>Buy foreclosure for $100k
>Pay $30k to rehab it
>Rent it for a steady cash flow
>Have it appraised for $200k
>Refinance for like 80% and make a mortgage
>Get $160k back despite having put in $130k initially
>Use $30k for new property while renting the previous for profit
>At least 1% of what I paid per month
>Snowball from there
Why don't more people do this?
>why don't more people do this?
>Buy foreclosure for $100k
>why don't more people do this?
>Buy foreclosure for $100k
That requires significant effort, capital and know how. You also described the best case scenario.
also im pretty sure the location is the most important part of this equation. not to mention the housing bubble is ripe for a burst
That's a lot of debt I rather steer clear off
>buy faberge eggs for $10 mil
>resell for $11 mil
Why don't more people do this?
I own shit under my LLC
Who in their right mind would do it independently?
Aside from debt there's also:
>Potential landmines in the foreclosure
>Time invested into rehabbing
>Risk of shitty tenants or finding/sticking out long enough for good tenants
>Risk of actual "shit happens" broken water heaters or roof leaks or whatever
>Public housing or some shit coming into the neighborhood and fucking up property values
You need expertise/relationships enough to be your own GC, understand the problems in advance so you can know what it will cost, etc. Also buying this type of property usually you need all cash at first. It's also time consuming and there is a lot of risk. In some areas maybe you could get a great deal on something but most areas where you can get good quality renters with low vacancy at the right price have competition already for these types of properties. And usually a property doesn't get to that point for no reason, so you also want to be buying something that is in an area with good redevelopment prospects or which has already bottomed and is generally improving or has prospects to. Really it seems like a pretty good job if you have the capital but high leverage is riskier than it looks once things go bad
My family flips houses occasionally....
A) Finding a foreclosure that is worth the asking price
B) Being the lucky one on the courthouse steps that gets the deal
C) Hoping you didn't get fucked on a house where the foundation is bad or the pipes are bad
D) Not getting sued by the next owner who claims you hid something terrible from them
I have a good friend who has been building houses for 30 years. He knows just about everything in this industry.
3 years ago he got a house for $150k. He put $100k into it. He sold it for $350k. So he just made $100k right??
1 year after he sold the house the new owners and their piece of shit lawyer decided to sue him. They had some pipe bust in the basement (and they let it leak water for days instead of fixing it right away). They sued him saying he knew the piping was bad etc...
It was all bullshit but now he has to go to court and fight it.
Honestly the TV shows ruined the flip game. When you are competing with idiots who will overpay for shit homes it's hard to get the deal.
real estate flippers are going to have astronomically heavy bags soon
>housing always goes up goy!
It's a solid game. I bought a fourplex near a college. I live in one unit, rent out the other three to rich Chinese college students.
>not buying houses and renting each house to a clean handyman tenant to get a profit of $3000+/month every month from each house, thus making thousands and thousands every month
god you guys really suck
Is it worth having a real estate license or residential builder's license if I plan to fix and flip houses?
stay poor kiddo
Quick rundown on llcs
smart man
Literally "Get out of jail freecard"
You can do anything with it
I have my Real Estate company as an LLC and fund it with my C-corporation
Everything from "business lunches" to oil changes I use as expenses
Anybody who tries to sue me can't touch my shit either cuz it's technically not mine
>Bitter rentcucks
offshore?
it protects you legally, costs around 300usd to start one in texas
So you can tank a business file for bankruptcy and thats all on the llc
Damn straight
why fund your LLC with C-corp and not another sole-member LLC ?
>im new at this
I think the BRRRR method is extremely powerful for snowballing your initial investment, but it's only recently become trendy/big in the real estate investing world.
>rich Chinese
>renting
user, wo ...
every Chinese college student drives a brand new beamer and pays 3k in rent
Can I make a llc get a loan on it and invest in crypto?
No kidding
Idk how but almost all the Chinese I see on my campus have bmws
I used to live next to some students who each had a gtr...
Of course
LLCs are the way to go, especially if you're renting. All the liability is held by the LLC, and the profits just pass through to you.
These are exactly the kind of people I rent to. It's a god damn gold mine. I've got enough saved to buy another property, but I'm at that awkward point where I doing have enough free time with my current job to manage another property, and the income I'd get from another property wouldn't offset quitting my current job. I'm hoping to one day be self employed off renting properties, because fuck working for someone else.
So a llc is a third party?
Is this how they really work?
Are you able to get a loan as one? I've always been scared to start a business incase it failed and i end up with a shit ton of debt.
>not owning a food truck
you actually want your assets held by a trust which is controlled by an llc
It depends on state law but in most states LLCs are treated as entities separate from their members (owners). The big deal is it shields the members from liability.
So the big deal for me as someone who is renting a property is I am protected from lawsuits related to the property.
Like lets say a tenant throws a party. A party guest falls off a balcony and hurts themselves. Lets say this person who got hurt decides to sue on the grounds that the balcony presented an "unsafe condition". If I owned the property myself, all my personal assets would be on the line in the lawsuit. If I own the property through the LLC, the owner of the property is technically the LLC so the extent of my liability is limited to the property itself. My risk exposure is insulated by the LLC, and only assets owned by the LLC are exposed. And if I buy another property, I can put that second property under a different LLC, so both properties are insulated from each other.
The other benefit of LLCs is pass through taxation. If you have an S corp, you get double taxed. The corporation gets taxed on the corporate level, then again on anything distributed to owners. With an LLC, pass through taxation means I only get taxed once.
That's how they work from the liability side. Debt is a different thing. I'm not an expert here but this is what I know:
An LLC is a separate legal entity which can own its own assets and take on its own debt. If an LLC can't pay its debt, creditors can only go after the assets of the LLC.
Some exceptions to this that I know of:
If you cosign a business loan alongside an LLC, you are personally liable.
If you pledge your own property as assets or collateral for a loan (which a bank might ask for if the LLC asking for a loan has no assets), that collateral is on the line.
People trying to go through your LLC can try doing what's called "piercing the corporate veil", where they try to show in court that your LLC exists only for liability protection and was never intended to function as a business. They look at things like not following corporate formalities (holding meetings, keeping minutes), how the operating agreement was followed, if personal funds mixed with company funds, etc. If they can do this they can go straight after you.
And of course you lose LLC protection if you're found to have committed fraud.
There may be more that I don't know about. If you ever find yourself in the position of setting up a company, definitely shell out the cash to have a professional help you figure out what corporate structure would be best for you, what your liability would be, and how to minimize your risk.
Thanks user.
Did the bank give your LLC the 100k for the house? Would you be able to have that be the assets even before owning it?
>>Get $160k back despite having put in $130k initially
>>Use $30k for new property while renting the previous for profit
In many places you cannot use mortgage proceeds to make a down payment on another house.
I put down money upfront, a luxury of having a good amount saved up.
For purchasing a property, there's two ways to go about it. You can do residential financing or commercial financing. The typical way individual homebuyers go about financing is to get a residential mortgage. This usually has a way lower down payment. But the issue with this is that you retain liability for the mortgage. Even if you put the property into an LLC, you're still on hook for the loan. Your worst case scenario here is for whatever reason you lose the property, and now you're stuck with another 15 years of payments on an asset you don't have.
To prevent personal liability, you need to finance the property through the LLC itself, which requires a commercial loan. These require more money down, along with other technicalities. Banks also get nervous about lending to an LLC with zero assets, so they either deny you or have Schlomo give you 18% interest. I was able to finance through the LLC by putting a good chunk of my own assets in first.
Basically real estate's a great investment if you already have money.
are we talking like 10% downpayment here ?
>just want to put down my 10k savings to get 100k loan through LLC for cryptos
>Public housing
He means blacks.
Also you need to be able to renovate it yourself, or have connections to hire people.
Constructors are expensive and the unions have no 'on-the-bench' labor. Everyone is working on shit, so prices go up.
What is a decent amount to start with so you can begin?