All Forum Posts by: Petar Skobic

@Ojay Jenkins Ojay, if you currently have no income, the first thing I would do is some type of a stable job. It doesn't have to be in the real estate industry - it can be anything, as long as it provides an income (even flipping burgers if necessary). Then, while working this full time job, start reading the forums, listening to podcasts, reading books about real estate, etc. You need to use that first year to educate yourself about the industry before jumping in. You also need to save as much money as you can for emergency expenses as well as for a down payment on your first investment property. 

The best thing you can do is to save enough money for a down payment on a primary residence (the property you will live in). You can probably qualify for an FHA loan with only 3.5% down payment, so this shouldn't be too hard to do. Then you can start renting out a room in that house and continue saving money for a future investment. Don't spend any more money on guru's and get rich quick systems because they simply do not work. Hope this helps. Good luck!

@Edward Mitchell There is no way to look up equity, but you can find the county tax assessor's website and look up property records. The records will show you how long the current owner has had this property. The longer that owner has had the property, the more likely it is that the payments were being made during that time, thus building equity. Unfortunately, there is no method to my knowledge that would give you more reliable information. There is no way to tell whether that owner possibly did a cash-out refinance on the property over the years or if they simply bought it for cash and had 100% equity from day one... Hope this helps.

I know it's very common to buy a property in your own name and then transfer it into your LLC through a quitclaim deed. But this also means that the title of the property technically changes hands - even though it's your own LLC. So the bank would theoretically have the right to call the loan due since it triggers the due on sale clause. Is this something I should worry about or just assume the bank won't do that?

@Anna Watkins Great point, I didn't think of it that way. Do you currently own any properties in south Atlanta? I would be curious to hear your thoughts on that area as an investment since you live within a half hour of my properties (granted in a much nicer part!) I am mostly interested in what your thoughts are on the long term prospects of south Atlanta, i.e. 10 or 15 years from now. Thanks again on your replies!

@Steve A. When determining the right amount of leverage, what it really comes down to is your own risk tolerance, investment style and goals. Personally, I have no fear of taking as many 80% 30-year fixed loans under 5% interest as I can possibly get. In his interview with CNBC, Warren Buffet said that he would love to buy a couple hundred thousand single family homes with 30-year mortgages at today's rates. The reason I say that is because it's obvious that this guy has all the cash in the world, but he's still choosing to leverage. Apart from the straight cash-on-cash ROI, you also need to account for the massive benefits of interest deductions. I get several thousand dollars a year back on my taxes due to the interest expense deduction - and that's just on my primary residence. I wouldn't have this if I bought cash. I also wouldn't have cash in the bank either.

Also, keep in mind the benefits of inflation. Over the decades, the dollar loses purchasing power. Example: what you could buy for one dollar back in 1984 would cost you $2.27 in 2014. So while your real estate may fluctuate in value in the short term, it is very likely to appreciate over a 30-year period. At the same time, your mortgage payments remain the same. And the loan balance continues to go down.

If you don't feel comfortable with leverage, that is perfectly fine. But in the title of this post you mentioned wanting to build a real estate empire. You definitely won't be able to do that with a $12k a month job and doing cash transactions on all of your investments. Don't get me wrong. You may do very well, but you won't build an empire without the appropriate leverage.

 David, I agree on the East, West and South Atlanta as far as the school ratings go. After a while, I completely stopped looking at the ratings because they are all horrifying. As far as desirability, I think that is a relative term for that area. This basically covers 70% of the wider Atlanta metro area so a huge number of people live there and I don't think they have a choice. If they can't live in Buckhead or anywhere north of the city, they are pretty much committed to bad schools and I think for a lot of them it's not even a factor. What are your thoughts?

@Steve A. Are all of your investments in the Indianapolis area? There are a lot of topics in your post, but I would agree with Travis here that you are better off leveraging for as long as you can. In fact, if I were you, I would be doing cash out refinancing on the properties you bought for cash and use that money for future down payments. When it comes to security, you may see things differently, but I actually feel more secure when I buy properties with the bank's money and keep my cash in my pocket, figuratively speaking.

@Crystal Smith Thanks again!

@Crystal Smith  Hehe, in south Atlanta I'm pretty sure every neighborhood screams murder! I'm afraid to check. Do you invest in Chicago?

@Anna Watkins Great point, thanks. What would be the best way to find that out? The only thing I can think of is a tax record search for that particular street. Is that how you do it?