Two Plus Two Publishing LLC Two Plus Two Publishing LLC
 

Go Back   Two Plus Two Poker Forums > >

Notices

Business, Finance, and Investing Making money, investing in markets, and running businesses

Reply
 
Thread Tools Display Modes
Old 01-25-2008, 11:06 AM   #151
spex x
Real Estate Mogul
 
Join Date: Jun 2005
Location: who dares wins
Posts: 1,611
Re: Ask me about real estate investing

Quote:
Originally Posted by srt050 View Post

I know you have gone over this before so forgive me. But where exactly should I be hunting? I am a member of my local real estate club, I have cold called, I have made business cards with "we buy houses" and passed them out (not as much as I should have, and I have slacked off lately, but have passed out a few hundreds) and I have scouted neighborhoods extensively, although admittedly they were probably not the best neighborhoods for rental properties. Any other strategies that you can think of? I have the time and energy to hunt for deals.
Are you attending auctions? Also, if you want to find properties that cash flow you've GOT to stay out of middle class neighborhoods. You can't find deals there and you'll be spinning your wheels.

Another thing you could try is research at the court house. Pick a handful of smaller apartment buildings and research who owns them, what liens there are, etc. When you find one that has been owned by the same guy for 20 years, contact him and find out when and if he wants to sell.

Have some patience. The deals will come.

Quote:

The point I was trying to make here is you cannot expect the same return for different types of investments. A duplex in an upper middle class neighborhood will invariably have a lower cap rate, because the tenant risk is much lower than a 16 unit apartment complex in a low income neighborhood. I guess what I was trying to say was I sholdn't be so fixated on a 10% cap rate because I am looking at different kinds of properties than you?
I disagree. The way I would do it is figure out what kind of return on my investment I want and then seek out properties that will give me that kind of return. It seems backwards to chose what kind of property I want to buy and then live with the returns for that property. Doesnt' make sense.

First you need to know what your goal is. After you have that, you can consider what kind of investments will get you to that goal. Do you think that my goal is to own low income housing? Of course it isn't. My goals are financial. I don't allow properties to dictate my goals. I determine my goals then find investments that will get me there.

Quote:
But let try and use an example to explain what I am talking about. Say you have the oppurtunity to buy a property for $500,000. All you have to put down is 2% or $10,000. Would you every buy the property and play it for appreciation if you could get it to break even or just barely cash flow?
Well, we have to define this scenario more. First, 99% of the time if you can get your hands on a property for 2% down that property is going to need significant work, which means significantly more capital investment. Second, transaction costs will ding you for another 3% or so for buying. So already this scenario is unrealistic. But I'll play ball anyway so as to not ruin your example.

Quote:
Here is what I mean. Say the Gross Rent for the property is $48,000. Net opertating income is Gross Rent-(50% Expenses)= NOI=$24,000. So you can pay roughly $2,000 month in mortage payments. And say the seller offered you owner financing at 4.75% interest only. Your monthly payment comes out to $1,939.58. Would/Should you ever consider something like this and play it for appreciation?
Ok, hold on. Let me get your scenario straight in my mind. So what you're saying is that you found a seller that is willing to carry 98% of the PP on a perfect property, already rented, and at 4.75% interest only payments? The chances of you putting together a deal like this are miniscule.


Quote:
Say 3% annual appreciation, (afterall most landlords structure 5% rent increases each year, and as you know rental properties value is tied to it's income stream; so IMO this is reasonable) your return on the year for appreciation is 150%.
Well, there would be transaction costs for selling the property, so your ROI would be much lower than 150%. Second, we don't know that the property will appreciate. It might stay the same. It might be worth less. We don't really know what will happen.

You have to consider that if next year banks are lending at 12% interest, your property will be worth significanly LESS than it is this year. Or say that the county government decides on a 10 mill tax hike. Guess what happens to your appreciation. Or say that the federal government decides that landlords have it too good, and to change the rules for deductions on income properties. Guess what happens to your appreciation. Or say that after you buy the house the neighborhood association decides to go on a crusade against rentals in that area. If they get restrictive covenants in place w/ the city that will affect any future owner, guess what happens to you appreciation. Or say that the house next door sells to a guy that moves several junk cars into the yard and paints the house blaze orange in tribute to deer season. Guess what happens to your appreciation. You get my point?

Not to mention the fact that properties don't manage themselves. Any time that you spend on this deal, including bookkeeping, etc, are hours of FREE labor. PLUS, what if something goes wrong in that first year. What if some drunk jerk runs into your house with his car? What if a tree falls on the roof and makes a hole? What if the furnace or A/C dies? You've got no extra income to fall back on. That is even more captial investment...


Quote:
I am having trouble finding properties that meet your criterias for cash flow returns and this is an investment strategy I am considering taking a look at and would love to get more knowledgeable opinions. Also, thinking about doing something similar (barely breaking even cash flow wise) but buying properties with equity.
Who said that your properties have to meet my criteria? They don't. It sounds to me like you need to sit down and figure out what your goals are and then go from there. Your goals don't have to be the same as mine. Good luck.
spex x is offline   Reply With Quote
Old 01-25-2008, 12:35 PM   #152
geormiet
veteran
 
Join Date: Jul 2004
Location: San Francisco
Posts: 2,720
Re: Ask me about real estate investing

Spex, you are providing a great service with this thread!

I was wondering if you could comment on my situation.

I'm a CA resident and poker player, where I rent an apartment. I spend a lot of my time travelling outside of CA, so I am going to purchase a home in Reno NV and establish NV residency to save on state taxes. I plan to purchase a 2 bedroom and rent out 1 room to a friend who will take care of the place when I'm away.

I have about 300k in index funds and cash accounts, and the home I plan on purchasing in Reno will be in the 100k - 150k range. I'll be able to get a loan in the range of 5.1 - 5.5% with 10 - 20% down. This was my plan.

This was your response to a question that lefort posed:
Quote:
Having said all that, I'd recommend that with your significant cash assets you do not borrow any expensive money from banks and hard money lenders. Why pay them to give you what you already have? I don't know what your market is like, but $450k should be enough to do plenty of deals. And your returns will destroy the returns from mutual funds. What I would do is pay for one deal with the $100k (depending on the market you're working in - 100k might be enough to do several deals), refinance the 100k back out and rent the property. Then repeat over and over and over and over. Pretty soon you'll be rich.

This is really interesting, I never considered doing something like this. Is lefort's situation different from mine in that he wouldn't get the same kind of low borrowing rates as me (since I'm buying a primary residence)? Or should I also look into doing something similar?
geormiet is offline   Reply With Quote
Old 01-25-2008, 02:01 PM   #153
spex x
Real Estate Mogul
 
Join Date: Jun 2005
Location: who dares wins
Posts: 1,611
Re: Ask me about real estate investing

Quote:
Originally Posted by geormiet View Post
Spex, you are providing a great service with this thread!

I was wondering if you could comment on my situation.

I'm a CA resident and poker player, where I rent an apartment. I spend a lot of my time travelling outside of CA, so I am going to purchase a home in Reno NV and establish NV residency to save on state taxes. I plan to purchase a 2 bedroom and rent out 1 room to a friend who will take care of the place when I'm away.

I have about 300k in index funds and cash accounts, and the home I plan on purchasing in Reno will be in the 100k - 150k range. I'll be able to get a loan in the range of 5.1 - 5.5% with 10 - 20% down. This was my plan.

This was your response to a question that lefort posed:



This is really interesting, I never considered doing something like this. Is lefort's situation different from mine in that he wouldn't get the same kind of low borrowing rates as me (since I'm buying a primary residence)? Or should I also look into doing something similar?
WEll, I don't know. i took another look at leford's post, and it seemed to me like he was getting into flipping. I was responding to his notion of using borrowed money to do the flips. It wasn't necessary for his situation.

Whether you should go that route is hard for me to say. Do you want to be a landlord? I mean, if you just want someplace to park some money for a decent yield, you could be much more passive about it. You could lend money to flippers instead of flipping yourself. Or you could buy mortgages or something. But if you want to flip and rent, that is not exactly passive.

Another consideration, and something that concerns me about the potential RE investors from this board is that for most pro poker players chasing a $400 rent check is just not worth their time. I can understand that, esp if you make $100/hour or more playing cards. Think long and hard before becoming a landlord. You don't want to half-ass it and become a motivated seller yourself.

I guess that I'm getting the sense from your post that your plan was to buy a personal residence, but when you noticed that you can make a lto of cash in REI you thought maybe you'd give it a shot. Its not as easy as it sounds though. Most professional RE investors that I know work FULL TIME chasing deals, contractors, tenants, buyers, etc. I don't, but I've been lucky.
spex x is offline   Reply With Quote
Old 01-27-2008, 07:07 AM   #154
rsxpunk
Carpal \'Tunnel
 
rsxpunk's Avatar
 
Join Date: Feb 2007
Location: bkk
Posts: 9,154
Re: Ask me about real estate investing

spex, awesome thread. I am a recent college grad and sometime later this year I'm going to purchase some sort of low income multiplex (probably a 4 unit). I know this is generic but can you come up with a couple examples of what kind of cash flow is attainable when you do some research and find a decent deal. I know this is vague, but I am a total noob.
rsxpunk is offline   Reply With Quote
Old 01-27-2008, 12:16 PM   #155
geormiet
veteran
 
Join Date: Jul 2004
Location: San Francisco
Posts: 2,720
Re: Ask me about real estate investing

so I am in Reno now, condo shopping, and had a realtor show me around. We saw about 8 props. After she was done, I went on my own to look at a new construction that I saw from the side of the road. The property, priCe, hoa fee, and location were superior to everything my realtor had shown me.

I spoke with the sales office and they seemed like they would be willing to entertain all sorts of offers.

Why do I need a realtor? Will she be better at negotiating than me? I don't see the difficulty in offering a lower price. Are there other factors? Is it a bad idea for me to proceed and put an offer down on a prop which I, a RE noob perceive to be good without a "professional" on my team ?
geormiet is offline   Reply With Quote
Old 01-27-2008, 05:02 PM   #156
remi983
grinder
 
Join Date: Apr 2005
Posts: 495
Re: Ask me about real estate investing

Quote:
Originally Posted by spex x View Post

One idea I came accross recently on creonline.com is buying mechanic's liens: http://www.creonline.com/articles/art-045.html
Is the book worth the $118 bucks? If you already read it, are you willing to sell it to me?

Have you pursued this idea since you posted about it?
remi983 is offline   Reply With Quote
Old 01-28-2008, 12:43 AM   #157
theblackkeys
Carpal \'Tunnel
 
theblackkeys's Avatar
 
Join Date: Sep 2006
Location: Fat Handsome
Posts: 7,222
Re: Ask me about real estate investing

Quote:
Originally Posted by geormiet View Post
so I am in Reno now, condo shopping, and had a realtor show me around. We saw about 8 props. After she was done, I went on my own to look at a new construction that I saw from the side of the road. The property, priCe, hoa fee, and location were superior to everything my realtor had shown me.

I spoke with the sales office and they seemed like they would be willing to entertain all sorts of offers.

Why do I need a realtor? Will she be better at negotiating than me? I don't see the difficulty in offering a lower price. Are there other factors? Is it a bad idea for me to proceed and put an offer down on a prop which I, a RE noob perceive to be good without a "professional" on my team ?
Would home builders be considered "motivated" sellers in general now (maybe in certian areas)? I believe I remember hearing about a large inventory surplus in california.
theblackkeys is offline   Reply With Quote
Old 01-28-2008, 02:02 AM   #158
geormiet
veteran
 
Join Date: Jul 2004
Location: San Francisco
Posts: 2,720
Re: Ask me about real estate investing

Quote:
Originally Posted by theblackkeys View Post
Would home builders be considered "motivated" sellers in general now (maybe in certian areas)? I believe I remember hearing about a large inventory surplus in california.
in reno it seems all sellers, builders or not, are extremely motivated.
geormiet is offline   Reply With Quote
Old 01-28-2008, 03:15 AM   #159
TheMetetron
banned
 
TheMetetron's Avatar
 
Join Date: Oct 2004
Posts: 7,549
Re: Ask me about real estate investing

geormiet,

Be careful. Read what the requirements are to not be considering a California resident. Owning a home in Reno may not be enough. And California is by far the most ridiculous state as far as going after former residents who try to claim residency elsewhere.

I just looked into this. Check out FTB Publication 1031 from the California Franchise Tax Board's web site. It gives you all the details to make sure you do this correctly.
TheMetetron is offline   Reply With Quote
Old 01-28-2008, 03:16 AM   #160
TheMetetron
banned
 
TheMetetron's Avatar
 
Join Date: Oct 2004
Posts: 7,549
Re: Ask me about real estate investing

For example, even owning a place in Reno, having a NV driver's license, and having bank accounts in Nevada may not be enough to keep California away if you spend more time in California than Nevada. Nevada needs to be THE place where you have greater ties to than anywhere else in the USA.
TheMetetron is offline   Reply With Quote
Old 01-28-2008, 05:47 AM   #161
spex x
Real Estate Mogul
 
Join Date: Jun 2005
Location: who dares wins
Posts: 1,611
Re: Ask me about real estate investing

Quote:
Originally Posted by rsxpunk View Post
spex, awesome thread. I am a recent college grad and sometime later this year I'm going to purchase some sort of low income multiplex (probably a 4 unit). I know this is generic but can you come up with a couple examples of what kind of cash flow is attainable when you do some research and find a decent deal. I know this is vague, but I am a total noob.
I think that you're going about this the wrong way. The question isn't what kind of cash flow is attainable, the question is what kind of cash flow you need. You need to figure out what your goals are. Once you do that I can help you analyze what kind of deals you can make to get you what you need out of REI.
spex x is offline   Reply With Quote
Old 01-28-2008, 05:55 AM   #162
spex x
Real Estate Mogul
 
Join Date: Jun 2005
Location: who dares wins
Posts: 1,611
Re: Ask me about real estate investing

Quote:
Originally Posted by geormiet View Post

Why do I need a realtor? Will she be better at negotiating than me? I don't see the difficulty in offering a lower price. Are there other factors? Is it a bad idea for me to proceed and put an offer down on a prop which I, a RE noob perceive to be good without a "professional" on my team ?
You don't need a realtor at all. Most realtors are no better at negotiating than anyone else in my experience. If this is your first home purchase, you could either use a realtor or not. You don't really lose anything by having an agent representing you in this deal. It really just comes down to comfort. If you're comfortable doing the transaction w/o a realtor then go ahead and do it. If not, then use a realtor.

In my experience realtors are good for getting all the scheduling associated with a property done - inspectors, closing, etc. But really they're no more than a glorified secretary. As a group realtors don't actually know that much about real estate. Thats because the range of transactions that most realtors have been involved in is very small. As a rule realtors are not encouraged to think creatively to put together deals. In your case, that shouldn't be much of a problem. But I don't think that you really lose anything by not using a realtor unless you don't know the market that well. If you aren't sure of the market, you might use one. Either way, I don't think you'll get hurt too bad.
spex x is offline   Reply With Quote
Old 01-28-2008, 05:58 AM   #163
spex x
Real Estate Mogul
 
Join Date: Jun 2005
Location: who dares wins
Posts: 1,611
Re: Ask me about real estate investing

Quote:
Originally Posted by remi983 View Post
Is the book worth the $118 bucks? If you already read it, are you willing to sell it to me?

Have you pursued this idea since you posted about it?
I've read it but haven't started chasing any deals. I paid $200 for it and then a little while later it went on sale 40% off. Bummer. Personally, I think that the book is worth $200. The idea has a lot of potential.
spex x is offline   Reply With Quote
Old 01-28-2008, 06:12 AM   #164
spex x
Real Estate Mogul
 
Join Date: Jun 2005
Location: who dares wins
Posts: 1,611
Re: Ask me about real estate investing

Quote:
Originally Posted by theblackkeys View Post
Would home builders be considered "motivated" sellers in general now (maybe in certian areas)? I believe I remember hearing about a large inventory surplus in california.
It depends on the seller. There are motivated sellers in every market. Most sellers are not very motivated in any market. Really, most sellers don't understand the reality of the RE market that they're in.
spex x is offline   Reply With Quote
Old 01-28-2008, 10:43 AM   #165
geormiet
veteran
 
Join Date: Jul 2004
Location: San Francisco
Posts: 2,720
Re: Ask me about real estate investing

Quote:
Originally Posted by TheMetetron View Post
geormiet,

Be careful. Read what the requirements are to not be considering a California resident. Owning a home in Reno may not be enough. And California is by far the most ridiculous state as far as going after former residents who try to claim residency elsewhere.

I just looked into this. Check out FTB Publication 1031 from the California Franchise Tax Board's web site. It gives you all the details to make sure you do this correctly.
I've looked into this a good deal, discussed it with my accountant, etc...

Effectively, I'm severing ties with CA and moving to nevada.
geormiet is offline   Reply With Quote
Old 01-28-2008, 10:47 AM   #166
geormiet
veteran
 
Join Date: Jul 2004
Location: San Francisco
Posts: 2,720
Re: Ask me about real estate investing

Quote:
Originally Posted by spex x View Post
It depends on the seller. There are motivated sellers in every market. Most sellers are not very motivated in any market. Really, most sellers don't understand the reality of the RE market that they're in.
Maybe this explains the number of ridiculously badly priced properties I saw in Reno which had been on the market for 200+ days.
geormiet is offline   Reply With Quote
Old 01-30-2008, 04:36 AM   #167
halperin
adept
 
Join Date: Nov 2006
Posts: 898
Re: Ask me about real estate investing

Quote:
Also, if you want to find properties that cash flow you've GOT to stay out of middle class neighborhoods. You can't find deals there and you'll be spinning your wheels.
I have recently been looking for a single family home to live in for the next few years while renting some rooms out to friends and then move out and make my first rental . i was hoping to use that to build on and eventually own apt complexes or commercial properties. how come you say you cant find any single family homes that can cash flow. does my idea have little potential?
halperin is offline   Reply With Quote
Old 01-30-2008, 12:47 PM   #168
smokingrobot
veteran
 
smokingrobot's Avatar
 
Join Date: Jul 2004
Location: shoving 300BBs with 50% equity
Posts: 3,381
Re: Ask me about real estate investing

What state are you in? I did this in New Jersey for a while, but mostly bought in land to sell to smal ltime builders. Either would get permits and approvals myself or sell unimproved and let the builder worry about appeasing the environmental board and the local governments.
smokingrobot is offline   Reply With Quote
Old 01-31-2008, 12:03 AM   #169
billb
centurion
 
Join Date: Jul 2004
Posts: 197
Re: Ask me about real estate investing

Spex, Ty for this informational thread.

where do you find mobile homes to fix up?
Do you have a supplier of repo or ones traded in?
billb is offline   Reply With Quote
Old 01-31-2008, 12:28 AM   #170
HoldingFolding
old hand
 
HoldingFolding's Avatar
 
Join Date: May 2004
Location: Silence is so accurate
Posts: 1,652
Re: Ask me about real estate investing

Excellent thread Spex - thank you for putting so much time & effort into it.

I remember as a small boy asking my Dad how come Greek friend of mine always got walked to school by his Dad. He said it was because the father owned a bunch of properties & didn't have to work.

Anyway, guess that stuck with me, as I now own 25 income producing properties in a major city in Japan. The return on cash invested is great (25% plus) & the interest rate is low compared with US, however, Japan's demographics are appalling which means there's not much hope of capital gains plus I face a high turnover of tenants. The fact that it's a buyers market means I also get gouged by the realtors.

Obviously not college town America, but any general tips on retaining tenants & circumscribing realtors?
HoldingFolding is offline   Reply With Quote
Old 01-31-2008, 03:34 AM   #171
Rotating Rabbit
old hand
 
Join Date: Apr 2005
Location: 25/21/4
Posts: 1,591
Re: Ask me about real estate investing

What do you do with disaster tenants? I have a couple flats in london (UK). In one of them, there's this dutch lawyer (note to self, never let a lawyer rent your flat, they know too much about how to piss you off). Anyway there was a building-wide boiler issue that resulted in like a week without hot water in november, and he hasnt paid rent for nov, dec, and so far jan. He;s gone awol in fact, neither I or the agency can get thru to him. So obv we're starting up legal proceedings against him but this takes **** ages. If he runs to Holland with no intention of paying arrears theres not a lot we can do (tho we can get a court judgement against him which means that hes not working in the UK ever again with a good reputation).

Do you have any good practical tips here to (legally) pursuade people to pay?
Rotating Rabbit is offline   Reply With Quote
Old 01-31-2008, 11:46 AM   #172
bwana devil
Pooh-Bah
 
bwana devil's Avatar
 
Join Date: Feb 2004
Location: Austin
Posts: 5,467
Re: Ask me about real estate investing

Quote:
Originally Posted by Rotating Rabbit View Post
(note to self, never let a lawyer rent your flat, they know too much about how to piss you off).
in some states in the US it is illegal to discrminate against tenants based on profession.
bwana devil is offline   Reply With Quote
Old 01-31-2008, 06:43 PM   #173
Tien
Pooh-Bah
 
Tien's Avatar
 
Join Date: Oct 2005
Location: INFOWARS ALL DAY
Posts: 5,965
Re: Ask me about real estate investing

Quote:
Originally Posted by Rotating Rabbit View Post
What do you do with disaster tenants? I have a couple flats in london (UK). In one of them, there's this dutch lawyer (note to self, never let a lawyer rent your flat, they know too much about how to piss you off). Anyway there was a building-wide boiler issue that resulted in like a week without hot water in november, and he hasnt paid rent for nov, dec, and so far jan. He;s gone awol in fact, neither I or the agency can get thru to him. So obv we're starting up legal proceedings against him but this takes **** ages. If he runs to Holland with no intention of paying arrears theres not a lot we can do (tho we can get a court judgement against him which means that hes not working in the UK ever again with a good reputation).

Do you have any good practical tips here to (legally) pursuade people to pay?
Just move on, cases like this it is not worth your time to be chasing after.
Tien is offline   Reply With Quote
Old 01-31-2008, 06:48 PM   #174
Tien
Pooh-Bah
 
Tien's Avatar
 
Join Date: Oct 2005
Location: INFOWARS ALL DAY
Posts: 5,965
Re: Ask me about real estate investing

Quote:
Originally Posted by bwana devil View Post
in some states in the US it is illegal to discrminate against tenants based on profession.
Yeah, but there are dozens of dirty tactics landlords use to block out certain tenants.


The landlord business is one of the most racist / sexist / shallow businesses in the world.
Tien is offline   Reply With Quote
Old 02-09-2008, 08:24 PM   #175
spex x
Real Estate Mogul
 
Join Date: Jun 2005
Location: who dares wins
Posts: 1,611
Re: Ask me about real estate investing

Quote:
Originally Posted by billb View Post
Spex, Ty for this informational thread.

where do you find mobile homes to fix up?
Do you have a supplier of repo or ones traded in?
I don't fix up mobile homes. If I were going to try to find MHs to fix, I'd probably talk to park managers first. Get the book "deals on Wheels" by Lonnie Scruggs if you're interested in MHs. That book will tell you everything that you need to know about flipping MHs and carrying MH paper.
spex x is offline   Reply With Quote

Reply
      

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Forum Jump


All times are GMT -4. The time now is 04:03 PM.


Powered by vBulletin®
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
Search Engine Optimisation provided by DragonByte SEO v2.0.33 (Pro) - vBulletin Mods & Addons Copyright © 2017 DragonByte Technologies Ltd.
Copyright ę 2008-2010, Two Plus Two Interactive
 
 
Poker Players - Streaming Live Online