All Forum Posts by: Lucas Moncada

Quote from @Rick Albert:

You make money in real estate in four ways:

1. Cash Flow

2. Appreciation

3. Loan Buy Down

4. Tax Benefits

When buying in low cost areas, it can be difficult to achieve FIRE without high volume of units. That's what makes more expensive markets/price points interesting. A 3% increase in rent on a $3,000 a month rental is more cash in hand than on a $1,000 a month rental. The same logic applies to appreciation. Plus higher price points with leverage general means higher loan buy down.

There has to be a bigger picture. For example I have one property in the lower price point as a rental (triplex that is now worth around $225K). The intention is buy more and then sell off as a portfolio and go into these bigger properties. Of course this can change if you decide to move to a low cost area where this cash flow goes farther. In a few short years I could likely move to areas where the median home price is around $100K and likely get fairly close to retirement (although I don't want to).

Although you may not cash flow, I recommend starting with house hacking. That's what I did and because of the bigger numbers, I was able to get lines of credit against the properties to buy more. I now have 9 doors (including where I live) and plan on buying more. 

If you are thinking of buying a property straight cash, obviously the cash flow is higher, but harder to scale. If you are younger, then you have the time to take on less cash flow and bank on the above four points later on. If you are older and need the cash flow (retiring), then yes, paying all cash can make more sense. 

Is there not a viable in between? Larger down payment, smaller loan and having the tenants cover the mortgage (maybe even with a small cash flow)? Essentially, house hacking with me not being there.

I know that house hacking is the recommended start but, I live comfortably on my parents' property in a nice location. It is not worth it to move to a "bad" neighborhood or having to commute hours to then have to live with strangers if there are alternatives.



With the house used as an example the mortgage is around $900 not including the utilities etc. Apartments in the same area are $800+.

Could I not rent each room for $400- $500 a month?

Of course, you have to find the tenants but, assuming you did, what would be the issue?

Quote from @Mike Dymski:

Need to be in a good location and have good management; otherwise, you will lose money.  What you are describing is "buying" rather than "investing".

If I rent out each room and make more than the mortgage or the house to cover the mortgage and the house appreciates is that not an investment? 

Quote from @Stephen DeThample:

Hello @Hector Mejia

First thing you will need to know is, what is your investment strategy. Are you focusing on a long term rental, medium term rental (30 days to 6 months), short term rental, or a live in house hack? 

This will help you focus your search and make the market analysis easier. 

If you have questions, let me know. 

 "long term rental, medium term rental (30 days to 6 months), short term rental,"

Not the OP but, how so? 

I have been searching for my first investment property and am now considering buying/holding and renting out. I live in Southern CA where cost of living is high as is real estate. So, I am considering buying out of state. 

Given that I have cash for a down payment and could get a loan for a "cheaper" house is it really the ability to come up with the money that holds people back?

For example, and this is picked at random, this house is $130,000 Kansas City.

- I could easily put down a cash down payment and given my wages in Los Angeles, if need be, pay the mortgage when it is not being rented.

- What are the potential problems other than not being there in person 24/7?

- Am I oversimplifying it? 

Thank you.

In a particular area in Fresno? I too am looking for my first deal and have seen quite a few for under $350k in Fresno 3 bed 2 bath.

Would it be over $400k what it is all said and done?

Open to anyone's input.

Quote from @Nicholas L.:

@Lucas Moncada

definitely, 100% house hack.  works in any market.

continuing to learn about creative financing is fine, but i personally think it's at least an intermediate, if not advanced, real estate strategy, for a fairly well capitalized investor.

i have purchased a couple of deals on seller finance, i am just not interested in sub-to.  too many moving parts / too high risk. 

if you're handy, buy something that needs some TLC, live in it for a year or two, fix it up, refinance and repeat.  if you do that 2-3 times you could own 4-9 units in 6-8 years.

you need a place to live anyway.

Would I need to live in the residence for a house hack? Can I rent it out completely or are there occupancy requirements? 

In your opinion it would be best to look for houses for sale by the owner? Are there alternatives to sites like Zillow or are those the most up to date?

Thank you.

Hello, I am hoping to get some direction on where to start with creative financing/investing. I am a union electrician and due to how jobs are getting a loan is a bit of an issue. I know some banks will work with my situation and many go through the union. Even so, I would prefer to forgo getting a loan from a bank etc. 

- I have about 50k cash. 

- I currently live with my parents to help out so my expenses/rent are very low. I have no issue staying with them for a while.

- Living in Southern CA, makes it a bit of an issue due to the high cost of homes which is why I was looking at alternative methods. 

- I read Paces' "Wealth Without Cash" and am interested in Pre-Foreclosure opportunities. 

- Whether it be a house hack (currently live with parents so would prefer to rent out if it is viable i.e. it not being a primary residence) or a sub-to. However, I read a recent thread where a member said it was no longer worth it in CA. Is this true?

- I am familiar with the area and can tell the difference between "bad" neighborhoods and have the know how/connections to fix up the home within reason (do not want to go over the 50k).

Any suggestions?

*Would also consider out of state so long as it is closer to the west but, would prefer to buy local first.

Thank you.