All Forum Posts by: Matt H

It doesn't matter how much you end up paying back in interest. Oh my oh my , what is with everyone being so worried about paying off good debt that's making you money? You get rich off OPM remember. It's good debt, so don't worry. You're goal is to get the lowest monthly payment you can come up with because one condo is not going to cash flow very good at all. They'll be lots of other costs that come up that you can't avoid so you have to go for whatever mortgage gives you the absolute lowest payment. The longer the amortization the better. Are you really going to keep this condo for 40 years? Like come on. Chances are you'll have it for a hand full of years, by then it will have gone up in value and you'll have found another even better investment and you'll cash out to leverage the money into something even better. Longer amortization is always better. Home owners who are not REI's only think about paying off their mortgages. Mortgages is all good debt to the REI, it's what's making you rich. So don't worry about paying them off. So ya go 40 year! Also don't tell people in here the area that you're buying the condo in. Someone else will go look it up on the mls and buy it from you.

debt free....

$30k increase over 5 years is easily justifiable in my opinion. That's only about 5% per year. That's about the national average appreciation for property. It doesn't matter how much they raised rents. Because once you take possession can't you bring the rents back up to market value by simply doing a rental increase?

One thing you have to realize about buying rental properties for cash flow is that you can't think over the course of a few years. You have to think in terms of decades when buying rental properties. Like where will you be with that property in 10 years? And the answer is always "in a great situation". Because you'll have appreciation, rent increase, mortgage paydown etc etc all working for you over 10 years. Honestly you should think long term when buying. I think that's one of the biggest mistakes that people make when starting out, including myself, was that kind of short term thinking. So always try to calculate where you'd be with that property in at least 10 year, 20 years and more and then decide if it's really such a bad deal. Only if you're intent is to flip is needing to get the best price so critically important.

I'm getting a bad interest rate on one property I'm buying. It's a 28 suiter and the seller insists on carrying the first at 6.5%. Here the going rate on firsts is 5%. So the novice investor might think "nope, bad deal because I'm not getting my interest rate". But the experience investor always thinks long term as to where they'll be with the rental property in 10 year or more. In this case the mortgage term is only for five years. So the situation is that so what if I don't get the best rate in the short term, which in this game 5 years is. But I'll refinance in five years and for a better rate and meanwhile I still will have all the other economic factors working for me, and I'll own another solid income producing asset, which is making money for me 24/7/365.

Buying a rental property is like a marriage, it's for the long haul. So if you end up paying a little more for a property upfront, or don't get the perfect interest rate, or whatever, it' no big deal when you look at the big picture. Also it's rare that you'll win in a negotiation on all fronts. So take what you can get out of the deal and move onto the next deal.

Mike...

Just our of shire curiosity since you seem to know everything, why do you think the market is going to change here? And do you have any predictions as to when?

The way I see it it could take along time. At least 3 years or more. TD bank predicted that the economic indicators they use have us on course to do well for the next decade. So I'm not sure where you get your research. Do you know anything about Alberta, and what we do for North America?

It's always best to defer payment on a flip. There's so many other hard costs that you can't escape in the process. So whatever you can put on credit like supplies that's a must in my opinion.

ncskier....

So was driving a car or riding a bike until you did it. Think about it like this...you could go to university for years to learn complex studies like rocket science, astronomy, quantum physics, engineering, surgery. With that in perspective do you honestly think that buying and running an apartment building or flipping a house is as difficult as that? Like goss darnet this is not rocket science. This is as easy as learning to drive a car. This does not take brains. I didn't even graduate from high school and I've already made millions in realestate. If it was that difficult there's no way I'd be able to do it. In my opinion it's only the big numbers that scare people. But there's nothing to be afraid of. All you got to do is start to change your thinking. Just start telling yourself every day that you're a millionaire. Slowly that will grow on you. And in no time you'll start doing big deals.

Ya, it's true that if you could just buy, rent out and hold for profit you'd overtime be extremely wealthy. But all that could take at least a decade. And once you've used up your downpayment on your first place, if you hold, then where is the downpayment for the next house going to come from when you're just starting out and you have not much savings?

If you want to go from no where you are now to the point where you can quite your job you can do it a lot faster. Just put your money into a house flip it, then take the profits and leverage that into a more expensive flip repeat, repeat, repeat ... Then rather quickly you'll have six figures to work with. It's possible to do that in 1 year. If you don't believe me there's a guy who did 52 flips in 1 year starting with very very little. He has a book out where he talks about how he did it.

So anyway once you have say $100k that will buy you a 1m dollar apartment building. The income from which you should be able to afford to quite your job off if you wanted to. From there the sky's the limit.

As for paint and carpet, the reason I say that is because paint, carpet, and lino would cover like 95% of the whole house. You can even paint the baseboards, and the door and door frames white. I've seen this on some houses that before looked absolutely dreadful. But by just doing that they looked like newly renovated houses. The key is not to do too much. I've seen it happen all the time where a person buys the home with the intention of flipping it for profit. But instead they get into this mindset where the reno job has to be good enough to the point where it would be up to their own standards to live in. That's the completely wrong mind set to get into. So be careful of that. Because then you end up doing more and more and more, to the point where you've blown your budget and your time schedule and you'll most likely end up with a loss. So be very careful. Or what you could do is just set an iron clad rule for yourself that you're allowed to do as much as you want, as long as it's done in 1 week. Which again comes down to paint, carpet, lino, and maybe change out the appliances for nice updated ones. Go to these scratch and dent appliances stores for those discounted new appliances. I say all this because you're getting the most amount of home reno's for the least price.

Anyway good luck.

Hi Alex,

22 and going to be making 75k to start??? Wow congratulations, you got to be excited about that!

Well as for RK his books as kinda all across the board. But there's 2 inparticular that you absolutely have to read. The one I'm about to mention is absolutely essecial reading which is "Cash Flow Quadrant".

Trust me, read that book. Also pick up RK "Retire Young, Retire Rich". That one is also a great book. Also pick up Carlton Sheets "No Money Down" and start listening to is too and from work every day. That will teach you all the basics of REI.

As for getting started, you're on the right track. Continue to educate yourself using the books I mentioned. Get yourself out of the "E" quadrant is soon as you possibly can and into the "I" quadrant, which will gradually happen as you get more and more into REI.

As a first project what I suggest is one of two things:

1) FLIPPING PAPER: Learn the process of buying a property. To learn the steps you can read that anywhere online or by simply chatting with a realtor. Next find out where the big real estate investor meetings are held in your area each month. You want to become a member of those REI clubs anyway. It's super important. Then once you know where they happen and you start to become more aquainted with the people there, then you're ready to flip some paper. Check your local real estate laws in your area before doing this. But you go out and find a good rental property which could be anything from a duplex, rooming house, or small apartment building. Then you put in an offer to buy it. Where you write your name on the contract you write "Your name and or Nominee". Then you ask for a lengthly condition removal date. Even 1 month for condition removal will work. Then you take that contract (paper) to the meeting. There you mention that you have x property under contract and that you'll sell the paper to anyone for 1 to 4% of the purchase price. So on a $1m dollar property you'd make between $10 to $40k. You could say to the group that you normally sell contracts for 4% but as a special to this REI Club you're selling it for just 2%. That's a quick way to make money in REI without actually buying anything. All you need is a few thousand to tie up a property under contract. At that point you flip the paper and get your deposit money and your commission back. The the person who you sold the paper too will go on to purchase it. It's a easy way to get started.

2) Another way is to flip homes for profit. Download Limewire. Using that download old epesodes of "Flip this house" and also "property Ladder" which appear on TLC. Start watching those shows. Listen to the host when she gives the flipper advice on how to do it. Learn from the mistakes of the flipper. Generally what they do is they find new flippers who don't know what they're doing so that lots of mistakes are made and so that it ads drama to the show. so learn from those mistakes. Once you got the just of it you're ready to go out and do it on your own. By this time you have been networking at the meeting and you've exchanged lots of cards with people there. You've kept in touch with them and they're now comfortable with doing business with you. So you approach them all and you hit them up for $5k as an investment in your flip, or whatever they can spare. Tell them that if they put up $5k in the form of a note that you'll repay them plus 50% or 100% as soon as you flip the house. You combine that with whatever money you can put together. Then you go out and buy a dumpy house in a great neighborhood. The key is to find a home that's selling cheaper than what it normall could sell for. This is sometimes due to a death, job change, moving, divorce, bankrupcy etc...where they have to sell out fast and for cheap. Try to find a discounted home because you'll hear this saying a lot in realestate which goes: "you make your money when you buy, not when you sell". That's because you're buying that equity at a discount and your reselling the equity at the going market rate for that particular neighborhood. You can't expect to relist a house terribly higher than others are selling for in the same neighborhood. So try to find a deal when buying. Make tons of lowball offers until somone bites. You put 5% down and that should be enough to get a mortgage for the rest, assuming that you've worked at your job for a bit and that you're credit is good. If not get someone to cosign for you, and tell them you'll pay them a few grand after you flip the house. When buying the home you tell them it's to be your personal residence. In essence it will be as you'll classify it as flipping your personal residence. You can even live there while you're flipping it. The trick here is that the very same day you buy the house, you also "relist it" back on the market at the new inflated price. So if you buy it for $200,000 then relist for $250,000. Try to make like $50k at least net net after all expenses, if not more. $50k should be your minimum. Then you go to Home Depot. Get a home depot card and buy the paint, carpet and lino you need. That way you don't pay for six months. You go in and with the help of a few friends (not the original investors) paint up the whole house but have a pro install the carpet and lino. You should be able to do the paint and carpet in 1 week. Do not do anything else. The home does not have to be perfect and you don't have the luxury of the time or money to do anything other than paint and carpet. So after 1 week you'll have what looks like a freshened up home for sale. Keep track of what else is selling near by before you buy the home (flip) and after you relist it. That way you'll have a feel for what houses go for in that neighborhood and you'll know how much to list it ad. Consult a realtor as well. Explain to them that you're trying to flip it, to come up with the right price point. Then hopefully it will sell within a few months of being on the mls. Also you have to relist it on the mls. Do not try to sell it yourself. Rather let the 10,000 realtors in your area compete to try to sell it for you for the small commission. it's always worth it. Once you sell it and hopefully you make $50k net net. You pay out your investors plus interest of like 50% or whatever and then you tell them that you're working on your next flip and that you want them to now reinvest all their funds into the next flip. Repeat that process every few months for another $50k profit. Each time try to flip bigger and more expensive properties. You'll find that the bigger the property the more likely hood you'll have to make six figures on a flip. ie: I just flipped a nice big home last year and made $140k net net after all expenses, and it only took six months to do. So start small and work into bigger and bigger flips. In no time you'll have your 10% down payment for your first apartment building. That you don't flip, that you try and buy for cash flow which you can retire off. good luck.

Okay I'm not going to comment on Mikes posts anymore, and I hope he doesn't comment on mine. If we both want to give someone advice based on our own experience so be it.

But I have to say just one last thing in light of all of this unrelenting bitter debate...."Nahh Nahh Nahh Boo Boo!!!!"

That's not all bad then, because just calculate into your purchase that you'll have to pay back the cities down payment. That's standard with any kind of second mortgage. Who wouldn't want to be paid out. But don't wait the 10 years to try to get a break on that 30k. Just sell it for a profit. Payout all mortgages and keep the profit which you'll use to do your next flip. So the next time you'll have your own downpayment money available. Then just keep flipping for quick five and even six figure winfalls.

Mike,

Life is short. Time passes us by so fast. We look back on things that happened a decade ago but yet it just feels like yesterday. So with the tiny amount of time you have hear on this earth, why not take a chance, why not step out of your comfort zone of working a dead end job 9 to 5, why not try get out on your own. That's what I'm trying to help these newbies to do. Is to have the optimism and confidence to do just that. Otherwise if they think there's that much of a risk they'll never step out and try a flip, or to try buying an apartment building. If they think it's risky they won't try it. And I know you think it's all risky but I don't. So we just have two different view points. If you think I'm wrong then take a look at my bank account my millions don't lie. And I'm working on buying 3 more apartments right now. If I thought it was that risky I wouldn't be doing it myself. So tell people it's risky all you want, that's up to you. But I don't think you're helping anyone by trying to protect them from trying new things. There's absolutely no way in life to try something and not benefit. The most successful people in the world also are often the people who went through the most failures along the way. Babe Ruth struck out more times than anyone in his era but also became world famous for his home runs. Worst case scenario if you somehow screwed up so bad that you lost money in buying a property to rent or flip, (which I don't see happening) at least you'd learn what not to do next time around. But at least you'd have gained the confidence and experience in knowing how to buy, and the process that's involved. Gaining that kind of ability is priceless.

P.S.: And you think my numbers are off right? Ya you are absolutely right Mike, because I made a net net profit of $140,000 on my last flip. So to just make $25k net on a flip is ridiculously off!!! So you're right. Also the house I just bought I paid $640k for and a smaller house a few doors down just sold for 1.3m, and two more down the street are selling for over a million so I'm assuming that in time I'll flip this one for at least half a million net profit. So again you're right Mike my numbers are way way way off!!!