nuffgreed,

This is a basic economic exercise. When you have a more profitable alternative, you should take that... For example if I'm an eye surgeon who makes $700 an hour at work, but someone would pay me $500 an hour to manage property. I'd give up a ton of value to quit my job to manage property...

It doesn't really matter how many units you have, it'd a function of the marginal utility of each activity. If you like fixing things... by all means... fix stuff. I do this occasionally around the house, though I'm probably better off paying a handyman and playing poker while he is here. If you don't like fixing toilets and can make more money doing other things, you'd be a fool to fix toilets.

Sprex,

I know you normally only invest in areas close to home, but do you know of any good resources to give you figures about population, employment etc, to gather some info about particular cites?

I guess you have a different view of things. I'm not the type to do labour for free.

So your properties are profitable if you don't pay the labor? What happens if you are unable to do the repairs for whatever reason? Will that make them unprofitable?

Imo: if you can't pay the labor the property isn't profitable.

www.citydata.com

Its just repackaged Census Bureau info, but easier to navigate than the CB site.

After reading this post I have half a mind to tell you to go **** yourself and figure it out on your own. I don't appreciate your sarcasm when I'm trying to help you. Lets not forget that I have other much more profitable things to do with my time then help you learn REI. I'm doing you a free service. From here on out you will speak to me respectfully or I won't help you any more.

For the record, I have been reading and understanding everything you've written here. If anyone has a reading comprehension problem, I'd suggest that it is you since 1) the topic of the financial analysis of RE has been has been covered at length earlier in this thread, and 2) the specific topic of reimbursement for the management of property has been discussed earlier in this thread, and 3) I've already repeated the earlier explanations for you.

However, I'll try again just in case I haven't been clear. Basically, if you pay a manager to manage your property, or if you do the management yourself, it amounts to the exact same thing on your income statement. Either way it is an expense. If you hire a manager, you have to pay him for his time. If you manage the property yourself, you pay yourself for the time. Either way, you'd put that expense down in your books as a management fee.

Your time is not free. If you make $20 per hour at your job and you take off time to manage the property, you gain the additional income from the property. But you lose the $20/hour that you would've made at your job.

Lets say that you could hire out the management for $10 per hour. Wouldn't it make more sense to hire out the management for $10/hour and spend the time you would've spent managing the property working at your job for $20/hour?

What it amounts to is that hiring out management to other people and spending your time on things that will make you a lot more money than managing property is smart. Spending your time managing property when you could be playing poker or finding more properties to buy is dumb.

I dont' use an agency. On the first page of this thread I told you that I employ 3 managers. They are employees, not contracted workers. Normally management companies will charge between 5%-10% of gross rents depending on your area and the property.



Nuffgreed - You REALLY need to go back and reread some of this thread.

Um, if you are paying $650 in mortgage payments, then your mortgage payment is $650. Why did you say earlier that the mortgage payment is only $450 or whatever?

If you plan to pay off the mortgage in 5 years time, you'll have to make payments of $2353 per month. Did you know that? Am I confused about something?

Its not necessarily bad to have properties paid off. You can hire out the management and live on the income. Nothing wrong with that at all.

All,

So one of the things I see documented the most as a good way to improve cash flow at a multi-unit property is to install washers and dryers but I have never seen any real numbers quoted. So if anybody here has any experience in doing this I would love to hear from you; in particular the questions I have now are:

1) How many people do you tend to need in the property to make the washer/dryers pay off?

2) What kind of return do you get?

3) Best source to purchase the machines?

4) General cost for installation?

I am looking at 7-unit property with a bunch of 1br 1ba units with a downstairs retail area that could easily be a full laundromat as far as space goes.

Spex,

I apologize if my response(s) came out arrogantly, but dont take it personal - I really do appreciate your time and advice.

I will go back and re-read this entire thread - I kinda started to skim through the middle since it mostly talked about trailers/mobile homes...

Thanks again
Nuff

Is it true that you have to have money to make money? I'm a 21 year old college student with no credit history. What if I went to the bank and asked for say a $10K loan to start buying mobile homes? Or, I should ask, what size of loan should I take out to start doing that? Will the bank back me if I have a co-signer?

It is not true.

I started real estate at 20 with nothing more than the money I made through poker.


It takes a lot of guts and never give up attitude.

Without any credit history I think it would be difficult to get a loan with a reasonable interest rate or possibly at all. If you have a co-signer with good credit then it would increase your chances of getting the loan for sure.

Let's say he was able to get a 10k loan at 14% with 1% origination fees(or whatever average fees are). Do you suggest he do this as opposed to saving up the money needed to do each deal? What about 5k at 10%?

I'm asking because I believe I could get a loan with the above or similar terms (to do trailer deals). I have little capital now due to paying down debt. I have the ability to save about $600/month. I also have a paid off car I could sell for $5000. (I don't need a car in my current situation, although I will in the future I'm sure. I think I can find a real cheapie and be fine with it though.)

I know this is limited information to be able to give really solid advice, but I would appreciate any insight.

Should I take out a loan (how much), sell my car, or just save? If I take out the loan and/or sell the car, I will still put my extra income toward deal-making.

Wow this thread took an interesting turn in past week.

I was wondering if someone had any specific knowledge about markets outside the US. The Netherlands and Germany specifically. I’ve been looking at the Dutch market for a while now but I’ve come to the conclusion that may be right or not: getting cash flowing properties is almost impossible.

I’ve got a few reasons:

First, the residential market is dominated by non-profit corporations that started building home’s for poor workers about 150 years ago. At first wealthy people started them and about 100 years ago the government started supporting them with cheap loans (like a 50 year loan without interest). Right now they own about 30-40% of the Dutch residential real estate. They are slowing down though because they aren’t subsidized by the government anymore but imagine a company that owns 100k cash flowing units, it’ll be able to get a mortgage to build/buy another 10k. Although I think they are good for the country (affordable housing for the low-mid class) it locks up the market. It’s almost impossible to compete with them.

Second, the mortgage interest payments are deductible so people are able to buy properties they can’t really afford, this makes buying so much more worthwhile than renting because of the price difference. Driving the prices up above reasonable cap rates. Note: this is only applicable for the primary residence, so you can’t buy investment properties and deduct the interest.

Third: scarcity. There aren’t enough new developments. First because there is hardly any free land and second because environmentalist try to lock everything up to prevent the last strips of nature being destroyed. I don’t really disagree with them but it’s driving up prizes again.

This made me conclude, together with harsh renters protection, not to invest in Dutch real estate but maybe look to Germany. I hardly know anything about it though so I wonder if anyone knows anything about it. There must be some Europeans in BFI.


I'm posting this here because I guessed that a lot of RE investers read here. But if I don't get any reactions I'll start a new thread.

Apology accepted. If you have more questions or need any clarifications, please ask.

I wouldn't recommend that you buy your own machines. There are companies that will bring in machines and service those machines for you. You get half the money (or whatever the market commands in your area), but they do all the work associated with the machines. This is a good deal for everyone.

IMO laundry machines are not worth the hassle if you own them. They constantly break, they're expensive, they get vandalized, etc. Hire a contractor to deal with them. Ask around at the REI club meeting to find out what company others are using and what kind of deal they get.

No, you don't need money to get started in REI. In fact, IMO, you are better off starting in REI without any money. It is important to figure out how to put together deals without money. You also need to get private money. To get private money you have to become an expert. That is good. Overall, being broke at the outset will force you to be really creative and that will make you a better and smarter investor overall.

If you need money to do mobile homes, try www.prosper.com or www.lendingclub.com. You can get some cash that way.

There are a lot of other things that you can do though. For instance you can learn all about tax lien certificates. Go find a family member that would be happy to get a 15% yield on their money. Use their money to buy an 18% tax lien and keep the spread. Or give them a 20% yield on their money and use it to buy mobile homes. Or go out and get good contracts then flip those contracts. There are lots of ways to get started with very little money.

Spex,

I searched through the thread and couldn't find any info on this.

We are getting ready to move and I'm wondering what would be better.

1) Lease option
2) Renting
3) Selling

With lease options, I imagine, it's better because I don't have to worry about repairs and I feel like I'll get better tenants and won't have to deal with as many problems.

With renting, we're going to be moving 500+ miles away, so I think I'm going to have to get a management company and I've read nothing but bad things.

It also seems like selling isn't a great option at this point. What do you think spex or anyone else? Your help is appreciated.

Thanks,

foxfox1

I want to know where these properties are that generate $2200/mo in rent but cost < $200K to buy.

Anybody here yet deal with the new 28 page version of the purchase agreement that comes with a Fannie Mae foreclosure? Just got handed one yesterday and it is a bit overwhelming. Your thoughts?

Hi Spex I don't know how much you know about the UK market but I live near the south where it's a little expensive.

I have $200k which will buy an average 1BD terraced property. When I have $240k I was going to make this purchase.

I am under no pressure to buy a property as I am only 20 but poker is my job so I can't/don't want a mortgage. I am living with my parents buy kinda want to move out very soon, I was thinking that after august the properties around here will drop a little more and I will also have money to pay for furniture as well as other fees.

Now is it ever worth getting a cheap property like what I am talking about? If I am not too lazy I make about $40k+ a month playing poker so would it just be worth waiting until I have around $400k to get a much better property or just get my money into a house ASAP? If you suggest waiting until I have a lot more money (say $400k) then I will probably spend $1200 a month renting a property as I don't want to live at home much longer.


Thanks,

Dan

Spex, could you tell us about your experiences buying properties and re-zoning them? Also have you done any work that involved buying a old building with a big lot in a prime location, and building a multi-story commercial building(say 3 stories or higher)?

Spex,

Thanks for all of the great information you've given us.

Do you recommend any books or other readings about REI?

With your income I can't imagine that you would take out a mortgage on a property. I agree with your initial feeling - buy the property outright for cash and keep cranking out the 40k per month. That is what I would do with your income.

Spex your patience is amazing. Folks, please read the entire thread before asking questions like this.

[QUOTE=formypokerstuff;4412044]Spex, could you tell us about your experiences buying properties and re-zoning them?

Rezoning is a type of bureaucratic nightmare. I've done it a few times. Once it was not successful because the property was in a historic district and I got shot down by the historic resource commission.

The biggest challenge for doing this - at least in my experience - is dealing with neighborhood associations. When I've done this in the past I've had residential RE rezoned to commerical. It turns out that neighbors are very reluctant to allow this to happen. The associations have a lot of pull and they exist specifically to fight these kinds of changes. If you really want to get a property rezoned your best bet is to join and become active in the neighborhood association. You need relationships to get this job done.

I'm not really sure what kind of information you are looking for here.


No, I've never done any devlopment on this scale.