russ,

I recommend listening to the free podcast called Get Rich Education with Keith Weindhold. Go back in the feed to the very beginning and listen to all of them if you can. Keith and the guests he interviews talk a TON about the kinds of questions you're asking and he is super easy to follow and listen to. Not a quick answer (sorry!), but I have found the education to be *invaluable*!!

Erica

Hi Kim! Sounds like you're off to an amazing start! Like a lot of investors, I wish I had started as young as you are! :-) If you haven't started doing this already, I recommend listening to the BP podcast "religiously"--including listening to the older episodes you can find in the feed. There are LOTS of inspirational stories from investors who started out at your age and even younger! Tons of inspiration and ideas! There are lots of free webinars by Brandon here on BP too, many of which cover lots of "basics".

Great job and good luck!!

My first rule of thumb is to quickly check out the 1% rule which means, if the property is valued at $190K, I better get $1900 per month in gross rent for it. If it doesn't come awfully close to that 1%, I generally won't bother running the rest of the numbers because it's not likely to cash-flow.

BP has a number of calculators under the "tools" pull-down menu that can help you analyze the deal once you've got the numbers to plug in. And if you haven't started listening to the BP podcasts or watching the webinars yet, I highly recommend those for TONS of ideas from Brandon and other investors about how to analyze deals and get started!

Good luck! :-)

I asked my lender about getting a HELOC on an investment property and he said that most lenders will not do that for investment properties, which is why I think we hear lots of investors on the BP podcast talk about doing cash-out refis... but I'm pretty sure I've heard Brandon say on the podcast that most lenders will require you to wait 18-24 months to do a cash-out refi after the initial purchase. Can't hurt to call your lender and ask the question though! :-)

Good luck with the project!

Hi Jeffrey,

There should be a SEPARATE (and much easier to read!) page titled "Closing Disclosure" or "HUD-1" or "Settlement Statement" that has a line on it about 2/3 of the way down that says, "Estimated Total Monthly Payment" followed by a dollar amount that is the amount that they expect your monthly payment to be (sometimes it's just a little off because they initially under- or overestimate property taxes or insurance by a little bit).

Congratulations on buying your first house! Good luck!

We have invested in four (so far!) turn-key buy-and-hold investment properties with Real Wealth Network based out of CA--a free network where you can get lots of free education + free investment counseling and they vet turn-key affiliates in a number of different markets: realwealthnetwork.com

We have used conventional loans (20% down) for all four of our properties so far.

The best "guru" specific to buy-and-hold real estate investments that I have found is Keith Weinhold. His free podcast is Get Rich Education. I recommend going back to the very first podcast in the feed and listening to every single one of them. :-)

Good luck getting started! 

Hi Gary,

Of course, I cannot say what YOU should do, but I can tell you that we have a lot of consumer debt AND decided to start buying investment properties anyway. We seem to pay off our consumer debt with our savings and then just run it right back up again, so this time we decided to keep up with our consumer debt payments plus pay a LITTLE extra and put everything else into real estate investment. Even though the Suze Ormans of the world would absolutely die over this decision of ours--and it's very possible we may be paying more in consumer debt interest than we are currently getting in returns on our real estate investments (we are about to close on our 4th turn-key buy-and-hold)--we just have come to know ourselves over the years and we thought if we didn't get started now with real estate, we never would. So we're doing BOTH--paying down consumer debt AND buying investment properties.

Good luck with making the tough decision!

Erica