All Forum Posts by: Sam Hecht

@Parker Boling

This deal looks really solid. You’re getting in for a really decent price, injecting tons of equity and it cash flows handsomely. CoCROI is really strong here too, and your debt coverage ratio is almost twice the requirements for most lenders where I live. Looks awesome!

@John McGuire

Congrats John! Looking at purchasing my first duplex as well :)

@Edwin Duran

Residential real estate uses comparable properties to help determine the sale price of a subject property. This method is known as the comparative sales approach. To start, you need to use as similar comparables as possible. Then, looking at the sale price to listing price ratio of the 3 comps, you can average it out and use that to determine the listing price of the subject property.

This link details the comparative sales method in further detail: https://www.investopedia.com/t... commercial real estate a different method to appraise properties is used, and it’s called the income method. It appraises a building based on the revenue it generates instead of the sale price of buildings that are similar to it. You can read more about this method here: https://www.investopedia.com/t... 

@Nana Qwequ

Banks also consider other factors like the debt coverage ratio depending on the type of loan or the type of property you’re trying to buy. The debt coverage ratio is an indicator to the bank there there will or will not be enough income generated by the subject property to pay off the mortgage.

Here’s a BP blog post that explains it in further detail:

https://www.biggerpockets.com/blog/2013-09-09-debt-service-coverage-ratio-dsc

Hope this was helpful!

Private lenders can be a way to acquire financing if you don't have enough for a down payment. I'm sure you can find suitable private lenders on BP!!

@Tyrus Lacey Jr

House hacking is also a really awesome strategy to start out with. There's a preferential 3.5% down FHA loan makes this a great place to start. If you buy a multiplex, occupy one of the units and use the other units' rent to cover your mortgage this is a fantastic place to start your wealth.

Here's a BP blog post about the 3.5% down FHA loan:

https://www.biggerpockets.com/blog/fha-guidelines

More specifically on house hacking:

https://www.biggerpockets.com/blog/2013-11-02-hack-housing-get-paid-live-free

Hope this helped!

Commercial real estate (more than 4 residential units) can be quite passive if you outsource management. Bigger buildings often have more problems and headaches though, so management is really important to keep this type of investment truly passive. Starting out though, I agree @Mike Schorah about house hacking. This is a great strategy to start out and learn the ropes, and is a great way to live for free while you're learning. 

Keep reading books and listening to podcasts. A little bit every day, and in no time you'll have tons of knowledge under your belt and will feel more prepared to start your REI career!

Hi Daniel,

I'm a residential real estate broker based in Montreal and would love to connect! Send me a message :)

Im interested!

What @Scott Esmail said is great. You can generate your savings until you're of legal age and in the interim build your investing skills. You should read think and grow rich by Napolean Hill, and the Book on Rental Property Investing by Branden Turner. I'd also recommend the Millionaire Real Estate Investor by Gary Keller. 

You're definitely ahead of the game getting into this field this young!