All Forum Posts by: Matt H

It is an interesting thought because actually up here you don't need any licensing to become an appraiser. So you could read some how too manual for that matter to start doing it. Apparently some of them make good money too. Because this one lady that does there here she charges like $500 and at most she probably only spends half a day to do 1 appraisal.

However, that being said I think if you want to become a real estate investor the best way is to just do your first no money down deal. 75% first, 25% second there's your total purchase price. You can do that. You just ask the vendor if they'll carry a second at like 15% interest. You're bound to find a seller who things that's attractive and will do it at the 25% amount you need to cover the balance.

Hey Andrew,

There's a couple of real estate meetings that I go to here in the city that you might be interested in. They're about once a month each usually on Tuesday evenings. Email me if you're interested in the times for those.

You know what, as strange as it may sound in order to do something or become anything in life, the very first step to becoming an expert is to just affirm to yourself that you "are" an expert. Honestly, if you can build up the believe system within yourself that you're already a expert real estate investor who knows how to make millions in the industry before you know it you'll see that become a reality for you. You have to believe it first before you'll see it.

The next piece of advice I could give you is critically important. Get a copy of Carlton Sheets No Money Down and listen to it during drive/commute time. You'll quickly learn everything you need to know.

To answer your questions:
1) To buy a house there's two different types, a) private sale b) listed on the mls with a realtor. If you're buying a private sale there's no realtors involved. Therefore its' just straight negotiations with the seller. The same way you'd buy a car or any other used item. If it's with a realtor then you'd either be dealing with one or two realtors which are refered to as the buyers and sellers agent. The realtor does a lot of the work in negotiating and communicating. So once you found a property there's several important things that go into the contract for purchase. The price, the terms, the deposit, the condition removal date, and the closing date. What typically happens is that when you fill out the contract you get some time, usually a few weeks to do what's known as "removing conditions". Conditions on our contracts are all standard so you don't have to write in the actual conditions. Those conditions are stuff like "checking to see if you can get financing". Then you have a closing date which is the date you take possession of the property. So if you both agree to the terms and dates and you sign then you give the seller a deposit check which is a small amount of a few thousand. At that stage the property goes into a status known as "pending". Because it's Pending condition removal. If you remove conditions before the condition removal date then that means the house is now sold. And on possession date you have to have your money ready. So you have to have your mortgage in place before that possession date. Then all the documents are sent to your lawyer and they then handle the closing. The lawyer then calls your realtor to give them permission to give you the keys. All the title and stuff is transfered and recorded with the city. And ya you have to get insurance for the place after you remove your conditions.

2) A realtor will do it if you choose to use them as your realtor. Do not sign on with one of their "exclusive contracts" though. That prevents you from using other realtors. So just "verbally" tell them that you'd like ot use them in helping you find the property. If they insist that you sign one of those client contracts tell them to go screw themselves.

3) No that's not uncommon. You can ask for anything you want done to the place which you can write into your offer. So say the place desperately needs a carpet cleaning. You could choose to write that in. But you have to be careful as to what you negotiate on. Because if you demand too much then the seller might not want to sell to you. So generally don't demand too much. But instead just bring defects to their attention and use that as leverage to get a better price. Like say to them "well the place needs a new roof (if it does) and so that's why I'd like to get $10,000 off the price to cover the roof repairs". You get the picture? (however, in our market here that's impossible at the moment, our market is still way to tight. Which is known as a "sellers market", which is when the market conditions favor the sellers. And as a buyer you have very little room to negotiate.

4) Not necessarily. Generally houses will be worth what others in the the same area are selling for. In our market you really can't sell based on what you think the house is worth. You just have to look at what else is nearby, similar in size and scope, and selling for. Because that's your competition for anyone buying in your area. If you have some major upgrades like granite, and other high end stuff sure that brings the price up a little, but not too much. It also depends a lot on the way you market it. For example I flipped a nice new house. It had a walk out basement. So what I did is I bought all the materials to do the basement. Costed only like 5k. Then i started on the renos. At the same time I advertised it saying that the basement was underway and once that was done I'd be increasing the price to $100k more. That got people motivated to take over immediately. I had no intention of actually finishing the whole basement. I just wanted to make it appear the buyer as a good opportunity to get in before the price went up. So there's a lot of little tricks you can pull to selling a house. But remember you make your money when you buy, not when you sell. That simply means that if you buy below market value you just made x dollars. However, i shouldn't say that because our market is different. Here real estate is going up by 5% per month so you'll make money when you buy and when you sell.

That being said if I were you I wouldn't wait to buy anything. Real estate is already up about 18% this year here in the city and continues to climb. So get something pinned down immediately because it will appreciate really fast. For example if you buy a house say worth $300k in one year that house could likely be worth at least $400k. So you make $100k in one year (possibly more). They're predicting about 42% increase this year in the city.

oh there's the door gotta run...

Currently looking for a second mortgage for a 28 unit apartment building.

Would like to find $100k for 2 years, paying monthly interest only payments with a balloon payment at the end at 10%.

The total purchase is for $820k.
First is for $620k
Second needed is: $100k

Total financing of 88%

If you might be able to do $50 or $100k on these terms then pm or email me.

Ya it is a quick way to get started. Just buy a house that all your research indicates is prices below market. Paint/carpet then flip. Don't do too much. Just paint and carpet at most. Then do that about a handful of times, continually flipping bigger and bigger, while saving the profits each time. Then in no time you'll have your 10% down payment to go apartment shopping. You only need 100k to buy a 1m dollar apartment building. That should give you enough liquid cash each month to retire on if you wanted. From there the sky's the limit right.

Mike....what I meant by that statement was that once you get a building and it's cashflowing each month, then what does it matter. Of course you have to know what it's generating. But once you set it, you can forget it. And just reap the rewards. Thats' why I'm just suggesting that he set up the right investment where he can forget it, and not have to ever worry about digging into his own pocket to cover a mortgage payment.

No the numbers don't matter to me anymore. Once you make enough money what does matter. Calculating to the penny only matters when you don't have as much to work with. As long as I have the approximate numbers I'm fine with that. And ya when it's time to buy I do crunch the numbers, but what's the point when where just shooting the **** on here. And the three new buildings will be netting approximately $50,000 per month. Added to the buildings and business I have I'll end up with $100k per month.

Listen, you and I just have two different styles of play in the same game. But it's not about us. It's about this guy who has $75,000 and wants to make the most of it.

If he learns to buy a house and rent it out, that's exactly what he'll learn. If he buys an apartment building and learns to run it, then that will become he's skill set and experience. Which is more valuable? I could teach my dog how to buy a house and rent it out. He's only got $75k to work with. So why not put it in what will reap the most rewards in terms of both cash flow and experience. This is a fully grown man. He's not a kid who needs to be potty trained.

How do you know his income would even support him a rental house goes vacant for a few months if someone bails on him? Where's the income to support that mortgage payment? At least with an apartment you'd never have the whole apartment go vacant. At worst maybe 5 or 10%, but you'd still cash flow on most average deals. And if you keep on top of things you could run it with very little vacancy. If you really own do apartments then you know this.

Okay so you're saying he should buy a house and learn the ropes? And that's suppose to mean less maintenance, less headaches, and less risk? But less rewards.

I'm saying go for apartments, perhaps more issues, more headaches, but far more rewards. And the rewards are not even in the cash flow of the building, the experience of learning to do so is far more valuable. The main reward is just buying that first one and then having the confidence and knowledge to continue buying more of them. Also you might have more issues that will come up, but I think that there's far less risk because like I said, if someone bails on you it's no big deal. You can re rent the unit still pay your mortgage and still have cash flow. Where as with a house, if someone bails then you have to come up with the mortgage payment out of your own pocket. Far more risky in my opinion.

We just have two different contrasting views. I just don't see how putting your funds into a house is anything to get excited about. The money you make at the end of each month is not even worth the headache of owning the place.

P.S.: To the fellow who started all this....If you do decide to buy a SFH, then let me introduce you to my dog, he'll show you what to do.

Mike...let me guess you don't own any apartments do you. Are you even a millionaire? Because you're trying to lecture a multi-millionaire, and I didn't do it via SFH's that's for sure.

Okay, I'll admit, I am playing fast and loose with the numbers, and that's exactly how I like to play it. I like to play fast and loose and make lots of money doing it, I'm guilty! I could care less about the numbers. All I ever need to know is like 3 sets of numbers which are:

The purchase price, and price per door.
The mortgage amount and payment and rate.
Rough idea of the expenses. (40-50% of gross)

Here's the thing. I use to be like you. I use to be overly concerned about having the numbers add up perfectly. However, then I started to realize more and more that it won't matter. The numbers will always take care of themselves and I need not worry about them. It's the economics of scale that matter the most.

Even if you buy an apartment building at break even cash flow, which would be really crazy, but even if you did, that just means you're 1 rental increase away from positive cash flow. And when you factor in appreciation, mortgage paydown, depreciation of the asset etc etc...then over time that property will start to make more and more money.

In the end the number of units you control, being that they're cash flow positive, will ultimately shape your financial future. Remember you can't get rich on your own money. You need OPM. The way to do that is by leverage. Which is why I was saying to the fellow to leverage that $75k into $750k of good debt.

I was doing some calculations and in about 3 months once I close on 3 buildings I'm working on my net worth will start to increase at the rate of about $100k per month. Do I need to know precisely to the penny, no. The rough numbers will do, because the numbers always take care of themselves. And this done using apartments as the vehicle, you cannot do this with SFH. You'd have to own hundreds of them to pull that off, and the economics of scale wouldn't work because you'd have to buy hundreds of homes and manage thousands of headaches. I just could not see the ecomonics of that being an easy reality for the novice person pulling it off. And even if that was true that would mean you'd have to purchase hundreds of homes. That could take years and years. This is a dead issue. Ask any successful millionaire realestate investor what works better, SFH's or Apartments, and most if not all would say Apartment buildigns. If you really think you can get rich off SFH's and you're own money, be my guest. If you want to buy SFH's go ahead, leaves me with more apartments to buy, leaves you with more SFH's.

The answer......no, no and no.

No appreciation isn't completely a result of rental increases. If it was I wouldn't be selling my building for 1 million dollars more than I paid for it last year. Because the rents have not gone up that much. The market dictates the prices, not what the rent is. Some markets appreciate faster as we all know. However, rent is one factor of the whole equation. But people sometimes put too much emphasis on it. Yes rents will go up by $50 bucks a year easy. Thats' just two rent increases of $25 bucks each. Is a tenant going to complain and or move based on that? I doubt it. Here most people are raising rents by $100 or more per year. In the city near here, Calgary many rents have doubled virtually overnight.

Mike....why don't you think my numbers work?
$15k gross rent
+ $400 laundry
less 40% expenses = $9400k
- $4200 first
= $5200 left with 25% down.

With a second then you'd be left with less. Possibly $3000 with nothing down. Plus about $4k that's about 5% appreciation per month. So you're left with around anywhere from $7k per month with nothign down, to somewhere in the range of $9200 with 25% down.

Then factor in over the next five years, rent increases and you're only looking at upside. But you'd better just stick with houses. Leave more buildings for me. Leaves more houses for you. ;-)

Tall......Ya you can get positive cash flow from SFH. Here's how. You buy in small towns or small cities. But the problem is that the positive cash flow is like a couple of hundred bucks. That's not cash flow in my opinion. I wouldn't touch anything making less than 5k per month liquid. And I'm starting to thinking 10k minimum might be better. Like even if your property is making 1k per month in liquid cash that's "fair" but it's even "good". Like what the heck can you buy with 1k. Basically nothing. So no, SFH are not the way to go by any stretch of the imagination. There's no cash flow.

Mike.....Yes you are right. Expenses generally run about 50%. Based on my calculations I'm planning to run it at about 40% as there's many expenses currently that will not longer be in play once I take over. However, my first mortgage is for $620k at 6.5% for 25years. That equals a payment of $4186.00 per month. And I was talking to my friend about this because the mortgage that I'm going to be forced into is actually 1.5% higher than what I could get otherwise. But it's just part of the deal. So for the first five years I'm locked in at 6.5%. Then after five years I can shop around for a cheaper mortgage rate. Also in five years if you factor in say $50 per year rent increase that's potentially an additional $250 per unit per month rent. So in five years I'll be poised to be getting an additional $250 x 29 units = $7250 + the current $15,000 per month rent. So a total of $22250. And at that time I'm hoping that time if interest rates are at least the same as they are right now where I can get a new rate at just 5% (that's the better rate here in Canada right now) then I'd only be paying $3624 per month for my first mortgage.

The bottom line is you have to ask yourself, who's richer the guy who controls 1 unit or 10 units? The guy who controls 10 units or 100. The guy who owns 1 rental home, or an apartment building. It's all just a numbers game. And at the end of the day the economics of scale wins. Lower cost per unit, and more units = more cash flow. People buy houses out of some kind of comfort zone. Because that's all they've ever bought for themselves so often some investors can't see past that. But each to their own I guess. I'm just trying to maximize this guys ROI that's all.

If that's the case, as it's the same here, prices are way too high in my city, so just seek out smaller cities and towns. Properties are cheaper and will cash flow. Right now I'm only buying buildings in small cities and towns.