All Forum Posts by: Michael Lee

Hello Sean!  the answer is probably one of the first thing you will hear and "no" is the answer.  One of the biggest pros is the knowledge you will gain and possibly the networking.  Trying to save a little money paid on real estate commission is usually a negative on being productive.  It takes a special real estate Agent to do both.  I was a real estate broker in Texas for about 30 years.  The answers you get will be divided mostly by the Agents and the non-Agents that will have the different answers.  Another pro towards

Good luck to you!

Hello Ramon!  You might get some important experience on that investment but that way of making a living  is too risky.  You need to own about 20 of those to make enough to just pay your bills and you'll have 20 different addresses.  You did not explain any of your goals   That may be a decent way to start but will not earn you any money but save you some on the down payment.  It's a sign that you are willing to move to make your first investment.

What you should do while you are dealing with your first investment is to learn about how to recruit investors and/or Partners so you can start purchasing apartments but start off small and work your way up in quantity as you learn.  When you own about 32 units your budget might be able to hire Property Management out of your investment and they can probably handle the day to day operations and your time will be reduced while you manage the property management and that might be something you gladly let somebody else do that.

You'll have one address instead of 20.  The location matters more with multifamily rental properties.  You might have to work a little harder upfront  but once you find something you can take it a little easier.  Owning a bunch of houses is not very easy and managing them can be painful and you might look forward to not having to do it any longer.  You'll find out pretty soon that residential properties are not easy and possibly as painful it is. 

Among other things, the less units you own the more painful a vacancy can be.  My purpose is not to try to make you feel bad but I think apartments are a good way to go right now.

Good luck to you!

Hello Kosh!  Your goals and plan usually has that information and the range of each one like positive cash flow, cash on cash return, net operating income that includes debt service payment. the positive cash flow on day one of your ownership, and the items you mentioned, the type of parking and on-site and nearby amenities are very important as well as the first impression of the subject properties.  Does each one get any public transportation and bus stop locations.  Can you or them add value to each property like rising rent or interior/exterior improvements.

Good luck to you!

Hello Joe!  Turning your existing house or other sleeping space is hard to answer without knowing what kind of resident it is you/might have a different answer.  Assuming it is a house there are a few primary things you should do.  First, I would recommend you find out if any city, state or federal laws that do not to allow a conversion your existing place you live in to a rental unit.  Secondly, I would assure yourself that your layout is good for a rental unit or is there any or a large number of people that demand that layout or that location.  Many homeowners do not look for their home as a future rental unit and that your existing place was not looked at as a future rental unit and you might find what you need to know is to ask an experienced Building Inspector that has been around for a while.  It may not be the floor plan looked for.

It's age might  make you do a recent capital expense.  Just make sure that you consider that.  I would suggest that you shop around for a new loan from a Bank, a Private Lender, a Hard Money lender, a local Credit Union, etc. looking for the ideal source for a loan with a commitment letter that says what you qualified for from the most desirable lender.  I would suggest you that you try to use a "good debt" versus the minimal cash needed for your existing home. 

in case you do not know, what a "good debt" means is that you get a debt that has a lower payment than the rent payment is more after any other expense you have to make like insurance and property tax. Just like I already mentioned you should shop around for the best loan you can get on your new home. A HELOC could work if you are disciplined and responsible for that type of a source. I would shop around for that too to make sure you are getting the vest overall deal.

You could also look into the possibility to get a line of credit or a loan to put up your existing place as security for those sources.  A Bank or other financial source will probably treat you better if you have a W-2 Job when you apply.  Even 0% Credit Cards might help you if you feel you will be responsible to pay on them and on payment due date.  I hope that some of this was helpful to you.  Since you are renting now might mean that renting to somebody else will not matter.

Good luck to you!

Hello again John!  Thanks for your reply! That is what I mean.  As long as your numbers work out to and show it's still a positive project, it can still be beneficial.  You might have to get better deals to make it work with those numbers but a deal can still work.

Hello John!  It does not really matter what you have to pay if your investment still makes your minimum percentages on your most important financial categories and still makes a positive cash flow, whether its 41/2 or 12 percent on the interest rate and any applicable points.  I have been on BP very much over the last 5 years and I have never heard anybody say that they lost money do to the financing.

Good luck to you!

Hello and that is a good/time effective question Abby!  Unfortuna-tely, people nowadays do much on-line and not in person.  If you spent as much of your time on the Internet as I did you would realize that people today are taking advantage of doing things on-line is the typical way people do things without having to leave work or home.  I hope you can read because I do not know why my some text has a line through it.  I agree with what you are saying.  Maybe my feeling has to do with my age of 61.

I am being told that you have to know how to use current technology to succeed.  He's 60 years old and has learned how to use all technology to be able to communicate.  I have seen many stores going out of business and that technology has taken or will take physicality of having a store is losing  out over the Internet retail stores and I think that will continue.  I live in just outside of Dallas, Texas and it's happening here.

Good luck to you!

Hello and welcome to this site Tyler!  Please do not take any of my statements personally.  They're suppose to about giving the right information and to use wisely.  Just to tell you about me and why you should believe in me.  For one thing why you should listen is because of my life's experience being almost 62 years old.  I was born and raised in Dallas, Texas.  I was in construction management for about 30 years and for about 30 years I also had a real estate broker license in Texas.  I did graduate from college with honors and it emphasized real estate.  I also learned a little from my dad and my older brother were both into real estate and construction.

I still live in Dallas County but, unfortunately, I had a brain annurism and a stroke that made me bedridden since then but my brain surgery was positive I feel lucky to be still alive.  Another positive thing about that was that I have been able to do much studying,  My brain is still doing pretty well.  I've been a member of this site for about 5 years and have learned very much full time since I have not worked and that includes book reading. I read a book about every two weeks.

I think you ought to concentrating first and as begin to be getting more confident you should pick your real estate type that turns you on the most plus learning about Partnerships.  You will probably need that depending on the type you select.  I think that this economy favors apartments the most.  Most decent sized apartment complexes will need a Partnership mainly because of money but with the right Partnership you can maintain control regardless of your percentage of the purchase price.

It's a good thing that you are working on raising your credit score.  That tends to be looked when trying to qualify with a Bank usually charges the lowest interest rate but, If you don't already know, there are several alternatives.  The alternatives could be short and long term. Be very careful with the Internet and many of the sellers on there try to make emotional and fear-based sells as well as any ignorance you might have.

The more offers you make, usually gives more '"yeses"  A couple of reasons I like apartment complexes is the use of cap rates and the value is based on the income.  Apartments tend to be a long term investment.  Something like Fix and F;ip tend to be seen as a short term investments.  You need to learn to hear "no" and not to take it personally.  That is just a part of the real estate business that you need to be use to.

Get involved and network at local real estate clubs and events and be a good listener.  Hang out with successful real estate people that could help you advance. An apartment investor who I watch on YouTube owns almost 5,000 apartment units says never buy a home and be ready to move to a more productive area. He's kind of pushy on his products but he teaches you some.  You also need to know how to do anything that has technology.

Being creative and not be doing the same thing that everybody else does.  I have plenty more pros and cons to share but I will do that some other time.  If you think I could help you in anyway, please contact me through this site because I am on it just about everyday.  Try to live below your needs and that purchasing anything you don't need should not be given any of your money.

Good luck to you!

Hello and welcome to this site Nicki! A few things have crossed my mind on your rental unit. First off, is that it is within a walking distance to a school. Hopefully, it's in a nice neighborhood. Does your NOI include a debt payment plus all indirect expenses? The cash flow is kind of low. Owning a single unit is very risky. Saving for the turnover expense is probably twice as much as you think. Save as much as you can in the reserve account. I hope the summer period for school people does not create much vacancy.

Work on apartment Partnerships for the future expenses. I've heard as many bad stories and good stories about single family homes. Most of the "good" storytellers owned 15 or 20 homes if not more just to pay their monthly bills. That is 15 or 20 different addresses. Why be in the largest competitor market? What is good about having to deal with an HOA?

Be rigid with your screening and try to get a tenant  will stay during the summer school period.  Good luck to you!

Hello again Keyoddie!  I should have reviewed that before posting it. I was saying that it could be good debt meaning that the debt payment may be less than the rent.

Good luck to you!