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real estate investing

JustWannaBeHuge

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Hey fellas,
Question for you concerning real estate. I'm not trying one of these "get rich quick" schemes about real estate that is all over the tv and radio, but I am curious about investing in real estate. I've been making decent money and looking for additional sources of income, mainly because I know I'm not going to live forever, and honestly, I want to be able to leave a very nice amount for my daughter when I'm gone. Hopefully, it'll be a VERY long time from now... but hey, I want to be prepared.

Any good books about real estate investing that is legit and you recommend? I plan to learn as much as I can, and even visit a few real estate auctions just to watch, not to actually participate in it.

Any advice is appreciated as always. Also, if you know of any good forums, let me know. Some that I found, seemed a bit "shakey" if you know what I mean.
 
What is the average return on your other investments right now?

That is your "cost of capital" as an individual investor.

If you're well invested right now you can more than likely achieve a greater rate of return with significantly higher liquidity and much less effort.
 
Why do you wanna buy into RE now? Just because? RE never goes down right? Look, the top 5 buyers of private residential RE from 2010-2013 was private equity, hedge funds. The top 5 put in over 5 BILLION USD. That has never happened before. Those same large buyers that have caused the recent 30%+ increase in values, have EXITED the market! They are done buying and now selling the rents, packaged up as bonds, CDO`s, sound familiar?

Next the country faces a huge demographics problem. Young people (20-42) are needed to organic-ly push RE prices. First they buy starter homes, then trade ups, then mcmansions, all at predictable ages. Young people are not pushing this mkt, cheap interest rates from the fed is, in an effort to re-inflate the bubble, FOREVER!! But it wont last. Gen Y is strapped with debt, college/credit, bad credit, low paying jobs or no job, and for some they still have the idea of "hope and change".

Old people, Ie: baby boomers are DONE buying just about everything except healthcare, Rv`s, vacations... otherwise they are downsizing. They are the people that pushed the Re bubble into S/L crisis with first time home buyers, then again into 2007 with trade ups, mcmansions.... all fueled with super low credit. If your interested in demographics (you should be) look on youtube for harry dent. He has lots of free stuff there but also subscriber stuff.
 
Why do you wanna buy into RE now? Just because? RE never goes down right? Look, the top 5 buyers of private residential RE from 2010-2013 was private equity, hedge funds. The top 5 put in over 5 BILLION USD. That has never happened before. Those same large buyers that have caused the recent 30%+ increase in values, have EXITED the market! They are done buying and now selling the rents, packaged up as bonds, CDO`s, sound familiar?

Next the country faces a huge demographics problem. Young people (20-42) are needed to organic-ly push RE prices. First they buy starter homes, then trade ups, then mcmansions, all at predictable ages. Young people are not pushing this mkt, cheap interest rates from the fed is, in an effort to re-inflate the bubble, FOREVER!! But it wont last. Gen Y is strapped with debt, college/credit, bad credit, low paying jobs or no job, and for some they still have the idea of "hope and change".

Old people, Ie: baby boomers are DONE buying just about everything except healthcare, Rv`s, vacations... otherwise they are downsizing. They are the people that pushed the Re bubble into S/L crisis with first time home buyers, then again into 2007 with trade ups, mcmansions.... all fueled with super low credit. If your interested in demographics (you should be) look on youtube for harry dent. He has lots of free stuff there but also subscriber stuff.

This was an excellent post.
 
Join a local reia in your area. Ron Legrand has good courses for residential. Lance Edwards and creonline.com have great commercial real estate courses.

Sent from my Desire HD using Tapatalk 2
 
Best way to learn is fine a real estate school by you and see what classes they offer. In texas there is a real estate school that you can take investment classes either online or in class. I agree that Gen Y does have a lot of debit but all that means is that they won't be buying RE but they will be renting. I would educate yourself and then find a short sale or foreclosed home that doesn't need any major fix, and rent it out. You will get a little more liquidity of the property as well as someone else paying your mortgage.


Sent from my iPhone using Tapatalk
 
Also realize that every city has a different market.
Don't be scared to look outside of your home town to find opportunity.
There are some good towns out there that are growing, have decent demographics, and good future prospects with affordable real estate.
IMHO and experience, you can never go wrong buying shitty real estate in close vicinity to an older university with strong enrollment.
 
Also realize that every city has a different market.
Don't be scared to look outside of your home town to find opportunity.
There are some good towns out there that are growing, have decent demographics, and good future prospects with affordable real estate.
IMHO and experience, you can never go wrong buying shitty real estate in close vicinity to an older university with strong enrollment.

Slumlord...
 
My advice is to purchase real estate without going into debt. Cash deals only.
 
I've been thinking of this as well. I live in an army town in central texas (a big big army post) and found a really nice, new community where duplexes are being built....they arent even all done. Spoke personally to the builder/investor. Brick duplexes 6br4b asking 185k brand new....there is also one for 140k foreclosed right down the road in the neighborhood same layout just a few years older. I have a fair bit of cash stashed away (50k+) and was thinking about using my VA loan (so i don't have to put anything down and have a big cushion of money for anything that may arise) to purchase this and live in one side. I figure the mortage will be anywhere from 1000-1100k....rent is around 900 so ill be living in a nice duplex in a nice area, only paying a few hundred dollars and building equity....hell yeah I could choose to pay...say $500 a month to be hitting that extra principle if i wanted. Anyway after a few years I'll probably be moving in which case ill rent both sides and then ill really be in the positive in terms of cashflow (will probably just double down on the payments).....then when i move off I can do the same again or whatever.

What you guys think?
 
Vanya you're only looking at the upside number potential, and you've calculated for zero risk into this equation.

I think it's a terrible idea to use a VA loan, or any loan for that matter to purchase real estate.

Grow your 50K, and purchase a flip for cash. That's what I'd do.
 
JustWannaBeHuge,

I can say from experience that only two things matter when it comes to making money in real estate. Equity and/or cash flow. You make money when you BUY real estate, not when you sell it. Location doesn't matter, property type doesn't matter, what the experts say the market is doing doesn't matter.
 
My advice is to purchase real estate without going into debt. Cash deals only.

With historically low interest rates, in the 4%`s, you say DON`T use it? Leverage is very powerful, useful but must be used smart, THAT will make you real money when done correctly.
 
If you are looking for a long term investment go with commercial RE old restaurants, warehouses things that you can get at a minimal cost. Make all of your leasee's sign a triple net lease. Meaning they pay taxes, insurance, and upkeep while they are there. With commercial properties in the right area of town you are almost guaranteed to always have a tenant and rent is MUCH higher than residential properties. Plus most businesses will do improvements to the property while they are there:headbang:
 
With historically low interest rates, in the 4%`s, you say DON`T use it? Leverage is very powerful, useful but must be used smart, THAT will make you real money when done correctly.

My suggestion was merely my opinion and how I operate in real estate investing. Debt is debt, risk is risk. You can have your leverage, I'll take my deed in hand anyday while sitting on CASH money.. not some loan from a bank or an investor. I could care less what the interest rates are. It's my personal policy not to go into debt for anything, ever, and that includes my real estate transactions.
 
I have bought and sold hundreds and possibly over a thousand houses as well as hold many rentals.

Hogan gives some good info but it needs to be tempered just a bit. The hedge funds operated in a hand full of cities. Unfortunately mine is one of their biggest markets, and while I enjoy selling to them, it has messed up my buying.

They have slowed down but not all have stopped. A lot of slack is picked up by smaller funds filling the gaps.

I believe a bigger problem is that wages have not increased with housing prices or rents. That eventually comes home to roost. Also when rates rise it will chill the market and that is inevitable.

I still believe that owning real estate, allowing the rents to pay for the property you buy, over time is a winning investment if you buy well, do not apply too much leverage , and keep a cash cushion for downturns.

What could be a better retirement than having 50 paid for rentals bringing in 70k a month in rent and net 50k after repairs, insurance, taxes, and uncollected rents etc. That will be an annuity you can leave your children when you are done.

I have many investments, but these are the ones I can count on. It is one of the few investments where the average guy can apply leverage like a hedge fund. Is all cash best? For very few people. For most it will cut their retirement funds by a factor of 3 to 5 versus conservative financing and keeping a cash cushion. Source: I went through one of the biggest real estate corrections of my lifetime and was able to use it as an opportunity to increase my holdings.

Good Luck.
 
The problem with rental property is when they decide not to pay the rent. Single family investements are tough to get right. Your returns can be OK but as it sits vacant or needs repairs, that's where the average person looses out. If you take that route, make sure you are prepared for the worst case. There is nothing worse than chasing someone around for $800 a month rent payment.

Also don't fall for the appreciation pitch. Sure you might flip one or two and make a killing but its not sustainable long term.

If you want to invest in RE, look towards net leased commercial investments. Credit grade tenants rarely own the building and land. The leases are bankable and demand is almost always high.

BPP
 

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