All Forum Posts by: Richard C.

Great to see an ambitious kid.

As for building capital, the most important form of capital is human capital.

http://www.dictionary.com/browse/human-capital

How do you develop your human capital?

DO WELL IN SCHOOL.

Seriously.  

Now, as for acquiring financial capital, your list of possibilities alarms me somewhat.  Why?  Because as I said, it is good to see an ambitious kid.  And no one would want to see that ambitious kid get discouraged, or waste his time.

You should forget things like FOREX and the stock market.  You are more likely to lose money that to earn it, and in any case, a 14-year-old cannot open a brokerage account.

The best way for a teenager to earn money is good, old-fashioned, not sexy or exciting, WORK.

Mowing lawns, flipping burgers, scooping ice cream, all of that fun stuff.

When you are 18, and able to sign contracts, you will have plenty of money saved to get a real estate license, which is a good idea anyway, and then make some larger amounts of money to fund your investment ideas.

Let me tell you what I did when I was young.  My first real estate deal.  

I bought a small piece of raw land, on payments.  I bought a cheap chainsaw and spent the summer cutting trees to prepare a driveway and house site.  I sold the wood for firewood (and this was before Craigslist; it would be easier now.)  I got the state permit for the curb cut.  I got the perk test done.

After all expenses, I cleared about $8,000.  For quite a lot of work.  

But I learned a lot about permitting.  About zoning regs.  About buying and selling real estate (well, not a LOT about that, but some.)  And I was now someone who had actually DONE something in real estate.  I regularly dealt with some of the same people who I was involved with on that project for decades, until they retired.

Work.  No fancy stuff.  No easy path to riches.  Do well in school, work a teenager's job, and get yourself ready.

Excellent question!  Very few small-time real estate investors actually manage their LLCs in such a way that they provide much protection.

It always makes me cringe to read posts on here from people who seem to think an LLC is magic.

They have their place, and their role.  But they are definately not magic, and if you change nothing about the way you operate, but place assets in LLCs, they won't protect you much.

Simply having the piece of paper does little, if you treat the LLC as an extension of yourself and not as an independent entity.

Let me offer a different perspective.

Companies of all sizes go to great lengths to collect market data.  What do customers want?

Tens, maybe hundreds of thousands of people in this country are employed in the search for, "market signals."

What you have here is two separate tenants, at their own expense, installing washers and dryers.

That is a pretty damn strong market signal that units of the sort they are renting should include a washer and dryer.

Install a coin-op in a place where the market is signaling a demand for in-unit washer/dryers, and you are deliberately bringing your property down-market.

That is not the direction most landlords typically want to move.

You got very little in the way of negativity.  Basically just that Jody person.  You have just chosen to interpret any advice you didn't care for as negative.  And now you're doubling down on silliness by trying to imply gender is involved.

No one cares if you become a real estate agent.  No one cares if you want to start now an not wait.  

People have just given you the perfectly correct advice that you have some real challenges in doing exactly what you planned, and so maybe altering those plans might be something to consider.

Nothing you have written in all these pages changes the basic fact that a $7,000 down, multi-family that will cash flow from day one and needs no repairs is a very, very, very difficult thing to find.  If they were out there, someone with even a couple hundred thousand (which is probably half the households in Massachusetts) would buy 20 of them.

So, maybe you find one.  But that is basically the real estate equivalent of a winning scratch ticket.  Your ambition, drive and education won't help you win at scratch tickets, and they won't help you with find that unicorn.

What you can do is listen to advice that people spent time to give you.  The best advice given on this thread, by many posters, boils down to:

1.  Househacking is your most realistic path forward if you want to act immediately;

2.  Buying a multifamily may require accepting a lesser property, saving up some more money, being prepared to put in some sweat equity in the form of repairs, and/or changing geographic locals;

3.  Going straight to a turn-key, property manager-driven investment so you can be entirely hands off will cost you valuable experience and may not be possible at all given your up-front investment.

None of that is negative.

 She has read some websites and articles, attended a few seminars maybe.  She learned a bunch of buzzwords, and "1031" is one of them.  203k is another.  There is no evidence in her posts that she actually knows how either of those things work.

Many people have tried to be helpful.  She doesn't need to accept all advice; I certainly wouldn't if I were her.

But she should think about why she needs to ask for advice, if she and her "investment group" and "mentor" already know all the answers.

 Some people cannot be helped.  

Good luck to you,  You will need it.

 No, it doesn't really work like that.  The judge magistrate is not going to give you credit for having the lease in your own name.

Technically, you might not even have the RIGHT to issue a lease in your own name, if the property is owned by an LLC.

I honestly think too many real estate investors attribute magical powers to LLCs.  They are not magic.  And in order to get many of the (fairly limited) number of benefits that they do have, you MUST manage them according to the rules.  Co-mingling of funds is a very bad idea.

For your first few rentals, an LLC is probably not even necessary. An umbrella insurance policy protects you at least as well. But if you are going the LLC route, make sure that you maintain the independence of the entity, and act accordingly.

I'm perplexed why you asked for advice, if you had no intention of accepting any?

So far, replies on this thread have fallen into one of two categories.  First, actual helpful advice, some of it quite detailed, that you have rejected out of hand because you don't like what people have to say.  Second, lots of "You go girl!" posts that offer nothing actionable, but you like.

Mine was the first reply.  I stand by my advice.  

You frankly don't have the money to pursue your preferred approach, so you either need to make more money or try a different approach.

No one is trying to be mean to you.  No one is trying to discourage you. The idea that people are just trying to keep you out of the business because they are afraid of the competition is laughable.  People are trying to help, by giving good advice.  And you are rejecting all of that advice, in a derisory tone, because it isn't what you wanted to hear.

Honestly, from your posts it seems like I was too late with my advice, and you are already paying a "mentor."  This is too bad.  That is money that could have been spent on actually getting into a property instead of spending 4 years learning without any actual doing.

You need to decide how badly you want this.  If you truly want it, you will learn to accept advice when it is given, with a gracious spirit.  You don't have to act on it all, in fact you will not be able to act on it all because much of it will be contradictory.  But you need to listen.

I recognize several of the names of people who have given you advice.  They have massive amounts of experience and have had great success in this game.  I have had some myself.  But you not only reject that advice, you belittle it.  Does that seem like the path to success to you?

Under no circumstances should you accept the building with that tenant in place.  Make it a condition of the sale that both units be delivered vacant.  If there is no lease, there is time for your seller to move the tenant out.

Seriously.  Do it.  You will regret it if you do not.

Goals are good.  Yours are very specific, and at least one (the 1031 exchange) is somewhat bizarre.  Tax avoidance tactics are something you use when you need them, not usually a goal unto themselves.

I expect you know that you are not going to get a multi-family in Taunton for $7000 down.  Especially not one that needs no repairs.  So that is step one:  Be prepared to move.

It is not true that any property that needs work will require a 203k loan.  

You should also remember that being a landlord requires some form of cash or cash-equivalent reserves.  You need to be able to immediately replace a furnace that goes bad, because your tenants cannot be left in the cold. 

Honestly, with that amount down, I think househacking is your only alternative if you want to buy now..  

Better, I personally think, is to spend the $1000-$2000 is would take to become a licensed real estate agent and affiliate with a broker, then sell real estate part time and set aside what you make for a larger down payment.  You will learn a lot doing this, and that will keep you from having to learn lessons the hard way.

Whatever you do, do not listen to anyone saying you should spend your $10,000 on "coaching" or their "system" or their seminar or training.  They just want to take your money.