All Forum Posts by: Michael Lee

Hello Keyoddie1  My advice would be to never try to do business with anybody in your family, especially if they are not in the real estate business.  If you end up doing a deal that includes that place out back, I would probably sell it to an investor at any price.  If the City would allow you to subdivide, it would probably pay off.  I would check to see if any lender will help you fix up those back units and coul

Hello and welcome to this site Teaira!  Nothing I say is meant to hurt you personally.  Buying a piece of property that is considered a commercial property (5 plus units) is highly recommended.  If you have heard that you need experience before you get into apartments is a myth.  Work your way up in quantity that will ultimately allow other people budgeted and paid for Property Management Company running the daily operations and you are responsible to manage the management company without having to come out of your own pocket.

I have heard that it takes about 30 units before you can afford a management company as a regular expense that property will pay for.  Being able to add-value should help you increase the value.  Having positive cash flow including any debt service paid plus any other indirect expenses on day 1 of ownership is usually the way to go.

The more units, the better. A single family home with just 1 front door is very risky. I've been a member on this site for about 5 years and I have seen as many bad stories as good stories on SFH's. Most of the good stories have come from people that owned 20 to 30 houses at least and usually more.

I am 61 years old and I'm bedridden so I spend 7 days a week, full time learning about real estate learning including book reading which I can complete each book in about 2 weeks.  If you cannot own them by yourself , seek out a Partner(s) that want to do that but don't have the time.

It can help you to form a Partnership just have everything in writing and in detail.  Learn to hear "no" and don't take it personally.  Just realize that you do not get 90% of your offers and realize it's just a part of business.  It is a numbers game.  The more offers you do, the more opportunities you'll get.

I hope something helps you.  If you think I can help you in anyway, please contact me through this site because I am on it just about everyday.

Good luck to you!

Hello and welcome to this site Taheerah!  My statements are provided to give you further education and not given as a way to hurt you personally.  I was in construction management for about 30 years in and around Dallas, Texas.  I was also a licensed real estate broker in Texas for about 30 years too.  Since I had a brain annurism and a stroke at 54, I have been studying about real estate investing full time, 7 days a week for about 5 years including book reading and that only takes about 2 weeks to read each book. 

I do not have any experience with a LLC but I would suggest that you contact several lenders and ask them what you should do to borrow money in an LLC or at first enter 'LLC borrowing" into a or several computer browsers to learn about your options. You might have to buy under a personal name and then transfer it to the LLC.

I was born and raised in Dallas, Texas.  I did learn a little from my brother and my father about real estate and my father was into mostly commercial buying and selling when I graduated from college (with honors) in Business that emphasized real estate.  I think you made a good move to be involved in buying and possibly selling apartment complexes.

One important thing thing you should do is to listen to Grant Cardone on YouTube if you do not already do that.  He almost owns 5000 apartment units and has been doing that for about 25 years.  He is a little pushy but he teaches you much about apartment owning and managing, which is done by other property management companies. 

He is predicting that he will make about 150 million this year. He owns his own TV station and does about 5 to 7 shows per week.  He suggest that you look at 3 or 4 properties everyday.  He also suggests that it should be having positive cash flow after any debt payment on day 1 before you make an offer on it.  He also uses his own jet that saves him much time and gives as much time to spend with his family.

He preaches much about cash flow and that the price is not that important.  Also to be patient and consistent are very important.  He also says you need to be persistent and much of their success is achieved with doing follow-up.  Many sales happen on follow-up which should be done about 8 times.  That does help you get the sale or get them to remember you when they are ready to make a move. 

Hello and welcome to this site Daouda!  Nothing I say should be taken personally.  2 or 4 units as rentals are very risky.  Any vacancies will hurt too much.  I've been learning about this full time for about 5 years and have read or heard that this is about 50/50 that rental houses as a success.  Full time means 8 to 16 hours a day, 7 days per week.  I also read a book about every two weeks about real estate investing.  The down side is needing 15 to 20 houses at different address just to pay your bills.  A better thing for short term investment you could possibly do well in this economy is Fix and Flip.

The upside is related to the demand, the location, and "house hacking" for those with little money and need a lower down-payment.  I am still trying to understand why people are choosing to take this route on a rental property.  Is it fear over Partners?  Is it because of an experience myth about apartment buying, or what?

The only favorable reason other than what has been mentioned is luck towards any net income.  Hopefully, the good outweighs the bad in your case and, hopefully, in your case that this at least is a decent long term investment.  New construction is dependent on demand and location.

Hello Renee!  That is an interesting question.  My answers are meant to provide you with good logic and is not meant to be a personal attack.  I was a real estate broker in Texas for about 30 years and the bulk of my experience of about 30 years in and around Dallas, Texas where I was born and raised.  I would suggest that you should never go below a 50/50 or 50/25/25, with you securing 50% of the profit.  I would probably not ask for more than 60/40 or 6020/20 with you getting the sixty. 

Of course I do not know exactly how the others would be involved but I am assuming that they will both be highly involved with the remodeling/rehab project.  Their involvement will mean the bottom line of what they get from the profit according to a professional appraisal after the repair/rehab or a resale to someone else.  What is very important is the final budget and how complete it is or how detailed it is and the anticipated profit with that done.

With a $500,000 profit to split everyone deserves their fair share depending on the participation in making things done properly and every bodies involvement.  The important thing for everyone participating in the deal should understand the importance of your involvement in the deal and that this would not happen without how you used your mind to make this happen.

You should get most of the renal net of the positive cash flow after any debt is paid.  I would recommend that you probably split that profit in the rental of the unit about 90/10 or 90/5/5 assuming you take all of the property management as your responsibility whether or not you hire a property manager or a property management company to be involved in the daily operations and you would manage the manager and keep their monthly reporting that you need.

I am assuming you will own the property under your name or a company you own. and/or you control what happens to the property which might be owned by a Partnership company.  You could include or not include the selling cost after the repair/rehab if there is a transaction to your ownership or anybody else.  The exit plan could change based on your decision.  I hope that some of this will help you.

Good luck to you!

Hello Jeff! The answers to your question are meant to inform you and not to be taken as a personal attack. The more units you can control is the best way to go. Apartments are #1 right now in this economy. Rental of a SFH is not as profitable and needs too many addresses. They depend on the actual demand that exist. The main reasons I do not like is the involvement of a HOA and many of them are built like well-fished apartments. Their location is more important than houses.

The biggest problem with house rentals is that there are not enough units at one place and they usually costs more than you think to turn them over for a new resident.  You would be better off by offering "Lease Options" on houses and deal with the people who have been turned down trying to finance through a Bank and do not know there are alternatives that do exist and they are people who can pay and you can trust.

Do not forget that the location has differing degrees of importance and the demand for each type that makes them a possible profiter.  Also, there are other important things to look at like economic diversity, direction of job growth, the population growth, and job growth to name some of the main reasons.  I hope that some of this helps you in which direction to go.

Best of luck to you!

Hello Rodney! The PMI usually will not go away until the balance owed is less than 80% of the loan. I do not understand that the money you save costs but it will cost you 62K. What you should do depends on your goals. Have you been pre-approved by somebody and where did the get their value? It might be just an estimate that might have to be adjusted down or up when it is appraised. Have you thought about leasing it instead. What is the demand in that area for sales or rentals?

Is there any city or state or federal restrictions against what you might do?  Have you thought about selling that property that you have now and downsizing on it and get a cheaper property?  That could make you 11K.

Good luck to you!

Hello Mauricio! I too would think you would be better-off selling rather than renting a SFH. The more units there are there, the better. If you do not get a small apartment complex I would get a residential multifamily place that has 3 or 4 units. The more units that you purchase the least pain you'll get with a vacancy. With all that I have learned in the last few years, full time, I do believe in apartments. You could possibility start small ( 6 to 8 units ) and work your way up from there.

I also believe that the demand in the subject area is very important.  I also believe that the real estate cycle is a the top right now and you should make a good return on your existing place.  We really do not know what the future holds and the economics of today will enable you to make a good return by selling.  Spread out your return on the funds you make and turn it into as many units you can get as long as the debt received for the new homes is "good debt" meaning you'll make more than the debt incurred to get it/them.

Good luck to you!

Hello again Myles!  I am glad you thought my answer is helpful.  I would be happy to help you out in the future.

Best wishes!

Hello and welcome to this site Myles.  None of my answers are meant to help you and not to hurt you.  One of the things you need to ask them what their equity IS.

Iwould ask them why are they selling.  The main thing.  Ask them if they would consider Owner Financing.  Also, ask them how old the property is or when it was built.  Ask about the close retail.  Ask them if or what amenities are on-site and off-site. 

What is the NOI? Are there any capital expenditure things? Is the existing debt assumable? Can you look at all of the units? Bedrooms/Bath and/or unit floor plans, are the plans available? Do they have any income besides rent? Are there any common areas?

Good luck to you!