All Forum Posts by: Ryan D.

 @Pat Peri: Pat, this is a residential property - 4units or less is residential, 5 units or more is commercial. You will not be able to get a commercial loan on this. Anyway, why would you want to? The terms for a residential loan are far better - better interest rate, longer amortization period, lower down payment. 

 yeah, a lot of people are overpaying and thinking they are investing. Let them. They'll get a crappy return on their investment, and sell a few years down the road, thinking this real estate thing is over rated. RE works well, but only if you buy at the right price.

You can also go directly to management companies - call a few in your target market, and ask if any of the owners they service are interested in selling. This could be a good source for off market transactions. 

What type of properties are your target?

You were successful before, so you know you have it in you - even if its buried somewhere deep, that ability to be successful is still there. Take small bites, and if you think stress is a trigger for your episodes, make sure you can identify the warning signs early. 

Also, as a form of protection, you can be the "brains" of the investment, but you can engage someone whom you trust to have some legal authority over your property (i.e. assets cant be sold unless both of you sign the sales contract, etc). 

 @Ericka Grant: Index funds are non-actively-managed funds that track some sector, or the broader market in general (like the S&P 500). In actively managed funds, someone is sitting there deciding what companies the fund should invest in, when to buy, when to sell, etc., and that person gets compensated for doing that work - that compensation comes out of the money that investors have in the fund (and/or the profit the fund makes). This is generally in the 0.5-1.5% range.

Typically, actively managed funds are measured by how they perform relative to an index fund. Because index funds are not actively managed, they do not change holdings very often, and thus their overhead costs are very low, often near 0.1%. Index funds are seen as a good measure of the performance of their whole sector, and thus serve as a benchmark. A good example is the S&P 500 Index fund VFINX - the S&P500 is simply the largest (by total stock worth) 500 companies on the market, very simple to know who they are and it takes little work to maintain a fund that invests in them, as there is no judgement or expertise involved - whoever the biggest 500 companies are, that's the S&P500. You dont need to pay someone to use their expertise to pick them, hence the low overhead.

Here's the little secret of actively managed funds - you are paying on the order of 10x more in commissions to the fund managers (vs index funds) for their expertise, BUT the VAST majority of fund managers DO NOT reliably beat the index against which they are measured. So at the end of the day, you pay them more and get worse performance. What this means is that fund managers (read: Wealth Managers) don't make their money actually growing wealth, they make their money SELLING you their funds. They are sales people, period. 

Many companies have index funds, Vanguard being the most well known in the area due to its founder Jack Bogle being a loud proponent of them.

Gilbert, you can also specifically search for FSBO, if you feel you are skilled with people and can make a direct connection with the seller, this may be a good tactic for you.

Find a niche at which you are good, and stick with it. Maybe that's FSBO, maybe SFH, maybe its duplexes in need of repair, maybe its small multi-family commercial properties, etc.

This is exactly right, many RE markets are very competitive right now. The equities market (stock) is inflated from all the capital the FED "printed" a few years back, so lots of people flush with capital, and moving it into RE & chasing after limited supply. Bidding wars help no-one but the seller. My best advice about bidding wars is to never get into one in the first place. If your market is that hot that you regularly get into bidding wars, then look for another market. Let the other guys pay more for a property than its worth. Don't overbid for a property just b/c someone else is willing to take a poor ROI.

There are some folks who will intentionally overbid just to get the contract, having no intention of paying what they offered and then nickle & dime it back down once they are under contract.  Sure its legal, though not particularly ethical in my opinion (unless its for legit problems that you only discovered during DD). 

Another tactic you can take is to take advantage the cyclic nature of the market - wait for the next recession (the market is overdue), after much of the overvalued wealth in the stock market evaporates. Then things will be on sale. "Buy when there's blood in the streets"

The bar to get into RE is very very low, so you end up with a fair share of shady folks. Its been my experience that when I'm very honest & open with sellers about what I'm willing to pay for a property and that I'll follow through with any commitment I make, sellers end up coming back to me, even if they are the ones to walk away from the table. People always appreciate honesty - I'm not saying you should always show all your cards, but always act in good faith, and the good people in the business will respond favorably.

Some "hard" strategies to present a better offer to a seller:

1. 1 - Offer all-cash
2. 2 - Fast close (~2 weeks)
3. 3 - Removing contingencies
4. 4 - Offer to buy more than one property from the seller (investors typically own more than one, if they've got one on the market, they may be willing to sell others too)

Soft strategies:

1. 1 - Be professional, open with your communication, & honest. This is absolutely number 1, you'd be surprise how far this goes. People don't like dealing with shady, rude, or dis-honest buyers (or sellers), and there are a lot of those types of people out there - make sure you are the polar opposite, and people will gravitate towards you.
2. 2 - Figure out what the seller REALLY needs, and find a way to meet that need - it isn't always about price. Sometime the property is a disaster, and they just want out from underneath it. Some times there is an emotional attachment, and they cant set foot in the house again ("mom died in that house", etc). Some times the property is owned by inheritors who don't have a clue about RE and just want to get rid of it with as little hassle as possible. Etc, etc, etc. 
3. 3 - Find off-market deals, or create them. This involves a lot of legwork and networking, but is very worth it.

Remember, real estate is a Get Rich Slowly game. Be patient, work on your network, find mentors, learn, learn, learn. It will all build up over time. 

 But Max, why sell when you can borrow out the equity (tax free) and move it into a new property? You can then own two properties with the same amount of capital you had sitting in one, all without paying any taxes to acquire the second one.