All Forum Posts by: Brant Richardson

Good Karma from trying to help her out the first time you talked too. Great story.

There are a lot of people in medicine who invest in real estate. I'm a physician assistant in the urgent care where I have 3 days off per week, wish it was 4. I got started by saving my pennies for a down payment on a house. 20% down on a cheap house in Santa Barbara is a huge chunk of money which took me many years to accumulate. When I finally had enough I realized that I could only afford a house that I didn't really want to live in. I figured I could do much better renting and buying rental properties somewhere else. I've read quite a few books over the years on real estate but I really increased my reading and started throwing questions at the BP forums which has really helped... you can ask anything and get an answer. Having a couple of weekdays off has been really helpful for taking care of business transactions.

Back to Ian's question.

There is no "too fast". I just qualified for 3 loans in a month. The third loan was approved before the first house had even closed. It is a matter of whether you have the capital and the debt to income ratio to qualify for the loan. Go talk to your lender right away about that property.

With that said property #2 looks a lot better than property #1. Justin B is absolutely right that your cash flow is not as high as you think. Hopefully that $564 mortagage includes taxes and insurance and is not just P&I. There will be some repairs and vacancies.

I am buying properties with traditional financing 20% down from a big bank (Wells Fargo). Property managers want the property to be in pretty good condition to get top rent in good areas. So the properties need some work to be "rent ready". If they had major health risks or were uninhabitable there would be a problem getting financing. One property had a roof leak and Wells Fargo did a hold back on the funds necessary for the repair but still gave me the loan.

I am doing this in Kansas City right now. I am buying 3/2's for 50-60k that rent for $850-900/mo, in decent suburb areas with decent schools. Unfortunately it takes a lot more that $12k to make this happen. There is the 10-12k for the down payment, then 2-8k in rehab costs and closing costs around 4.5k. So I am looking at around $20k in cash per house. The Turnkeys I have looked at charge quite a bit more to be in the areas I am in but your overall cash input would be less because you would not have to pay for the rehab in cash.

If you can get $1000/month or more (1500-2000 would be incredible) using $50k then you have great numbers to work with. The question is how decent is the area? Will you have high turn over, evictions and people trashing the property which makes those very nice looking throretical yields a struggle and turns your passive investment into a not at all passive income.

If you have 200k+ in cash you have a lot of options. If you aren't excited because you found a great deal then I would hold out a little longer. I don't know anything about Katy but you should not have trouble getting rents that are 1% of purchase price in Texas. If you aren't expecting appreciation I would want more than 1%. You might do better buying two 100k houses. What is the expected rent on the property you are looking at?

I'm not familiar with the market in Tracy. Can you buy a property that will be cash flow positive there? If not, then you are kind of stuck flipping.

Buy and hold is great for passive income. You get a property that will cash flow a couple hundred dollars per month and probably appreciate over the years. You add one property after another and build long term wealth.

Flipping is labor and time intensive work, not passive income. Good way to raise a chunk of money. A good way to make some cash for the next down payment on a buy and hold.

Your flooring skills will definitely be helpful as a landlord.

A great way to start that is often talked about here is buying a duplex/tri/quad and living in one of the units while the other units pay the mortgage for you.

They're in the mid West...says the Californinan.

5 months may seem like plenty of time but it is not. Start talking to lenders immediately. You need to see what they are willing to do with your debt to income ratio. If you have any extra expenses like a third car, trim them now. Get a copy of your credit score and see if there is anything you can do to improve it.

The duplex plan is perfect.