All Forum Posts by: Ed L.

If I had the cash laying around I'd dump it into a Condo at the Whalers Village on Kaanapali Beach in Maui.  

Best beach in the USA, Best location on the best beach, All the beachfront property is full developed out, Direct flight from America's wealthiest state, and there's a lot of room for increases on the vacation rental rates.  

I can't help but think that price appreciation is likely to occur on those properties due to the  unique setting and basic laws of supply and demand.

Why foreign investors are dumping money into homes into places like Vancouver, and London over Maui just astounds me.... 

As a Realtor and Investor-  Whoever brings me the deal is my Agent for that transaction.  I would expect nothing more of any of my clients.  

The numbers work great.  Now it's time to do due diligence and make sure it's legit.

How are the surrounding properties? Other Multi family, SFR, Commercial, etc.. I've ran across some great 4 unit multi family properties for as little as $35,000.00. Seeing them in person revealed they were in a large project style complex that I was uncomfortable investing in.. Basically you were forced into being a slumlord because all the surrounding properties were owned by slumlords...

Are all the units currently occupied and current on Rent?  

Are the units sub metered for water, sewer, and power?

How does the roof look?  Any signs of foundation issues?  When was it built?

Are there any issues with property lines?  I've bought one house that included the neighbors living room, bought another that my master suite was on the vacant lot next door, and just contracted another where the house appears to be on the neighboring lot all together...  I'm a big believer in GET A SURVEY...

My biggest concern would be the surrounding properties and the neighborhood in general.  At that price you can catch up on some deferred maintenance if the building is structurally sound.  If needed I might would go in and renovate the units during tenant turnover.

Sounds like a great deal, my next move would be to tie it up and get started on my due diligence.  

If you don't currently own a home, my first move would be to buy a fixer upper.  Live in it for two years and sell for a tax free profit.  This is probably one of the most under utilized advantages of RE investing.  

Starting out with little $$ to invest I would steer clear of investing in Rentals.   The prospect of steady and continuous income stream is very tempting, but I feel new investors are making a horrible mistake by jumping into long term rentals with leverage.   A tremendous amount can change throughout the course of a 30 year mortgage.  That B neighborhood may turn into a C or a war zone.  We will undoubtedly have another recession or depression in the next 30 years.  The home is going to require major capitol expenditures that may pop up sooner than expected.  A nightmare tenant may set you back months in repairs, legal fees, and vacancy during the eviction process... The first 10 years of a 30 year amortization are nothing but interest payments essentially.  I could go on, and on, but just be sure to really think it through.  

I would/did start out as a RE agent, then flipping, and then moved some of my excess funds into rentals.  I feel this was probably one of the safer ways into RE investing.  

Before I ever did a flip I had been selling Real Estate for 4 years.  I knew all about contract law, inspections, finance, and the closing process in general.  Once the rehab was complete I knew how to properly market the property , and  didn't have to pay a listing agent to sell the property.   Even with all the experience I still didn't do great on the transaction, but I was on my way.  

Before I ever purchased a rental I had saved up enough from flips fund the purchase and rehab out of pocket.  I also had the experience of rehabbing to properly budget.  

If you want to play it safe that would be my recommended path. 

As a RE Agent I comb the hot sheets multiple times a day looking at New listings, price reductions, back on market, etc.  I also look at closed, pending, and expired.... Do that for a couple years and you will literally know almost everything there is to know about your local market.  

I then do a separate search just on REO and estate properties.

Mostly REO properties, occasional estate, and occasional divorce situation.

I've picked a couple off of craigslist, so I make a point to scour it daily also.  

I really need to step up my game and try some yellow letter campaigns, and bandit signs. 

I kinda know the feeling.  I've been doing this for going on 10 years.  

If I were just acting in the capacity of a Realtor I would probably have burnt out by now.  Luckily the investing and rehabbing is complimentary and is highly rewarding to me.  

Keep your RE license.  You apparently are doing well as a agent, so don't throw it away.  Many people would love to have your earning capacity.  

Maybe consider hiring a assistant.  It takes off a tremendous amount of pressure and allows you to better serve your clients.  

If that doesn't work, scale back your business, refer off new clients, and take a nice long vacation once things are more manageable. 

Invest $600 towards getting your Real Estate Sales license.  Find a good reputable broker and don't be shy about asking questions.

You will learn a tremendous amount of highly useful information during your Agent coursework.  A lot revolves around liability and keeping yourself out of lawsuits...

As a Licensed Agent you will have unfettered access to the MLS, learn how to draft contracts and supporting docs, meet investors, learn how to market properties, and gain a tremendous amount of knowledge about your local real estate market.

You will also get back 3% on almost every property you buy by representing yourself as a buyers agent.  This alone more than pays for all my licensing fees and annual dues.  When it's time to sell you can also have the advantage of listing the property without the expense of listing with a Agent.   Say you buy a house for $100,000, spend $20,000 rehabbing, and re-list for $150,000.   In this scenario you can save $3,000 when buying, and $4,500-$9,000 when selling just by being your own agent.  

Your broker will also hook you up with lenders, title companies, inspectors, contractors, web marketing, signage, camera advice, etc. etc. etc...   

Then there's the obvious benefit of making commissions.  You can double your nest egg with a single deal.  

That's my 2 cents.

I've found you really can't go wrong with the 2% rule.

It limits you to smaller and cheaper properties, which in the long run increases cash flow due to reduced maintenance, taxes, insurance, & capital expenditures.  

Everything from painting to hvac replacement is cheaper on my little $35,000 1,000sq/ft cottages.  They gross $750-850 per month..

To get to $1000 per month rents would require buying larger homes(1,500 sq/ft) and investing $75,000+ per property minimum. 

I also like being able to offer a SFR home for about the same rent as apartment units. There's a lot of people who want a sfr home but can't afford $1000 rents

Last part is I can save up and pay cash for lower priced home..  I'm pretty averse to long term debt on rentals... I've seen far too many investors leverage to buy rentals and then mysteriously go bankrupt.  

 Sorry about that Jerry-   should have read "most I've encountered" 

I'm sure there are some exceptionally talented wholesalers out there that offer a great service to both investors and sellers.   I have all the respect in the world for those that succeed.

I just think it's a bad path for someone that is new to the RE business.  Hence the reason so many are unsuccessful.

AWESOME CHEAT SHEET!!!  I would have killed to have that starting out.