All Forum Posts by: Samir Shahani

Steps to get what you want:

1) Save all your money.

2) Grow your W2 income. (Get a degree if you don't have one) (Get a masters if you have a bachelors) ("Work work work work work" -Rihanna)

3) Use that money to buy strong CASH FLOWING houses (buy and hold)

4) Keep saving, combine the savings with your investment income

5) Use that money to buy more

6) Keep growing the business

7) Retire! :) 

You can amortize the loan over an agreed upon period of time. 

http://www.bankrate.com/calculators/managing-debt/...

Try this link to Bankrate, it gives you calculators on the above asked questions. 

I would never invest in that property with the numbers you presented unless there are some significant value add opportunities.  

Principle payments you make on your mortgage from your tenants rent should not be added back to the property's cash flow.  You only realize this equity when you sell the home. Also, do not declare principle payments on taxable income; big mistake.

If you want that property to work, you have to find a way to increase rents significantly. 

@Chris T. Sure, nothing is 100% passive.  Even if you invest in stocks (usually considered a very passive place to invest), you have to re-balance your portfolio, monitor large trends, check news stories, look at financial statements, listen to shareholder meetings, etc. etc.

In this case, if your properties are under an even reasonable property management company, you will be in a situation where your income is more or less "passive".  You will not be the one dealing with leaky toilets or broken appliances.  If you are receiving a phone call every single minute from your property manager then is he/she actually doing anything??  Why are you paying them ~10% of revenue??

And it goes without saying, that buying and holding properties requires MUCH less activity than spending time fixing and flipping a property. 

I'd suggest analyzing the properties in depth.  Use one of the calculators that are provided, or create a spreadsheet.

I'd suggest something like this:

**Hypothetical properties** 

You can ask for whatever you want.  It is your house, land, etc.  You want to make sure you get a decent tenant w/ all the necessary facets required to pay the rent. If you want to see proof of their 3rd uncles income, you are totally entitled to ask.  

The real question, however, is what is relevant to ask a tenant.  As a landlord, the real important questions/proof required in my mind is:

-W2 / income verification

-4-5 recent pay stubs

-Credit Report

-Background check

-Proof of assets (stocks, 401k, cars, etc.)

-Proof of liabilities (personal loans, student debt, car loans, etc)

-References from previous landlord (if possible)

If you have the financial ability to buy and hold 3 solid, cash flowing units per year you will be in great shape.

If you have 17 units (little over 3 per year for the next 5 years) cash flowing at 500/month each.  You will be generating slightly over 100k a year - completely PASSIVELY!  

You will also notice that after the 3rd year, it is entirely self sustaining and you will no longer need to put up any of your own money.  You can just indefinitely compound what you already have. 

I would carefully craft the seller financing in your favor (e.g. no early payoff penalty, no minimum time period, etc). If your seller is hesitant about this, maybe you can agree to a small penalty for exiting early.   Get your real estate lawyer involved.  Ultimately, avoid getting trapped into a bad deal just for the seller financing option.

At the end of the day, in my opinion, you are investing for the property and the money that the property will generate (be it appreciation, cash flow, tax incentives, etc).  the financing of the property should not be a hindrance, it should be a facilitator. 

Why can't you secure financing from a local lender/bank? If you have good credit and money to put down, I see no reason why a bank will not lend to you. 

Brandon Turner has a wonderful section in his book about building a team.  The first person he suggests should be on your team is your spouse.    He gives wonderful advice on how to make that happen and  some also very clever suggestions. 

Check out his book! :)