All Forum Posts by: Nicholas Daniels

So I’m 21 looking into buying my first property. It seems like property taxes generally keep going up, but why?

Where is the money actually going? I know this might sound like a dumb question, but if our taxes keep going up why are the services we are provided seemingly not getting much better? I look at the schools and the roads in my area (Michigan) and they’re **** generally. So why do taxes keep going up?

This might be more of an individual question based on someone’s own circumstances. But it seems to be happening everywhere based on the Zillow data when I look at pretty much every state.

Just out of curiosity. Is it possible to buy a house for cash, have it cash flow $1000/month and then just keep buying those until I get $20,000/month? Why not just 20 of the same house? Can I do this passively I hate fixing stuff and I don't want to manage anything lol. 

Hey how do property managers work? Do they do everything because I want to be a hands off investor and I’ll just be paying cash.

@Jesse Daconta I’ll check that out

@Jay Hinrichs I’ll keep stacking for now!

@Rachel S.

I started a Social media business in my senior year.

I'm thinking about buying rental properties and was curious if putting 100% down would make sense in my case. I'm 21 about to graduate college (thank god). I have no debt, and I have ~$200,000 saved up. I don't really want to fix things or do any physical work. I'd much rather just buy a property in cash and then have a manager do all/99% of the work. I can live at home once I graduate and stack up more cash and focus the cash flow of the first property on the second until it's paid off, then continue to do that until I have ~4. 

I'm pretty confident I could have 8-10 paid off properties by 30. If they cashflow $1250 each (after all expenses, property management (10%), repairs ($250/mo), maintenance (5%), vacancy (7%), etc. That's a pretty common return on $200,000 where I'm at (midwest). 

The thing is, if I'm netting $1250/month that's a 7.5% return on $200,000. That's not bad for paying cash (I think)? I'm sure one could make the argument I should leverage and get a higher return, but I don't really care about getting every little %. 

My goal is $10,000/monthly passive income meaning I need 8 properties that fit this metric. Would it make sense for me to buy them in cash? I'm not interested in growing my net worth to the absolute extreme (although I predict my strategy of buying with cash will let me capture huge opportunities where people who are leveraged will miss out on or go under). 

Thoughts? 

@Avery Rustad Wow thanks! Great response!

Okay, so I'll be graduating with a business degree next year around mid-May 2021 (I'll graduate just before I turn 22). I estimate I'll be making ~$50k/year and my credit score is currently 750. And I've been doing a bunch of research on real estate and believe I've formulated a good strategy. Feel free to tell me if you see any holes in my strategy, and I have a couple of questions at the end that I'd greatly appreciate your input.

From my understanding, I can utilize an FHA loan on a multi-family property. The advantage of this, of course, is that it will allow me to put down a 3.5% loan, instead of the conventional 20%. This does come with the downside of a PMI, but I personally still believe this is a viable option.

My goal is to purchase a 4-plex using an FHA loan and live in one of the units rent-free (for at least a year, but I don't have a problem staying longer of living near people). I'd manage the property myself, and gain experience as a landlord whilst living in a rental property. I'd purchase an umbrella insurance policy for personal protection.

Then, my plan was to save up 25% and purchase another 4-plex property, then tuck that inside an LLC. I know I can convert the first 4-plex into a conventional loan, but I feel like this strategy will slow down my property accumulation. There's also less risk in the property I'd live in because I'm confident I would always pay rent, lol.

Once I have the second property inside an LLC, I'll convert the first property to a conventional loan, then put it in a separate LLC. So now I'd have two 4-plex properties inside two separate LLCs. I would then move into a small house for myself, and then hire a property manager and manage things on a less time-intensive manner from then on.

Questions:

1. I know I could qualify for the first FHA loan, but what about the second 4-plex loan? Or the single-family home after I move out of the 4-plex? Would the bank lend me money for these? I feel like my income wouldn't be enough (let's assume each 4-plex costs 370k and the single-family costs 180k which is standard around where I'll be living)?

2. Is putting them inside separate LLCs a smart decision?

3. Do you have any advice on how to force up rents and appreciation on the properties?

4. Would it be smart to pay off the properties? I know this wouldn't make mathematical sense (given the extremely low-interest rates, but what about from a risk perspective? I don't really want to build a real estate empire, just two 4-plex's will do and a single-family :)

5. If a 4-plex is inside an LLC, and I can't pay, would I be liable if the house is inside an LLC?

6. Any advice on finding good property managers?

I had a couple questions about Househacking with an FHA loan.

1.Would a fourplex be an good FHA househack?

2. If I put 3.5% down on a house that costs $300,000 (meaning I put ~$10,500 down) wouldn't I be benefiting from inflation? Because if the house appreciates by ~3% per year (inflation) that means I'd gain $9000 in net worth the first year, and have an ROI of ~85%? Am I really benefiting from inflation?

3. How much can you increase rents? Like if I remodel the units (has anyone done this and how successful was that).

4. Is a fourplex a good idea? I’ve heard many people say they wish they’d done it instead of a duplex?

5. Can I refinance to a conventional once I have 20% equity and do the entire process over again?

Thanks!