All Forum Posts by: Val Csontos

My suggestion above will only work if you study the neighborhood you would like to invest in. And visit at least a 100-150 houses/properties for sale AND for rent, in the given area, and understand values well and become intimately familiar with property values so you can sort of predict sales and or rent amounts of current listings with reasonable accuracy.

My small bank around here will lend you up to 75% of the APPRAISED value on an investment property you are about to purchase this could be for example "House B.

BUT in order to be able to cross collateralize the "down payment" (25%) on a different property your original house we could calle it: "House A" have to have at least 50% equity.

Here is an example: say you are buying "house B" for $75,000 (and it does appraises for $100,000 )

You will need a $75,000 mortgage to pay seller and a $25,000 collateral for your small local bank in lieu of Cash down payment.

Than let's say you have another existing house: "house A" and it does upraises for $100,000.

In order for the bank to accept the equity in "house A" as collateral for the $25,000 down-payment on "house B" you can not have more than half (50%) of the appraised value collateralize BEFORE settling on "house B"

This means: if your existing "house A" worth let say $100,000, now you can not have more than $50,000 mortgage on it BEFORE you settle on your new "house B" purchase.

Because generally the policy of most small banks is:

They do not allow your to exceed the 75% Combined Dept to Value ratio on any properties anytime they have a mortgage interest or collateral on.

So the bottom line is: if you currently own a property that is only 50% mortgaged then more than likely you can use that house to buy the next one for zero cash down! Also if you purchase the second house using the above technics and at say you located a deal where the property values are : 50 cent on the dollar (not impossible just take many hours of research) than you can do the same exact thing again and buy a third house "house C " and using the second house "house b" for the down pay. As you can see this technics can allow you to buy over and over with little or no money as as long as the equity is there.

Good luck, and Happy Investing!

I like buyer agents, As they can be your banker/partner for your next deal, Here is how:

In my area i called around and had located one who is willing to accept their commission in the form of a monthly payment over say 60 months.

So when we settle on an investment property I use their commission to cover closing cost or at least a major portion of it and there by decreasing the down payment required for my purchase.(a better deal for me) The monthly pay to the agent comes out of the cash flow of course!

Good Luck!

Do you have equity in your current house? If you do you might be able to ask your local bank (only small banks with few branches will do this in my experience) to cross collateralize. Instead of putting down 20-25% cash on the next house ask the bank to see, if you could put down "your equity" in your 1st house.

This will work if:

you buy below retail, like some house with ugly green carpet or purple walls that is not selling. Than negotiate it down the price to 60 cents on the dollar. (it is possible if you are persistent and try a few)

And if they go for it get it under contract and start talking to the VPs of commercial lending department of the small banks in your area to ask which one will do the deal for you!

Good Luck!

@Brie Schmidt The apartment price range doubled and SFR probably went up 30-40%. Real nice 3br 2ba apartment (A quality) $2000 - $2300/mo walking distance to the mall.

So when people are tired of apartment living they come to rent our SFRs for same or a bit lower price :)

@Justin Case

I don't know enough about stocks, but I had purchased a couple of SFRs with no money down at all, and even the closing cost was covered from borrowing my realtor's commission and paying him monthly payments from my cash flow over the first 5 years.(unsecured note zero interest)

I always rent out those houses in such a way that I always signed the Lease document about an hours after the settlement for the purchase. So on the eve of the purchase I would have the first month rent in my pocket (as the mortgage pay is not due for 30 day.

Bottom line for one of these purchases: I I got a house that appraises $135K with zero down, with about a $112k mortgage and a $6k note to the realtor. And about $75/mo cash flow. Also first month rent goes into my packet on settlement day( about $1250)

Ten Years later:

House appraises about $180k rent $1500

Sixteen year later:

House appraises about $225k rent $1850

The above is not an isolated incident I had done this over about 10 -12 times!

Did other things too, but the point is unlike stocks, you can actually build wealth from thin air with the help of your tenants in real estate investments. However @Bob Hines has a point that RE Investing is a business and there is nothing passive about it :)

@Justin Case

Robert Kyosaki summed it up once pretty neatly:

investing in the stock market for the AVERAGE person is like driving a car blindfold, without the steering wheel. (he had demonstrated that with the go kart once on stage!)

I agree with that statment 100%. And like you said you are the outlier do you expect the averadge 401k person to follow your technics? So for regular folks their best shot is to get some where financially is REI if they use common sense and are careful.

Good luck trying to build a portfolio of stocks out of thin air! With real estate you actually can. You can still buy a house with $5000 down that appraises $150,000 and your tenants are paying down your morrtgage with the rent and you get the "left over" of $100 each month. That is the starting point. 3 years down the road your "left over is $180 and 6-7 years down the road it is $300/month. Very conservatively!

On some properties I had only put down $2000k and now 10-12 years later I have the "left over" or cash-flow of $6-700/mo and the house is about 30% paid off! Tell your friend try to duplicate this return with stocks. :)

@Ally H.

I am not familiar with your markets but I personally would never consider investing in condos. It seems like when ever there is a market correction,(price drop in real estate) the condos are the first one to drop prices and they go down the furthest, and in a recovery phase of the market cycle the condos are the one to come up last. So why make it hard on your self?

Also I am sure there are people here who think otherwise but my view on condo fees are:

Overtime those fees could add up so much, if you owe say two condos and pay those condo-fees for many years, for the same money you probably could have purchased and paid for another SF or a Town house with no fees!

Again not knowing the market, If I had to go there and money is tight but I had lots of time to search, may be I would consider the following? Search and search and keep search for a multi-unit say a duplex or a 3 unit, with ugly outdated paint jobs (forest green/ navy blue etc...) carpet etc... and fix that up and rented out to other military folks may be? Not on the sexy part of town but further in I guess where locals regular folks live? And where the numbers start make sense?

I started my real estate investing I here on the East Coast where I was sent here just like you by the military (Air Force and I was a E-3), I started purchasing homes(no money down) and rented them out to O-2s, O-3s We lived on Base here on Ft Meade in 40 old row homes for low ranking enlisted housing, for the first year or so, when I stared to purchasing newer foreclosed homes, small apartments and those higher ranking military folks were paying my mortgages! This was in the 90s and we still have those properties and some more!

Good Luck to You!

@Rob K.

Wow people are funny and interesting and even negative when it comes to jumping on the band wagon! Rob, Did you read my original post or just saw the word "casino" in the paragraph? :)

In The original context of my writing I was describing J Scott the economic and the demographics of the two surrounding counties around here. And i was attempting to explain that, out here in the two counties we have experienced some amazing demographics and economic indicators. The housing bubble did not effect my property holdings and most of our property values are back to 2007-8 rates and are start climbing again 2-3%.

In the past ten years Private industry and Goverment have been opening up new, and move here existing jobs like never seen before. The US Cyber Command is about to open several thousand of jobs here next to NSA on Ft Meade. When DoD started closing bases in the South US in the mid 2000s some of the Jobs that could not be closed, they had moved here that gave us about 7000 white collar DOD jobs. This is still ongoing and because of it, we have a population growth of about 1.1% each year for the last 15 years and the US Census expect this to continue for the next 20-25years (they do not make prediction beyond that) . Large players have also built over 5000 units of Luxury Apartments and close to 10,000 SFR are being built for about 3-4 years now, and close to hundred restaurants, several Hilton/ Mariats etc... The Luxury Apartments charge rent for a 3br around $18-2000/mo (fortunately they do not compete with my properties . The nearby mall was built 10 years ago for 100,000 daily car traffic, plus buses comes here from Baltimore and even Washington. This is where they put the Casino. As you can see the casino is NOT the major player here rather one of MANY! Just a fun fact: They sell $300-800K houses walking distance to the casino. Don't get me wrong I would never buy that close to the Mall/Casino.

I was asking J Scott, since He now live close by here, why not invest here, for a very nice pay off down the road vs closer to Baltimore where Appreciations does not really come to play. He said his plans were calling for immediate cash flow and that was more possible closer to the city.

Good Luck and Happy Investing! :)