All Forum Posts by: Michael Ealy

There are many real estate strategies and they don't fit everyone.

Sure - multifamily can be for newbies - but start small - 2-units and learn as much as you can.

Also, not everyone are cut out to be a landlord. Some like the "thrill of chasing the deal" and become really good wholesalers and good real estate agents. Others like improving properties and have an "eye for beauty and design" and they become really good developers and rehabbers.

To be a good landlord - specially of multi-family, you have to be detail-oriented, you have to know how to read people, you have to be assertive & firm (otherwise, your tenants will walk all over you) and you have to be very patient (because the real money in real estate, specially with multifamily is made over the long term).

 You can make the mortgage payments - it does not matter to the mortgage company which name is on the check as long as they can cash it. You can also get a cashier's check and mail the check or tell your family member-seller to change the banking info where the payment is automatically drafted to your checking account. The tenant's rent should go to you now after the deed is transferred to your name.

If your question is how to do real estate on a shoestring budget, the short answer is "HUSTLE". Talk to everyone you know that you buy and sell real estate. Be a man on a mission. Get to know as many real estate people as possible:

• appraisers
• attorneys
• bankers
• contractors
• hard money lenders
• landlords
• leasing agents
• mortgage brokers
• private lenders
• property managers
• real estate agents
• rehabbers
• title companies
• wholesalers

Because any one of the above can become a source of property or source of buyer, or source of money for you. Network like crazy.

Once you find a good a great deal, the money follows. I've done over 1,000 deals using NONE of my own money because I am really, really, really good at finding great deals!

My answer is buy it as low as possible.

No rules of thumb.

I bought properties before that are 30% or less than appraised value (of course not all).

Based it on the numbers.

What's the real money coming from the property?

Divide that by the cash you need to acquire the property - and you get your cash-on-cash return.

However, the over-all profit from a multi-family or from a piece of property is not just the cash coming from the property but also the loan paydown and appreciation. Factor those in plus the cashflow and you got the over-all ROI.

Investing in single family homes is semi-passive not really passive specially if you manage the property yourself. How many hours/week can you devote to real estate investing? If the answer is $0, then agree with Holly - maybe invest as part of a syndicated deal so you can learn as you go. However, a lot of cases $30K investment is not going to be enough. You need at least $100K to be taken seriously and you have to be an accredited investor.

If you can devote at least 10 hours/week, then you can become a landlord of single family homes.

Me personally, I love apartment buildings specially 50 units and up. I manage these buildings like businesses and I have teams of people managing these for me. 

Applying what you learn from a book AS SOON AS POSSIBLE is the key. Imagine if I read a book on how to read a bike but never rode one! There was no way I could learn.

Immediate implementation after listening to ONE podcast beats listening to 315 podcasts for 1 year and doing nothing.

Information is obtained from books/podcasts/etc.

But insight and PRACTICAL wisdom is only gained by taking action in the real world.

So take action NOW. Don't read one more book or listen to one more podcast until you implement what you've learned so far. Inspect a property. Talk to a real estate agent. Make an offer. Talk to a mortgage broker and learn how you can get a mortgage for investment properties.

Just DO IT!

Please ask an attorney just to be sure. Each state has different rules. You may need to put up a "foreign LLC" in Georgia.

 $200-$300/month per door but keep a healthy reserve of 6 months expenses per door.

Agree with Justin - this property won't cashflow so I wouldn't buy the deal either.

Offer $140K and see what the seller says. It won't hurt. If he counters at $170K, then close it for $160K.

One thing I'd like to add is: even if the property is a bad deal, don't just run away. Make an offer, even a low-ball one. I have acquired over 1,000 units and I am amazed that sellers sometimes come down significantly on their asking price. Had I just not make a low ball offer, I probably would have bought a lot less than 1,000 units.

 Depending on the bank - each bank will have their own shortsale requirements and paperwork. However, generally, you need the following:

• Purchase contract signed by the owner and you, the buyer but with the clause: "sale is contingent to bank's approval of the shortsale".
• Authorization to Release information - given by the owner to YOU so you can negotiate with the bank in her behalf
• Hardship letter - written by the seller saying why she can't pay the mortgage and it's impossible for her to catch up
• Comparative Market Analysis done by a licensed real estate agent - specially of foreclosed properties in your area in the past 90-120 days within a 1 mile radius from the property. Your goal is to show the bank that foreclosing on this property will be costlier than accepting your offer. For example, if foreclosed properties sold for $50K, it makes sense for the bank to accept your offer of $60K.
• Repair estimate done by a licensed and bonded general contractor - showing how much repairs the property needs
• Pictures of the repairs needed - banks are afraid of mold and foundation/structural issues. If the property has these the chance of shortsale approval is higher
• Income Statement from the owner - showing how much her income is and the expenses she has without the house payment - showing why she can't afford the house payment anymore
• Cover letter from you - explaining why it makes sense for the bank to accept your shortsale offer

Good luck!