All Forum Posts by: Skyler Smith

You'll need to both read Brandon Turner's new book on no/low money down investing, and bring in more money. After you've leveraged yourself out, you need to get more creative to keep the deals coming in. @Stephen Masek has a good point, getting another job will help. I got my real estate license so I could make my own offers, but last year I did enough as a Realtor and brought in enough money that way I was able to quit my day job. There are many ways to make money in real estate to generate cash that can invest in more buy and hold properties, be it bird dogging, wholesaling, flipping, or representing other investors as an agent. Good luck with your goal, sounds like it's going to be fun!

There might not be a wrong answer here. Your first priority is making sure that you have a good place to live, even if it's just renting for now. I'd make an excel spreadsheet with all the numbers for both properties and see where the numbers come out best. Take into consideration the 50% ownership, ROI, and your IRR (internal rate of return - including tax advantages, loan pay down, etc.)

House hacking doesn't always have to mean sharing a wall or a downstairs neighbor. I was living in my 4-plex when I was single, but was able to buy a 5-plex sold together with a 3/2 SFH (all from the same seller) by the time I got married. Now my wife and I live in the 3/2 home and can easily manage the 5-plex. Looks like you're looking in the right places, it all is going to come down to how the numbers work, not just now but also in the long run. I'm excited for you!

@Tim Shin When I got my loan for my first house hacked 4-plex I went to five different lenders before I got one that really understood what my goal was and was able to help. The fifth lender counted 75% of the rental income from the previous landlord to help me qualify for the loan. I've used that same lender for every deal since. 

Most won't work with you like that, and you'll want to make sure to disclose everything and keep as much cash in reserve as possible, but sometimes it just takes finding the right professional to help you get the type of deals you need to do. Have you talked to other investors in your area about which lenders they've had good success with?

I know that in my state you have to be careful if you are offering on behalf of others for the  sale or purchase of real estate, exchange of properties, negotiation of rents or leases, collecting rents, listing property for sale, writing and presenting offers, negotiating options, conducting auctions, advertising real estate, prospecting for clients and customers.

For sure find out what the laws are in your area and follow them. It's not a bad idea to sit down with a real estate attorney and have them look over your marketing and your contracts. Maybe work within an LLC with a licensed agent. Or you could wait until you have gotten your license and not have to worry about it anyway - sounds like you're right on track! I got my license a little while ago and it has helped in many aspects. Good luck!

Make sure to account for vacancies and repairs. The terms look nice, and it's nice that they're willing to carry. The problem is that your cash flow doesn't seem to be high enough to even cover your expenses. With that size of down payment anything you have to feed into it makes it extremely expensive, and this one will need feeding with the numbers you've provided. Check your investment goals and make sure that you're willing not to profit from this house (and possibly feed money into it) for at least 20 years. If it fits your goals, it would be a way to build equity and get potential cash flow much later down the road.

I would not buy this property with the given information

I think he's talking about a quitclaim deed. This is a way to transfer title of a property that is indeed quick. I feel that a title report is always worth the money. 

Just because someone is going to quitclaim you something doesn't automatically make it a good deal - I don't think we have nearly enough info to guess for you on this one. Be sure to invest in things you understand, browse this site and other resources. Maybe find an experienced partner and get a finder's fee or invest alongside them. 

Be weary of discrimination laws. In many states there's a huge legal difference between banning smoking and banning smokers. You can ban smoking near doors and windows if there are other tenants living there. Ban littering on the premises, etc. Just be careful. 

I would avoid investing in those types of homes unless you've got a LOT of money and your investing horizon is in the 15-20 year range. In many cases these homes are totally worthless. They're boarded up, water damaged, vandalized, and often they're part of a whole city block that's vacant. One thing you're not seeing from the list price is the amount of back taxes on these homes. The list price is going to be the cheapest thing to pay off with all the liens these properties have. For folks that have only a few thousand dollars to invest, $1,000 homes are an easy way to get you in a lot of trouble.

Yes indeed @Daniel Alegre  , that's another great way to get the investor's money back. The way Robert Kiyosaki does it is he puts the investor's money together, they buy a distressed apartment complex, fix it up and refinance, pulling all of the investor dollars out. In that mode the investors still get the residual cash flow after the refi.

Great question, and there isn't just one answer - it's pretty much whatever your investor is comfortable with, and obviously something that you'll work out in writing with the investor before the deal goes through.

Some investors feel comfortable just making a debt style investment, some prefer to take an equity stake. Some require monthly payouts, some just want the money to grow and they'll take it out when the project sells.

Your investor is going to want you to have "skin in the game." It's hard to get someone to give you 50% of a deal if you have no track record and no money tied up in the deal. Some things you can bring to the table if you don't have any money are time and experience. Your work in rehabbing or managing is worth something, as well as finding the deal.The investor can either cut you in on a percent of the deal or pay you for your time - it's a great way to get started. Many of the investors I've worked with want the exact percent of their contribution. If we both put up $50,000, then we'll each get 50% of the monthly cash flow and 50% equity when the project sells. If I'm only putting $25,000 down I'd just get 33%. Being the agent listed on the transaction brings an additional commission when we buy and when we sell, and I would generally take a 10% management fee, and that's how I would make more money in the deal and it would make more sense for me.