All Forum Posts by: Troy Young

Talking about loosing leverage as you pay off the principle... Many times you can have the rent, pay your loan and all your other bills on the rental and still have cash in your pocket left over. If the tenant buys the house for you fast that's not really a bad thing. I try to have the tenant pay for the house and all my costs associated with it, within 5 years. You don't have to put a lot of your own money into paying off the loan. Also, you can refinance if you get a lot of equity and would like to leverage other people money. I usually finance or refinance rentals to get all of the money I put into it out and let the tenant pay off my loan then I can choose to finance it again if that is what I want. I also like having both rentals as well as financing for others through Land Contract or Rent with the option to buy. They both have pros and cons. For example, if the market goes up my rentals are worth more and if the market goes down I have the land contracts locked in bringing in a nice price for some houses. 

Yes, I was able to connect with a few others. Thank you. 

I think it comes down to personal preference. I know people that do multi family now and started off with single family. They like the multi family better because they get a better cash flow, less overhead (taxes, maintenance, financing etc), plus if they buy it to renovate everything is in one location rather than separate sites. Many times the more people you pack into a tighter space the more problems you will have with tenants and tenants not getting along with each other. I do single family homes and still get a decent cash flow and basically never have problems with the tenants or vacancy. But I will probably get into multi family soon to expand my horizons. In different areas the markets are different so some places like NYC people are used to living on top of each other and the cost for a single family home wouldn't be worth it but in other areas where people are used to having their own house that is quiet and private it may be harder to get people to be good tenants in a multi family building. 

This tenant has been there a about 5 1/2 years and has already paid for the house and all the money I initially put into it including new carpet and roof. I figure it's probably not going to get much worse than it already it. I usually clean, paint and do all new flooring in my rentals when people move out anyway. If they stay here another few years and buy the house over again I'm alright with them making it a mess and still won't be in a hurry getting it back. I just take it as a lesson learned to created a little bonus on other properties that have animals. If it was like a $200k house I would be more upset, but on a cheap house they already paid for I can't complain too much. 

You could send them a letter basically stating that you would like to buy their home (list the address of the one you want so they don't think you're talking about the one they live in). Leave a couple ways that they can contact you and see if they show any interest. If they don't respond for a while you can try another letter or other options. 

It varies. That is basically how I got started. I was told that if I refinanced it would be based on the appraisal and the appraisal would be highly influenced by what I paid for the house even though I remodeled it. They told me that if I waited 6 months they would go off the SEV or would give me a more accurate appraisal (to include money I put into fixing it up rather than just the sale price). I chose to wait 6 months and they gave me about 3 times as much as I paid for the house without any stipulations on how I could spend it. I used that money to buy other houses cash and after another 6 months to a year I refinanced those to buy more etc. Different banks and lenders have different rules so make sure you don't sign a contract agreeing to use their money in a certain way that you rather not. I really doubt you would run into that problem though if the loan isn't recorded. If you record the lein they will make you pay that off first. 

If you are paying rent or housing costs for college get a place for yourself first. It's easier to get a loan on a place you will live in rather than for investment properties, especially at your age and income. College kids are used to sharing a room or house so you can rent out rooms to friends at a cheaper rate than the college but also enough that your friends should be able to pay all your bills for the house. That gives you a free place to stay, you'll gain valuable experience, it can be a low risk investment, and build your equity in the house and your credit score also. One thing that I regret is not getting student loans and buying real estate with them. I bought my first house when I was 18 and worked through college to get out debt free but if I would have bought more houses with student loans I could have made more than I did working full time. Just be careful, learn what you can and when you run into a problem see it as being a good teacher because your problems can teach you valuable lessons.  

My first tenant asked if I allowed animals because he had a couple dogs. I said that would be alright. He is an older guy and after a few months found out how much he loved animals. He would go down to the animal rescue and take pretty much anything that needed a home. He had probably at least 30 pets in there soon including: dogs, cats, rabbits, ferrets, rats, lizards and lots of birds including parrots. From that experience I learned to charge $10 per animal per month to keep it somewhat under control. I didn't change this guys lease. The house already smelled by the time I saw all the pets, so I don't want to get it back, but I'm not going to put new carpet or much else into it while he is there.

I'm doing property management for a friend of mine living in NYC. I live in Michigan where real estate is a lot cheaper. He decided to use a bank that had locations both in NYC and in MI. So far it's working great. I would like to invest in other areas but would agree a good property manager is key. If you have any connections where you would like to invest they could at least check around and get you a few referrals of PMs. If it's a bigger company they should be able to handle it and do a good job. Even if they charge a bit more it is probably worth it. 

I have seen values go up quite a bit but they are still lower than previous highs of 2007. I also buy cheaper houses in decent areas and get about a 2-4% monthly return from rentals. I expect the market to continue to go up especially with all the money that has come into existence since the last crash but I also buy properties that when the next bubble burst will still bring in a decent cash flow. The more you spend on a house the more it is able to drop. In every economy there will be people looking for a cheap place to live.