All Forum Posts by: Matt H

I'm assuming that you don't have a lot of capital. So therefore you need to start flipping homes. Again my formula for doing that is that you have to flip them as fast as humanly possible. No waiting around to cover a few mortgage payments. Do the renos in a week and flip it in a month. Just do carpet and paint only, regardless of other stuff. That will cover 95% of the dwelling. Your not living in it, so it doesn't have to be perfect. It won't have to be perfect to sell it. Just carpet and paint because that you can tackle in a week. If you do anything else that's when you start adding more work for yourself that necessary. Do it on your Home Depot card that way you defer payment for 6 months. And relist the same day you take possession. That way you could do many flips in 1 years time. Each one leveraged into a larger deal. That way your capital gets leveraged more and more, and you make exponentially more each flip. In no time you'll have $100k saved. With that you can go shopping for a 1m dollar apartment building. All you need is 10% down to buy an apartment which will set you up for life.

I was told that you have to be 21 in the US to be considered an adult is that true? Here in Alberta it's 18. So once a kid turns 18, the very next stop is the bar to get drunk legally.

Okay lets get this straight once and for all...

for the record I didn't say it's going to appreciate by 50%. I said it would appreciate by 100% per year and I GUARANTEE THAT IT WILL. So here' how much my house for example will go up by each year over the next 10 years:

$640,000
$1,280,000
$2,560,000
$5,120,000
$10,240,000
$20,480,000
$40,960,000
$81,920,000
$163,840,000
$327,680,000

So as anyone can see as "clear as daylight" my house is going to be worth three hundred and twenty seven million dollars in 10 years from now. It's completely impossible for this not to happen.

Then only 2 more years after that my house will be worth over a billion dollars. So get is straight!

What I don't get is why we pay $4 dollars per gallon but sell you all the oil you need and you only pay $3 per gallon. Can someone explain to this to me? We should be getting the lower rate.

I agree with Ryan,

One major thing that hasn't been spoken much of is being "counter cyclical"...

Remember right after 9/11 how the stock market began to plummet? Everyone was in a selling frenzy? Well that's when the real experts in that market were buying like crazy!!! And then just a few years later it was back to where it was on 9/10.

The real estate market has it's bears and bulls too. But it's generally a very slow moving. And generally the values don't go down, or if they do it's very mild, but when they do that's the time to be buying as much as you can. You're goal in that market is to be approaching all the sellers. And making tons and tons of lowball offers. And buying whatever you can below market value. Just like what happened in 9/11.

Then you just rent it out and hold it until the market turns around. The market will eventually spike again. Everyone will be whoopin and yelpin about how things are soaring and how everyones getting rich. And fortunately for you, you bought at a discount during the time when the market was the lowest, therefore making the biggest gains.

So if you can think long term and be counter cyclical you could stand to do phenomenal.

I think that would be kinda tricky because most people who would buy a nice home to live in for their family, they already have their own furniture? What are they gonna do with that? I do think a staged out sells easier though than a baron one.

==================================

LETTER OF INTENT TO PURCHASE

Date: April 22, 2007

To: XXXXX XXXXXX

From: XXXXX XXXXXX,
XXXXX XXXXXX Inc.

Re: residential property located at: XXXXX XXXXXX

The following sets out the basic terms upon which we would be prepared to purchase the Property. The terms are not comprehensive and we expect that additional terms [including reasonable warranties and representation,] will be incorporated into a formal agreement (the “Agreement”) to be negotiated. The basic terms are as follows:

1. Purchaser: XXXXX XXXXXX Inc or it’s nominee

2. Vendor: Current owner of the Property represented by realtor: XXXXX XXXXXX

3. Property: XXXXX XXXXXX XXXXX XXXXXX , free and clear of all liens, charges and encumbrances at Closing, except: [e.g. those recorded on title to the Property as at the date hereof, with the exception of the Vendor’s mortgage(s)].

4. Purchase Offer: $300,000.00

$225,000.00 New first mortgage (or possible option of assumption and or with increase of existing first to 75%)

$50,000 Second mortgage (carried by vendor for 5 years interest only at 8%)

$10,000.00 Initial Deposit
$5,000.00 Additional Deposit following condition removal
$10,000.00 Balance

5. Deposit: Upon execution of the Agreement, the Purchaser will deposit the amount of $10,000.00 which will be fully refundable if the Conditions Precedent are not satisfied or waived in writing by the Purchaser. Otherwise, the Deposit will be applied to the Purchase Price at Closing. If the Purchaser defaults at closing, the Deposit will be retained by the Vendor as it’s sole remedy.

6. Conditions Precedent: The obligation of the Purchaser to purchase the Property will be subject to satisfaction or written waiver by the Purchaser of the following conditions within 60 days after execution and delivery of the Agreement.

Review and approval of the documentation concerning the property;

Completion of satisfactory physical and environmental inspections of the Property; including suite inspections.

Completion of satisfactory due diligence search and examinations;

Satisfactory review of the title of the Property;

Satisfactory first mortgage financing being arranged for the purchase of the Property;

Satisfactory second mortgage being provided by the Vendor for the purchase of the Property;

7. Additional Items: This letter of intent hereby states the major terms of the agreement that the Purchaser would be prepared to move forward with. This letter of intent is in no way a legally binding agreement between the Purchaser and the Vendor.

Sincerely,

XXXXX XXXXXX

_____________________________________

The above terms are accepted this ___________ Day of _______________, 2007

_____________________________________

XXXXX XXXXXX
President
XXXXX XXXXXX Inc.

Phone: (780)
Cell: (780)
Fax: (
Email:

kygregor....that's why generally I lock in for 10 year fixed terms on mortgages for rental properties. That way you can figure out your exact payment well into the future. And yes I agree with what he says about 50% expenses. That's not his formula though, everyone knows that.

Just out of curiosity how exactly could buying an apartment "Ruin someone life"? That's nonsense. Buying an apartment would be the biggest breakthrough almost any REI could have.

They'd gain liquid cash flow
They'd gain appreciation on a large amount of good debt
They'd gain mortgage pay down
They'd learn how to run apartments (but there's nothing to learn really)
They'd gain the confidence to buy apartment (which is really a myth as there's nothing to it)

What do you gain if you buy a house to rent out? Basically nothing.

You get $200 buck a month cash flow
You pay the mortgage if a tenant ever moves out on you
You don't have your money leveraged at all, so it's NOT working hard for you.

Otherwise each has similar risks which are both minimal. If the mortgage isn't paid then in time the bank will foreclose. There's the same risks on both. Only I know for "A FACT" that buying a house to rent out is way more risky. Here's why...

If you buy a duplex and say your mortgage payment is $1200. You'll be lucky to get $700 rent from each unit. So you're making a total of $1400 and after mortgage payment you're left with $200. After taxes, utilities, insurance, repairs, maintenance you're left with a negative cash flow every month. But that's not the risk, or the worst of it, the worst part comes when you call up a tenant because a check bounced and no one answers, so you go there and the place is a disaster and they've moved out. You've spend their damage deposit already most likely and now you're left having to pay the mortgage for half the building out of your own pocket. And you face that very same risk month after month after month. One unexpected move out and you're paying the mortgage.

Where as with an apartment, you have economics of scale working in your favor. For example, chances are most any apartment you buy should have some cash flow left each month after all expenses. But the fact that you have multiple units is a huge benefit in numerous ways.

It provides you with security in terms of vacancy, because there's no way you're building will go vacant. Worst case scenario you have 1 midnight move which means that you slightly less positive cash at the end of th month. but at least you still have positive cash flow. And you can rerent that unit in no time flat. The other major benefit is when you do a rent increase you're getting "the rent increase" times 10 or 15 units. So what you could do is give two tiny rent increases per year of just $25 dollars. That's $50 per year x say 15 units - $750 additional dollars per month that you'd be earning ($750 x 12 months = $9000 per year). You could easily continue giving those every six month and most likely people will not move over it. On a duplex you can't generate that kind of leverage that multiple units gives you.

An apartment has all the economics of scale working for you. There's far less risk, far more rewards. I'm yet to see what this big risk is in owning an apartment?

In order to become wealthy you need lots and lots of debt. Millions of dollars worth of debt. All good debt in the form of mortgages which will make your rich. Without lots of good debt you'll never get anywhere. Yes, do avoid bad debt, but good debt such as mortgages, you want to get as much of it as humantly possible, thus leveraging your downpayment to try to use it to borrow as much more as you can. You can do whatever you want, everyones goals are different. But maybe you should ask yourself what you're trying to achieve. Getting a new stream of income, or just starting slow and learning the ropes. But just realize that there's a fast track and a slow track. Both in time will get you where you want to go though.