All Forum Posts by: Matt Lyons

I invest mostly in rural areas where tenants seem to be responsible, handy and work hourly jobs.  Most want a home but do not have credit to buy a home.

I recently bought a home for $42,000 (3 bedroom 1 bath) in a VERY small IL town.  I was going to flip it but instead I put up a For Sale By Owner with Owner Financing sign and post on Facebook.  TONS of interest.  I opted to rent to a couple who wanted to make it their forever home, here was the deal:

Basically a rental with an option to buy based on an attached schedule...so they put $5k down, then they rent for $700 a month PLUS taxes and insurance (which they pay me and I pay those so I always know it is paid).  They have the option to buy at anytime based on the schedule attached to the lease which is a 30 year loan at 11% interest starting at $70k...so every month they pay rent their option to buy goes down same as a loan would from a bank.  If they fail to pay I can evict them same as a regular tenant since it is written as a lease with an option.  They also cover all repairs, upkeep and maintenance...I pay for nothing ever, they treat it as if it is their home in every way

Am I really smart, or am I doing anything wrong?  Again it is a month to month LEASE with an option to buy based on a schedule I attached to the lease.  My return is awesome,  I have a tenant who does all repairs and fixes, I never have to go there and if it all works out I get a great return and they get the house of their dreams at a monthly affordable price

a few suggestions:

1. You can buy a place through a company like renttoretirement ... their deals are turnkey with management and are in markets that works... no I do not work there and I do not own it and I do not currently do any investments through them, BUT I like their approach and concept.. reason I dont is that I can get a better return on my own than through them BUT if I did not have time to do it all then I would for sure work with them or a similar company

2. Partnership: there are TONS of people on bigger pockets doing deals daily...reach out and talk to any of them.  I like to make money, whether I make it on a rental deal, on a flip or by selling off a deal I have put in place does not matter, all that matters is I make money...for example: I am buying a place for $23k.  I am putting that place on a rent to own program where I profit $463 per month for next 30 years, if renters goes to bank and buys me out the buy out starts at $45k.  I recently offered to sell that deal to a guy for $4k.  He gets a great deal and I get paid for the work I did and deal I set up

3. Loan the money out:  anyone on this site is more than willing to cut you into a deal for a % of profits and ownership.  For example, I bought a place for $50k that generates $1k per month in profit, I let a buddy buy in for $10k and I put in $40k, he gets 20% of all monthly profits and I manage

LOTS of options if you have money just think outside the box

I purchased a 14 unit property on 3.5 acres in Clinton IA.  I have learned that I can divide off 2 of these acres that currently is a field with some woods.  The new parcel is already zoned Multifamily and I can likely put up 40 units on this much land.  The city has told me the only restrictions are building needs to be 25ft from the road and cannot be higher than 45ft tall. I am considering putting up a container box apartment building or putting together a syndicate (or working with one) to make this project come together. The property is "in town" so to speak so utilities are near the building site.

Clinton, IA has a number of good economic trends going on with a land based Casino, a new Purina plant and some positive downtown reconstruction.  In addition, there is plenty of Section 8 money available in this area so the property can easily be built to meet Section 8 standards.

I have done a number of single family flips and also bought and held a number of multifamily buildings but I have not done a project of this size from scratch.  

I am looking for any of the following:

1. Someone to help me take this to a syndicate level

2. Someone interested in buying the land from me that knows how to develop

3. Someone familiar with grants and government lending programs to bring this develop to market

In short, reaching out to the BP family and trying to find any resources to help take this off my hands or work with me to bring this potential to market in the most profitable way possible

@Akeem Moreno

Sorry I have already moved forward with another but I will keep you posted on the next deal

Thanks

@Nicholas Z.

So did I! Taxes are far less but you also have lots of money for section 8 which by itself is not bad... but I have learned Clinton advertises this to the south side of chicago so the tenant base is the same as the south side of chicago and the city is truly a nightmare. I have talked to more and more landlords that have run from that town. Some literally just left the property and eventually the city took over and sold at auction for under $1000... that’s how bad it is at this point.

@Samantha Levien

Get a license if you want being a realtor to be your JOB.... and it can be a great career for many

If you are looking to be in Real Estate to INVEST and create income and wealth then ABSOLUTELY NOT! In some cases having a license can hurt as you have legal responsibilities that will go against you being able to buy as cheap as possible

@Nick Robinson

This is awesome! Thanks much

I see a lot of posts asking where someone SHOULD buy, for first or next property, or a certain type of return or property...I thought this might be a good place for people to tell others where they would suggest NOT to buy.  Towns that for whatever reason are not investor friendly or not a good return, lets see if we can help each other avoid mistakes others have made....I will start:

Clinton IA...I would NOT suggest buying in this town. Mid sized city just north of Quad cities. I own 20 rental doors in Fulton IL about 1/4 mile away and I have not had one issue with the city and tenants are pretty good, ROI has been great. In contract, in Clinton IA I have owned 16 doors for about the same amount of time, rental rates are similar and taxes are lower so it should be better...IT IS NOT... the city is very quick to fine any landlord or anything, while I have never received one violation or complaint from the city of Fulton I receive at least one a week from Clinton...in addition tenants are nowhere near as solid as in Fulton, lots of late payments and damage and so forth...if you look in this area do not be fooled by a better estimated ROI... I would invest more in Fulton IL any day of the week and I will NEVER invest in Clinton IA again...in fact I have a great available on a 14 unit building if anyone just needs to make a mistake

STR are not going anywhere. True some areas are getting much tougher with restrictions or extra taxes (like in Austin TX) but these areas are also over saturated with STR and over priced properties. Look around and figure out WHERE people want to go and look for those areas a little less traveled to get a better ROI. For example: Golf Shores is pretty high priced with tons of competition, but Dauphin Island gives you similar rental rates and much lower entry point.

Finally, I mostly invest for cashflow, BUT started to do STR for appreciation: Bought in Bonita Springs December of 2020 for $362k and put under contract May of 2021 for $475k...it was fully rented that entire time and HUGE appreciation with no work done, I have never even spent the night there!

@Shannon Green

Do it as a second home... 10% down and 30 year fixed. YOU CANNOT DO BETTER THAN THIS LOAN!

Don’t tell anyone you will be renting it out in Airbnb the mortgage company will not care! At this stage they all know that most everyone will be renting out second homes when not used and short term renters don’t use it for a residence

Also the mortgage company or bank you finance with will likely sell off the loan anyway.

And finally, you can technically have 50 second homes... the only issue is you can’t have two in the same state but you can have a second home in every state and often deal with the same lender

For example Mr Cooper (mortgage company out of Dallas TX) can do loans with 10% down for second homes in all 50 states and rates are very fair

Good luck