All Forum Posts by: James H.

...

I don't think buying at market value is such a terrible thing as long as the cash flow is good. Much better to get in with equity right out of the gate, though. Typically, you don't find good cash flow with at market purchases, but it can happen. I don't think I would do what you are proposing. New neighborhoods are too unknown. They will not nessarily develop into good neighborhoods - especially the ones aimed at entry level buyers.

The avearge union carpenter has no idea what developing is all about. The also don't know how strong a jointed stud is compared to a non jointed stud in a vertical position. Just like an average mechanic is not qualified to tell Toyota execs how to run there company. That carpenter might be able cope the most beautiful joints you ever saw and still not be able to balance a check book. You know what they say, we all have opinions just like we all have em, err, you know.

Forget trying to work as a developer. Go out and build just one single house for resale and then report back to us on where your values and your money should intersect.

I'd move west to your 100K job and start saving like crazy. Do a real world analysis on how long it would take to grow your real estate investments into something that generates 40K while working at your 60K job. Then do a real world analysis on how long it would take to grow your real-estate investments to 100K a year without you working at your job.

Without running the numbers, I can tell you this: It will take a lot longer starting from now and 25K than starting from 5 years from now and 25K plus 200K from that extra income of 100K over your current 60K plus whatever else you are saving.

I haven't seen statistics, but the overwhelming trend that I personally see is that *most* people making good money in real estate are people with high earning day jobs.

I have wondered the same thing. I think you may have still have to go through the eviction process, but there are no technicalities that the tenant can use to overcome that you simply have decided not renew the lease. So, there wouldn't be any burden to prove they broke the lease agreement.

Interestingly, one of my tenants, who has been a good, if slightly nitpicky,tenant has become less nitpicky now that the lease term has expired and converted to month-to-month.

I had set up my primary on a bi-weekly payment plan and have decided to leave it in place now that we have converted that property to a rental. I have rounded up my new primary residence 60/month to make an even monthly payment too. My interest rates on the two properties is 3.75 (plus mortgage insurance) and 3.25, respectively.

That extra little chipping away will reduce about 7 years off new rental mortgage and about 5 years off my new primary. That is pretty significant reduction in time to pay off the mortgages and has very little effect on how much I reduce my capital build-up (about 1,200 less per year). Usually when building capital, it is a combination of steady savings and some other unplanned/unexpected financial windfall that we use for investing rather than a new big screen or whatever the average person does with it. Now that we have two rentals, I am hoping expenses stay in check for a while and that rental income will make a significant contribution to the steady savings part (in addition to the reserves that Steve Babiak) pointed out.

Tips for the real estate hobbyist:

Manager your own properties.

Try to do as much of the rehab work as possible yourself, based on your competence.

Attempt to make any repairs yourself before paying somebody unless you know for a fact you won't know how to do it. HVAC is something I never mess with, but I will put my hands on pretty much anything else.

Try to create relationships with reputable vendors. This is almost impossible for me because I only have two rentals and they don't require repairs very often. I did get a discount for having 3 properties' HVAC systems serviced at the same time recently (included my own house). 55 vs 79 bucks for a tune up and 15% discount on any parts if needed- not bad.

Have tenants deposit rent directly to a bank account.

Have mortgages auto debit from those bank accounts.

Buy your rental stuff at Home Depot with a dedicated credit or debit card. The register remembers the card and HD will email your receipt to you. I just learned this. Have not noticed that Lowes is doing this yet. Use HD or Lowes coupons at HD whenever you have them.

I don't think I am at the level of "professional" yet, so I understand your "hobbyist" mentality. I think you want to try to automate as much stuff as possible, while still be willing to do manual labor for stuff.

I'd ask one of the neighbors in the corner of the through street if I could pay them to put a pointer sign in their yard. The yard sign has awesome power.

Do you use a yard sign? You might get more prospective applicants with a smaller search range than "all over town" by using a yard sign. I don't even advertise on the internet. I only show once or twice a week and schedule everyone for the same time. Has worked great so far.