All Forum Posts by: Lam N.

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I just had an idea.  What if we make this into an lgbt type of housing for lgbt students?  It really does have a lot of space for activities and stuff, not to mention a large balcony in front on the second floor.  We plan on modernizing the bathrooms and make it into a nice living space.  There is a large dining room and 2 living rooms.  Also a little storage room that we will convert into a laundry room.  

Back in college, I would have killed to be able to live in an lgbt exclusive living space like this.

Treat this as a cheap lesson.  Verbal contracts are worthless.  Just make a mental note of your losses and move on.

I used to take in homeless youths and tried to help them get their lives started.  As a result, I have lost thousands over the years.  Until my husband made me stop LOL.  My point is don't dwell on your losses.  Plan out how to deal with it and move on with your life.  Trust me, if you learn how to move on without dwelling on the broken promises, you will fair a lot better than the people who have done you wrong.

Case in point.  One guy who still owes me a couple thousand dollars is now living in his truck.  Another guy who still owes me $3k (my younger idealistic self tried to help him get on his feet) has now been in and out of jail and never managed to get off probation.  I on the other hand have moved on to owning enough rental properties to have replaced my full time job as an engineer.  

In other words, plan it out where this incident will be a reminder for you but in the grand scheme of things is just a blip.

Edit.

Yes, my younger idealistic self made many mistakes.  No need to attack please.

They just accepted our offer.  A large house next to a huge university.  We will renovate it and turn it into student housing.  5-6 bedrooms.

Single sex or co-ed?  Always rented to families.  Never students before.  Advantages and disadvantages?

We have flipped 3 houses and are about to close on our 8th rental property.  Here are a few things to think about.

(1) When you renovate, don't try to make it into your dream home.  When it comes to looks, be minimalistic.  The tenants will want to decorate it to their taste.  They don't need you to tell them what color to like.

(2) Always replace the toilets with brand new ones.  You can get a good toilet that flush strongly for $80 each.  A leaky toilet has the potential to ruin your house.  Just replace the damn toilets.  And always buy the extra thick wax ring.  Don't ever use the really thin ring that comes with the new toilet.  This is an area where you will pay $100 just to save $1.

(3) Don't try to go cheap with the electrical and plumbing hardware.  When in doubt, just replace it.  We make it a priority for us to replace all the water valves and electrical switches and outlets.  P-traps are also a likely problem area.  Just replace them.  Don't try to be cheap and try to caulk your way out of a leak.  A p-trap under the sink costs $2.  A leak will cost you $500 or more in repairs.  If the water heater is getting old, replace it!  An old rusted water heater can flood the whole floor or your basement.  If you look hard enough, a good 40 gal water heater brand new you can get for $250.  

(4) And finally, learn to do a lot of these things yourself.  Around where I am, it costs about $70 just to have a plumber come out for a damn leak under the sink.  You can avoid all of this by replacing the potential problem stuff before a tenant moves in.  Even if you don't want to do the work, you need to know the ins and outs of these things to check the work of your contractors.  I can't tell you how many contractors I've encountered who tried to price gouge something because they thought I didn't know any better.  It does not cost $200 to fix a p-trap leak under the sink.  Replacing a water valve does not cost $500.  Learn these things for yourself.

 Actually, I didn't mean to be defensive. And yes, I agree with the general patterns of behavior of each generation. In a way, we do fall into that pattern. Husband and I love to travel. Unlike a lot of other millennials, we don't spend every penny we earn to travel. 

But yes, I agree with you. 

Millennials come in all shapes and sizes. Husband and I are millennials. We flipped houses for a few years and now we are buying and holding rentals. Some millennials we know spend every penny they earn traveling the world. Some we know who are always broke and can't even travel or buy. 

I know we have certain reputation to the older generations. I'm just saying we are a very diverse group. 

Full disclosure. My husband and I do not follow the BRRRR plan. We have our own thing that works with us.

The point is to get a positive cashflow going.  Yes, you will end up with a lot of debt, but after subtracting out the payments that you have, you should have a little extra for yourself as net income.  If you rinse and repeat, this net income will hopefully be enough to substantially subsidize your full time job income.  Some people have gone as far as having this amount being enough to replace their full time job, given that they have enough rental properties that have positive cash flow.

Hope that helps.

Edit.

Ok, let me try to be more clear.  

After your last step there, you now have $15k and some positive cash flow (net income).  You can get another loan to stack on top of your $15k and go out get another property.  Rehab.  Rent.  Refinance.  Assuming everyone went well, now you have $30K and slightly more net income.  Repeat.  etc.  The point is to build up that profile of rental properties to bring in positive cash flow. Each rental property may not bring in much, but a whole bunch of them together will bring in enough on a monthly basis to subsidize your lifestyle.

Edit again.

Also, here is another thing to consider.  I don't think seminars and online articles stress this point enough.  You need to think of everything in terms of assets and liabilities.  I know most people think your personal home is an asset, but it is actually a liability.  Banks always tell you something like a boat is an asset, but as a matter of fact for most people it is a liability.  

Once you understand what are assets and what are liabilities and able to identify things in your life based on these 2 categories, then you will understand that a rental property that has a positive cashflow is an asset and that this is the whole point of your venture into REI.

For example, my husband and I own outright 5 properties.  We are closing a 6th next week and are working on obtaining a 7th.  The 5 rental properties we have right now all have tenants and they are worth a lot more than what we paid for them.  In other words, they are assets.  Until our 6th and 7th get tenants, they are liabilities because so far they only cost money without making any.

The BRRRR method is probably the safest method to building real assets.

 All our tenants pay for their own utils. 

 Yup. You should ignore me and continue with what you are doing :-)

 No. Not super urban, but pretty urban.

I'm just sharing from experience. Not trying to sell anything to anyone.