All Forum Posts by: Alick Patrick

While doing research for my first REI property I realized that I can generate the same amount of cash flow for a property around $100,000 and for a property around $500,000. Of course the $500,000 property meant better location and equity. However, if I settle for a cheaper property I can purchase a couple more rental properties and thus generate more cash flow.

On the other hand, my first time landlord status cautions me to know right upfront that there will be issues, repairs, other expenses, etc. that not only will cut through my cash flow but could also be stressful for me since I will be dealing with a lot more units. The $500,000 property has two units, one for me to live in and one for my tenant. The three cheaper properties would have a total of 8 units and I most likely would not be living in any of them.

I was told by one of the brokers I am working with that even though my mind is set on a goal of collecting properties for cash flow I would realize that building equity and selling the property after a short period is more profitable. I doubt it that my mind will change but I'd like to keep an open mind since I'm no expert. I also did some research on the threads for this forum section and one member suggested to buy cheap properties on good areas, fix them, and then generate both good rental income and equity. Although that may sound like the perfect route to go a new kid on the block like me would not know how to fix a property and calculate the costs associated with it.

Now my question to the people that were once a newbie like me and had the same exact goal in mind, is the equity route really that attractive that I will end up buying and selling? If so then I will seriously consider location location location on my purchases.

Thank you @Joshua McGinnis and @Lumi Ispas for the lender shopping advise. The learning keeps pouring in! 

And you're right again Lumi, my tax person keeps telling me every year that I need to purchase a house because I am paying so much in taxes but I wasn't paying attention to her because of my mistake and bad experience with my previous foreclosures. Just after listening to those Rich Dad, Poor Dad audiobooks three months ago did I learn that I should instead invest the money I will be paying for taxes into real estate and write it off. That pretty much made me start looking into real estate again, although this time I'll be coming into it as an investor--wiser person, hopefully.

@Andy Mirza

Did you purchase the $20-$55k condos at San Bernardino to keep and wait for appreciation or did you rent them?

I didn't know San Bernardino was once that cheap but if I can find other similar areas that have the potential of appreciation and are selling at that price range I may be able to save some funds and purchase one or two while also saving up down payment for bigger investments like Lumi was suggesting I do after a year. I know I won't get approved for another loan just months after purchasing a fourplex but I'm thinking with a $20k property I can possibly purchase it directly and I can also let is sit temporarily without renting it out if I find the first time landlord experience with the fourplex too challenging. What are your thoughts on this?

@Joshua McGinnis

Do all lenders follow a standard FHA interest rate or is there competition on that? If the rate is standard then I already have a couple of lenders that were able to approve me. It was trying to get a loan for an investment property at TN that I couldn't get approved for but it seems like I should in fact stick with an FHA loan and settle for a property in my area that has 3-4 units as @Lumi Ispas, @Shane W., and @Peter Skobic advised. Hence, if rates vary per lender then I would love the referral so I can compare the rates.

Thank you all for responding to this thread! I'm very humbled with how people here are willing to help without expecting anything in return. I've actually spoken to a couple of members already and they spent a good time with me over the phone just to tell me the basics of REI. I'm a pretty good I.T. engineer but boy I am in kindergarten for REI. Thank God for BiggerPockets and its members.

@Lumi Ispas

The 3-4 flat suggestion sounds like a great idea. Instead of paying for rent now I can settle with something like that and get a feel for an entire year of how being a landlord for the other units would be like. That might actually be perfect for my lack of experience before going into conventional and commercial loans. Thank you!

@Peter Chan 

That's extra cash flow I have coming in from my employment. I work two full time jobs and net a little over $18,000 a month but after my monthly expenses on rent, cars, etc I can only put in $10,000 into this real estate investing. When you say I can do a lot with it does that mean putting more down payment on a property (coz' I'd like to avoid that as much as possible)? My mistake in the past was purchasing properties out of convenience and looks and went for a $675,000 house and $525,000 condominium. A year later the house was valued at $525,000 and the condo was below $500,000. I want to start off with properties a lot less than that so I don't have to put too much down payment.

@John Malahay  I'd like to learn more about rehab and wholesale but I'm only new into this so I don't have much funds yet to get into that. I can only put $10,000 down initially. After subtracting all my normal monthly living expenses I only have an extra $10,000 each month that I can put into this going forward. Will that be enough to cover rehab costs? Also, for a newbie like me is it safe to start engaging on rehab and wholesale?

I'll look into FIBI and those meetup plans. That will surely help! Thanks!

Hi! I'm a newbie. I had two properties that went into foreclosure or short sale 6 years ago during the housing market crash. Up until last weekend I didn't think I can get another property again but due to an unexpected incident a broker run my credit and told me that I am qualified to get a property--with 3.5% down! Thus, I started looking. To cut the story short, I ran into a thread here at BiggerPockets and saw a real estate investor that have properties at TN for $80,000 or that can generate good cash flow. I was surprised because I'm from L.A. so the cheap properties I've been seeing are on the $200,000 range. With that price minus just the 3.5% down payment that I'll be putting down I don't see much cash flow coming out of the properties.

I know it will be my first real investment property and there may be a lot of problems having to have a property management company manage a property that is not local to me but I'm willing to take that risk for now. I prefer that risk over the risk of purchasing an expensive property in L.A. with little to no income being generated.

Anyway, so I called the guy and was sold to make a purchase. I asked him if he knows any lender that can assist me with a loan because the broker that told me I was approved said I am only approved for properties around Los Angeles. He gave me a couple of lenders and I started to work with them. So far one stated that he cannot approve me because my foreclosure fiasco 6 years ago is still on my credit report, and the other has been unresponsive after I provided her all the information she needs so I'm assuming now that I am also not approved.

Can someone please kindly advice me if there are other options I can take to get approved for a property in TN? Actually, any state would do too. If you have cheap income generating properties to sell and know of a lender that may be able to approve me at your state please advice.