All Forum Posts by: Matt H

Mike....I agree, with you on the buy with no money down if possible. And he's right. If you show your first and second mortgage holders that you have $75k liquid and some other assets to pledge you can likely buy even no money down. That's what I'm trying to do right now on my building.

But I strongly disagree in terms of buying single family houses. Anyone who ever buys an apartment building never ever looks at single family homes ever again. The economics of scale are far far far superior in multifamily. Multi family units generally cash flow each month. A house will not cash flow. And if you call making $200 bucks a month cash flow then you're crazy.

Look this isn't even worth my time, I should be online gaming right now, but let me lay it out for you in two deals. Both deal are actual real life deals taken from the same city. Population of 120,000 so prices are relatively low still on realestate:

A House/ Duplex:

Entry level price is around $100k. Even if you converted it into two units your rent in total for the area might be $1250 per month. Even if you could afford all cash down so you have no mortgage, you still are left with taxes, utilities, management, maintenance, vacancy loss, and the list of expenses goes on and on. At the end of the month you end up with a few hundred bucks. Please explain to me what $500 bucks a month does for a family of 4's lifestyle? Basically nothing. You can't afford to quit your job, you can't do much other than cover a few bills. So if you ever get sick, hurt, or out of a job, then you'll be screwed. And your appreciation per year at 5% is $5k wow pretty exciting stuff ;-) Makes you want to run right out and buy up some houses!!!...not.

An Apartment Building:

For example I'm buying a 29 unit building right now in the same city for $820k. With 10% down payment that's only $82k down. And the building is grossing $15,000 per month and will cash flow after all expenses and debt servicing at $5000 per month minimum, plus about 4k per month in appreciation. So roughly 9x12month= $108k per year. That's a 131% return the very first year. The liquid cash flow alone is $5000 possibly more if you cut down on expenses. That's $60,000 per year in liquid cash flow alone. (not to mention the 48k in appreciation per year) For a family of 4 that actually would amount to something worth enjoying. Like the for the average joe blow who's only earning $60k per year at there job, that means you would have replaced your income from your job and you could retire if you wanted. That's a big deal.

Plus with a house if one unit goes vacant, then you have negative cash flow that month. With an apartment you know when a lease is coming due and if someone moves out you can fill it or already make arrangements to have someone ready to move in before hand. And so what if a unit goes vacant' for a month. That's only a 3% vacancy loss for one month and you'll still be cash flow positive. That means you'd earn only $4500 that month instead of $5000.

Anyway enough said. Remember the rule of monoply your aim is to get hotels not houses. Or in this case multi family. And remember you get rich on OPM, not your own money. It takes leverage to get rich, not single family houses that are just headaches. No go buy an apartment or you're gonna get whacked, capeesh!

P.S.: And besides I'm a 5 star general, he's only a 4 star....what does that tell you. ha ha.

Listen, you're 100% on the right path. Which is real estate investing. However, what you need to do at this stage is become an expert. Once you understand and learn the strategies you will be guaranteed to make your first million in less than 5 years.

Listen, I've made millions in just a few years in real estate. And here's how I did it.

Starting with nothing I simply did one thing. And if you do this you will almost be guaranteed to become rich. If you do not, then you're wasting your time on this forum. Better off that you just go back to university and try to get a better job. So here's the key...

You absolutely must change your commute time to and from work into study time. The way you do that is simply by listening to real estate training courses too and from work. That will become your study time each day toward helping you become an expert.

So what you want to do right now is pick up two courses:
Carlton Sheets No money down. (you can get it on ebay for dirt cheap)
Dolph Deroos "Real estate investors college"

Do not think here. Just do what I say. Go right now and buy those courses. When you get them put them in your car and start listening to them too and from work each day.

In no time you'll understand exactly what to do to become rich based on your current situation. I have a ton of advice I could give but without knowing exactly how solvent you are I have no idea what to recommend, other than starting with this. Without these courses I would still be stuck running my old business probably not making anything from realestate. So trust me, get those courses Dude and just listen to them as you drive, how hard is that!

Good luck.

Listen, you have the right idea, but trust me on this, as a seasoned investor you're taking a slightly wrong path.

I see this often where new investors end up looking at duplexes and fourplexs. But generally those have little to no cash flow. There simply is not enough units. If a unit goes vacant you end up usually with negative cash flow for that month. Do not do this.

Instead I highly recommend you begin looking for a small apartment building. You most certainly have enough cash to do so. For example I'm buying a 29 unit building right now for only $820k. With 10% down payment that's only $82k down. And the building will cash flow after all expenses and debt servicing at around $5000 per month, plus about 4k per month in appreciation. So roughly 9x12month= $108k per year. That's a 131% return the very first year.

There's no way you can do this with a duplex or a fourplex or a sixplex.

What you have to do is leverage that small amount you have available. In order to do you have to get financing up to at least 90%. I'm trying to get 100% on my deal. Many lenders these days will lend almost the full value of the building. And or you just get a second mortgage to cover as much of the balance as possible. So in my situation I'm getting a 75% first and I'm hoping at least a 15% second (or more).

Because here's the thing....

You do not want to go into real estate to end up just buying headaches with no cash flow. If you do at the end of the day all you'll have is problems and headaches with no rewards. If you're going to take on the responsibility and issues with owning and renting a property, then it absolutely has to cash flow in a way that will positively effect you and your families lifestyle.

And that's really really good that you haven't jumped into anything yet. You're so lucky. Because at least now you can completely avoid the thought of duplexes and fourplexs which have little to no cash flow.

Here's the thing. You only have $75K so that money has to work hard for you. If you had to employ that money would you want it to return just 10% per year, or 100%? Because that's the difference you'll be looking at between apartments and duplexes.

Remember that $75k will buy you at least $750,000 dollar property. That's 10% down. And a first and a second to cover the balance. With that you want to buy as many units as humanly possible. If buildings are prices too high where you live, like here they go for $100k per door, then look in other cities or towns. You do not have to buy where you live. Your just a few hour flight away which cost a few hundred bucks if you ever need to go to the place. My building here in the city I rarely ever have to go to. A decent property manager runs the whole thing and will for you as well once you get something pinned down.

Anyway, trust me. Do not go into duplexes or fourplexs. Your $75k buys you at least a building worth $750,000 any day of the week, which hopefully is at least 20 units.

Good luck.

Just thought I'd share something rather interesting that happened lately. I was at the book store and I bought this book with blank pages in it to do some goal setting.

So I brought it home and wrote out some pretty lofty goals. Like I'd be earning $100,000 per month in the next 3 to 5 years.

So here's kinda the chain of events that followed:

- At the time I wrote those goals which was in early 2007 I was closing on a 48 unit apartment. That closed. Amounting to $20k per month net net in cash flow and appreciation.

- I went to look at another building I had on the go. It looks good and that one will bring in $10k per month net net in cash flow and appreciation.

- Then at the same time was presented two new buildings which I looked at and am in the process of now buying. Both of which combine will have $40k per month net net in cash flow and appreciation.

- And my business is doing about 30k net net per month.

Add it up and you get $100k per month.

So when you're setting some goals, if you already know how it's going to manifest itself, then your goals are probably way to low. They should be lofty enough so that the universe will orcastrate things in a way where it will come to you with the solution to meeting your goals. So write down some crazy figure and see what happens. You never know what forces will begin to work in your favor once you write it down.

So the government will make on this transaction more than the realtor, more the the mortgage company; da man is the second highest earner in this deal....100k roughly. No wonder we're not completely a capitalist society.

Tax laws are different here in Canada. There is no deferred taxes, other than farm sales. I could be wrong but that's what my accountant just told me.

I thought I bought you back? Besides you're the one with the 3m net net deals coming in. ha ha ;-)

Update: I'm going to be buying 3 new apartments. One is tied up, the other two are in a verbal agreement stage. Total of 134 units producing $25k per month in liquid cash after all expenses and debt service. So things worked out really well.

My friend just told me about an interesting situation. He's buying a building, about 30 units, at approximately $100k per door. But those units could be sold off as raw condos with nothing done to them at $200k per door. So he just made $3m net. I just can't believe that. I can believe it, and I do believe it, but I'm just amazed! Like to think that there's million dollar deal floating around out there it's kinda exciting. Just hope I can run into some deals like this.

I don't like the idea of one bedroom actually being an oversized hall way. That's a major setback. Also it's old. What do you think you can do with it, flip it? Maybe you can but how much do you really expect to make, and is it worth it?