All Forum Posts by: Colin Reid

@Thomas Manning, boom, there's the catch! Thanks for pointing it out.

We're having some electrical work done in one of our houses. It's a new area for us, so we hired a company based on a referral from our agent. The electricians (one licensed, one assistant) arrived, did the work, and the lead guy gave me his personal number, saying he is indeed licensed and can do work a lot cheaper than if I go through his employer.

Is this considered kosher, and separately, is it wise? I know there's no free lunch, so what are the pitfalls?

1. Favorite Real Estate Book: Tie between Hold, and Millionaire Real Estate Investor, both from Gary Keller. Hold got me started and the rest of the Keller books have kept me going. I have no affiliation with KW other than as a client (yet).

2. Favorite business book: Think and Grow Rich, by Napoleon Hill. I haven't really enjoyed any others.

3. What do you think sets apart successful real estate investors from those that don't succeed or never even start?: Fear and ignorance. I don't work in the industry full time. I'm Active Military, and the majority of my peers believe real estate is bought to be lived in, risky to invest in, and think I'm nuts, along with one or two of my peers who also invest. They simply don't know about it, and are afraid of the perceived risk. 

4. What do I do for fun? I am a competitive target shooter and handgun safety instructor. We enjoy the outdoors, hiking, camping, offroading (and working on the Jeep as a result of the offroading) and we have our first child on the way.

@Daniel Chang, I agree with your sentiment, and that's why we're trying to diversify. We're certainly not getting out of real estate anytime soon, but we realize a need to be in other asset classes as well. 

@Frank Jiang, we've been burned by a salesman claiming to be an "advisor" once. That's why we're only interested in working with fiduciaries.

My wife and I have been interviewing financial advisors lately, all CFP's from reputable firms, and all fiduciaries. We've reached a point where we have enough income from our day jobs that we feel we need some help diversifying and directing it to meet our goals. We've both started learning as much as we can about REI and personal finance (separate but related topics in our opinion), especially since we got married last year. I've been a buy and hold investor for about 3 years, together we own 4 properties (including my home, which will get rented eventually) and aside from those four mortgages, we are totally debt free. We plan to buy more, and I may do real estate part- or full-time when I get out of the military.

But in listening to several financial podcasts, and at least one of the interviews with a CFP, I hear a lot of warnings against real estate. One advisor even said "when the market peaks, I would get rid of all those houses." Could be good advice, but there's a lot more to consider when making such a decision, obviously.

So is this anti-real estate mentality a result of lack of understanding, or seeing other clients' lack of success in REI? Why are so many financial professionals against owning real estate?

Welcome, David!

You're starting out much like I did, except you have a plan. Just the fact that you're here means you won't make the mistakes I did when I was looking for my first properties.

I am a big fan of Gary Keller's books (HOLD and Millionaire Real Estate Investor are great reads), not to take away from any of the others mentioned already. Read before you start looking or working with a realtor. It's easy to get excited and move faster than you can read. In the mean time, while you save up some more, it's free to cruise zillow, realtor.com, etc to get a feel for the comps in your target neighborhoods. Zillow is nice because they show what properties actually sold for (the z-estimate is crap; scroll down.), which you can use as a source of rough comparable data.

The savings cushion is critical, but I also buy a home warranty. I've had good luck with American Home Shield. For my home and properties nearby, I selected a higher deductible plan to save a few bucks on the premium, but for a few properties we have that are hours away, we pay a bit more and have a lower deductible since there's no practical option to just go over and fix it ourselves. A major appliance or two replaced by the warranty company will pretty much pay for the coverage and deductible.

Put as much down as you can. More money down means a lower payment every month, which means more cash flow. My first house was purchased for a fair price with a VA loan with nothing down, and it barely cash flows since I moved out. By my third property, 20% down and an aggressive offer results in a property that meets the 1% rule and cash flows $400/month.

Best of luck! 

I'm not an agent, but I've been the son of an agent for 20 years or so, and learned a lot from that and even more from the few deals I've done. All the agents we've worked with have been good except for my first one (left the closing table to show a house), but only one team has really been able to support me as a buy-and-hold investor so far. They are buy-and-hold investors themselves, the PM on the team is an agent, and they go out of their way to support me as a landlord while keeping the tenants happy as well. The last agent I worked with on that team had a HOLD worksheet (from Gary Keller's book, HOLD) prepared and stapled to the listing for each house we toured.  Everything I've done with them has been a win-win-win. That's what makes them "investor friendly" to me. 

The others have tried to sell us houses we'd love to live in, but the numbers don't work for investment. They may be good agents for regular buyers/sellers, but not super investor friendly.

I would guess that an agent who is an investor will be well equipped and inclined to help investors in a similar niche (i.e. if the agent does buy-and-hold, he/she may be better suited to work with other buy-and-hold investors, but maybe not a flipper).

Welcome! Lots to learn here. Good luck!

My goal I set in 2014, as a single guy with a job and two houses, was to buy one house a year for the next 4 years. I bought one in 2014, which is cash flowing. I got married this year, and my wife came with a house, which is also cash flowing. I'm calling that a win. We're looking for our 2016 house right now, which will bring our portfolio up to 5 houses.

We have some other goals, both this year and long term. 

First, we  will fix up whichever house we buy, while living in it. We are trying to buy it like a Flip (reading FLIP, by Villani and Davis right now) but with owner-occupied financing, spend a few years fixing it up, then rent or sell, depending on the market at that time.

I'm also looking into getting my license, and I'm sure I'll have a lot of questions for another thread. 

After this next purchase, we'll have 5 mortgages, none more than 6 years old. We're going to have to look at paying off some of that debt, and/or creative financing. Knowing our acceptable risk level, creative financing is not something we'll likely be comfortable with, but snowballing our cash flow from our rented properties. I'm stating the goal now that we'll come up with a plan for reducing our debt-to-income ratio (mortgages are our ONLY debt, period) and stay attractive to boring old conventional lenders. 

Thanks for starting this. We're just starting to integrate our finances and figure out how we're going to invest as a couple. This gave me a great excuse to type some of this out!

 I grew up in NE Baltimore County. At 18, college and the military took me away. That was more than a decade ago. This is one of the many reasons I'll never go back there.