Real Estate 10 Properties

30yr mortgage on a 500k house is going to be around mid 2000s.

if you can actually rent them out for the much, the rent should carry the mortage (depending on the property tax)

depends on the laws where you live but most banks require 5% down payment on your first home, then 20%+ on secondary residences, so your 100k is going to be eaten up by your first down payment.

Buy 1, -> use rent to carry the mortage and excess rent to build upy our 2nd 20% down payent -> buy 2nd, rinse repeat

I watch GrahamStephen videos and he says that luxury houses are easier to sell because you deal with affluent people who don't bullshit you and know what they want.

Maintenance cost is a bigger issue with cheaper houses because it's all about location. The land itself is the main cost, maintaining a house on expensive land is cheaper than maintaining a house on cheap land because the wood and construction is all the same.

Obvious get 1 property per year so you can deduct it from your tax

Is this the quickest and fastest way to make starter money? To just put 5% on a 500k house and start from there? What about 5% on a 1mil or 3 mil house. I can save all my money while working.

I'm 22, I need to be a millionaire as fast as I can. I already bullshitted in college and now I just want to be rich real fast, but safely.

Bump, I need to know more shit, thanks for the advice guys.

>the land itself is the main cost

Are you talking about building a house?

It would be a wise idea to check up how much the luxury objects have increased in value compared to the "cheaper" ones.

pro tip: 3-4k rent per month and you will only break even on your mortgage payment/expenses/cashflow. any repairs will come out of your pocket aka you will never recoup your investment.

real estate investing is just as market dependent as anything else. when in a buyers market (ie during a recession) acquire tental properties. when in a sellers market, develop new land or underused land. of course development is difficult and requires a lot of know how.

your plan is shit, but that doesnt mean not to get involved, it just means you need a better plan.

Give me a sec, and I'll calculate the example with 500k purchase price, and 3.5k in rents. gonna give you a result in a few minutes

your mortgage payment estimate is off

with ops income he will not get approved for a 2nd 400-500k loan

banks will not just keep giving you loan after loan

also if you only put 5% down, you will be paying mortgage insurance until you hit 20% equity. pmi is typically an additional 10% of the mortgage payment.

op- with your income, buy cheaper stuff. and ffs learn how to run the numbers on rental properties before you jump in.

I'm just going to buy up built houses and rent them out to cover mortgages. I'm also going to buy when prices are low.

Right, I will follow markets. Thanks for the insight. Develop new land as in build new houses?

you will not be approved for a 1 mil loan.

Alright then, I'll start at 300k-500k houses. Also any thoughts on a Dunkin Donuts/ Gas Station/Convenience Store?

Purchase price: 500k
Annual rents: 36k (3k a month)
insurance and other costs: 1500 dollars.
Cost of sales: 21%
Increase in rents: 3%
Increase in expenses: 3%
Appreciation of property: 4.5%
Tax Rate: 21%

Mortage loan: 350k
Interest rate: 4%
Term: 30yrs
Ordinary annuity with 1 P/Y

Agent taking 2% of sale
Required rate: 15%

You will earn 15% return for about 7 years, at which point you should sell and buy something else.

inb4 "don't sell, keep it forever"

i dont know about franchises.

do serious research on your local rental market. single family homes are difficult to make rental income.

also unless you put 20% down, the loan will most likely be for a "primary residence" which means you have to live there (at least on paper) so it can be tricky to rent it out.

look into multi family to start (duplex triplex etc). since they are the most common investment property they will be priced at a value that guarantees a return (or nobody would buy it), typically between 4-7% depending on your market.

that being said, if you live on site, rent out a couple of rooms in the unit you live in, and add some value with sweat equity, you can get a much higher cash on cash return.

read up on depreciation of rental properties (example of rich people writing laws for themselves) and get familiar with tax writeoffs. that is where a large chunk of your "income" will end up coming from.

I do not know your variables in your countries, like tax, cost of sales, interest rates, insurance and shit. So I just picked random numbers

op is not putting down 150k i dont think

Putting 100k down, with information from before.

Holding 9 years, then selling

op see this, these numbers are probably not applicable

you probably wont get 4% interest
you probably wont put 150k down based on what you have said

but you should get familiar with these types of analyses and run numbers on dozens of different properties (get rent estimates from craigslist) for different down payments and interest rates.

sometimes the numbers will work out, but most of the time they wont.

keep in mind that there are guys with decades of experience that do this for a living, so make sure you know how to run numbers. get your finances in order, know your budget, and be ready to pounce when you see somethjng good.

talk to some local real estate agents, tell them what youre looking for. they get paid when you buy, so they want to help you. a lot of them are vicious borderline retarded middle aged women though, so choose wisely.

and inspections, inspections, inspections. make sure any offers you make are contingent on inspection.

Good breakdown, 15% return is pretty good.

I guess I'll start with a triplex and live in the basement or some shit.

I also live around North Philly, where I can lease to college students. Houses are booming here. They're about to make a stadium here and I could cash out big. I went to the school so I know the updates on sports and shit.

Give me realistic figures of what I previously randomly applied, and I'll run the model again.

yeah i have some multi family near a university. its good, but college kids are still infants and will destroy your shit.

do not forget to account for vacancy. and put money aside. you dont want a couple of months of vacancy (aka youre paying mortgage out of pocket) to sink you.

anyway good luck.

350k house 5 bed rooms 2.5 baths

Rent $550 for each(I know rent around here as I was a student living here)

Total rent about $2.7k

Live off of only 40-50k a year, and save the rest in index funds, so you aren't losing money to inflation. Go find yourself some contractors that you'd trust with your life, you'll need them. Also you should research your local laws. Some places require you to have a real-estate broker license in order to rent properties, otherwise you have no legal claim to collect rent from somebody. Next start up your company. If you know someone already in the business you could pool cash with them and form a partnership, otherwise go with a limited liability or sole partnership. That's something you'll want to talk to a lawyer about. I don't recommend the route of buying 10 500k houses. Instead start off with one house that's around 150k, so you can learn the ins and outs of renting a property. Then you can move up to your first 500k property and consider selling the first one. An apartment complex is where you can make serious bucks. I've heard some people say that you don't make money on rent until you're renting out at least 10 units within a property. This might be harder to get into, but remember: you aren't earning money off of a regular property. The price of rent usually just covers the mortgage and insurance with MAYBE a bit left over, so you're earning free equity, but it's not going to be useful for some time. With apartments, on the other hand, you will be able to pay off the mortgage and insurance AND start to accrue a profit, meaning you increase in liquid and iliquid worth at the same time.

I am talking about the following. What you just gave me does not help me, or you.

Purchase price:
Annual rents:
insurance and other costs:
Cost of sales:
Increase in rents:
Increase in expenses:
Appreciation of property:
Tax Rate:

Mortage loan:
Interest rate:
Term: 30yrs
Ordinary annuity with 1 P/Y

Agent taking what percentage?
Required rate: 15%

Prices are back up to 07 bubble levels, why would anyone buy now? Just wait a year or two and everything will be on sale, including stocks.

Purchase price: 350k USD
Annual rents: 32.k
insurance and other costs: 1500
Cost of sales: ?
Increase in rents: 5-10%
Increase in expenses: 5%
Appreciation of property: 10-15% a year
Tax Rate: about 23% in philly I think

Mortage loan: 350k
Interest rate: 4%
Term: 30yrs
Ordinary annuity with 2 P/Y (I'm going to save 80k a year for this)

Agent taking what percentage? Maybe I'll get someone for 2%
Required rate: 15% I want this return

Appreciation isnt 10-15% a year actually, could be like 6-8% in this area.

ok if your purchase price is the same as your loan, that neans you put nothing down and financed the closing costs

this means you also have mortgage insurance. 5-10% yearly increases in rents is not sustainable, so dont bet on that long term.

a 350k loan will be roughly a $2300/month +/- $200 depending on mortgage insurance and your rate. that only leaves a few hundred left for repairs.

if you live in it, and are frugal, it can do well. especially if you improve it and get it re appraised so you have 20% equity. then you can remove the mortgage insurance which makes a huge difference on cashflow.

and like i said before, learn about deductions and depreciation. based on these numbers and putting next to nothing down, the vast majority of your gains will come from tax deductions, and the fact that your monthly living expenses may be subsidized by your tenants.

Somebody shill me on req

meant 10-15% increase

op run lots of different scenarios
best case
worst case
etc

if it doesnt still look workable in a worst case numbers scenario, you may be setting yourself up for trouble.

If it begins with a precious metal I think you'll be fine.

Worst case scenario, I lose out on rent but my houses increase in value as is the rest of philly. Sell off houses in a boom and buy them back during a recession.

I think there's better ways to do this than take advice from NEETS on Veeky Forums

>let's invest in real estate!
>let's buy up properties in white neighborhoods paying white neighborhood prices
>let's mortgage real estate for 30 years
>let's take a 30 year bet that that white neighborhood is going to stay white
>don't pay attention to demographic decline
This is why i don't invest in real estate

Franchises require time and experience and from my experience finding quality labor is the toughest part. If you are buying one sub-1 million it is more than likely going to have some kind of issue. You are definitely going to be paying or working in order to get it going.

I'm currently writing my thesis in Business and Economics + I am in training at the family run real estate business.

>let's take a 30 year bet that that white neighborhood is going to stay white
>30 year bet

Are you really that dumb to think that it is smart to hold any property for 30 years? haha

You sell when the incremental rate of return is equal to your desired yearly return. Holding for 30 years would be financial sucidie.

Do you have any concept of demographics?

Those neighborhoods where it'll be worth investing are growing smaller and more expensive every year

yes, but, you are buying in the boom.

oh, well if you have a family run real estate business. get the fuck off of Veeky Forums and go talk you your dad. jesus christ kid.

shit, I forgot you americans have niggers and ghettos and a lot of crime. We don't have that where I am from.

The model I am using is a model based on an average. Not from year to year. I would be more desireable to add numbers as each year pass.

Yeah, that fucking sucks, I'm just getting my job now. I guess I can trade in the crypto boom for now?

when white people are finally gone there won't be anything to compare the non white neighborhoods to so the value of these will increase.

$2300 a month, 30 year mortgage? with 7% interest p.a??????

I would recommend buying one at a time so you don't over exert yourself. Once you've got a couple working good you can try to take on multiple properties. Shop around for mortgages, banks are a good place to start even though they usually are not very investor friendly. Look into private lenders, they will usually be more expensive than traditional loans from banks, but without as many restrictions and are often times necessary to getting a deal done. You can always refinance through the bank once you have everything set up. A third option would be to look for seller financing, these are good because for one, everything is negotiable. You are dealing with a person, not some employee with set rules they must abide. Another reason seller financing can be attractive is because they are usually in distress. If they could sell the property outright chances are they would. The financing is a last resort. This gives you a lot of leverage in negotiations. If you do decide on bank aim for 20% down. Private lenders sometimes have different criteria to get the best rates ( one I dealt with only provided the best rates on property over 250k)
Good luck on your endeavor, real estate is a great path towards financial independence

Alright I'll start with a 350k, (put down 20%) 5 bedroom house, one that has a studio in it to live in. I'll try to get a private seller to finance with me as well. Thanks.

I also go on Veeky Forums so I'm well articulated with the 5k cars.

Good luck

I just closed on my 10th rental unit. Here's a super super quick rundown:

-65k duplexes
-$16.5k down payment each

-rents $695/side, so $1390 per property

Cash flow about $470-$550 per month each after taxes, mortgage, etc.

Free money.

And how long do you plan to own them?

I will probably own these for ever, for 2 reasons:

-rents increase every year, with inflation, meaning you make more money each year

-the extra cash flow from each unit helps me buy the next one even faster. Soon I should be buying a new one every 2 months or so.

Might sell if I want some lambos one day.

I actually might start with a 65k duplex so I can live cheaply right from the start, rather than save 70k down in a year or two after student loans.

Also, should I pay off 80k of student loans in 1 year, then save for another year for a 350k house.(I would be paying my own rent for 2 years)

Or, save some money(16k) for a duplex, then pay off loans? Then do 350k house?

Smart thinking, this is actually what I did with my first duplex, as well as my most recent one.

Live in 1 side, rent out the other and cover the mortgage. Then you can find roomates for $450-$550 per bedroom to give you extra cash.

This was easily possible in the Midwest (cheap properties and high rents).

Also, I would recommend buying an investment property and have those gains pay your student loans off.

That way it pays off your debt, and you gain equity also.

Flipping houses is a pain in the fucking ass, unless you really like construction-labor work. If it isn't your career you're going to be pouring all your free time into it to get them ready fast enough to sell. Paying people to do it for you is only profitable if you're buying and selling tons of property. Being a landlord is even worse, at best you're dealing with routine repairs all the time that aren't the tenants fault, and at worst you're dealing with niggers constantly bouncing on their rent or fucking up the house and then taking years to get them into court to try and get your money back (protip: they don't have any money so you're not getting shit). I rented out a house I owned while living in another state and it was awful. The guy was late on his rent every month, which meant I got extra money from late fees, but I always had to worry if he was actually going to pay or not. If something needed a repair, I had to get a friend or family to go check if it was their fault or not, he wouldn't adhere to the HOA and I would get notifications and fines from them constantly. He finally fucked up enough for me to break the contract, but then he threatened to simply not leave, which they can legally do until they're given a court order. He finally agreed to leave and then I promptly sold the house.

Just buying and selling land is a long term game. Its less profit unless you're HODLing land in an area that increases in value over time (an acre of land where I live was like $2-5k in the early 2000s. Now the cheapest you'll find is $20k, most are $40k+). You aren't going to make any money on a quick flip, they simply won't buy your land if you increase the price while the lot next to yours is cheaper. Add in property tax and it better be land you are sure is increasing in price.

Don't know much about business real estate, but it seems easier.

You should really consider finding out what kind of incremental returns you have. It is really not wise to keep a property forever, for several reasons

- Higher chance of bigger repairs needed. (kitchen, bathroom, roof)
- The law of diminishing returns
- Not cashing in on increase in housing prices.

Your initial investment of $16.5k will after a while yield lower than your competitors (because of diminishing returns), and you will fall behind.

Just a friendly advise

Should I just move to the midwest? I most probably will get a remote job, so I can start real estate anywhere.

Dont pay your fucking student loans off, pay the minimum. Why are there so many financially illiterate morons on this board? What is your loan rate like 4%?

I took out all sub and unsub loans(no private loans fortunately). They're like 6-7% ;_;

mine is 2.168 %

That's literally what I said. Buy a rental property and have it pay the minimum.

Good point. Maybe after a few years it's worthwhile to cash out the equity and invest elsewhere. Thanks user.

Where do you live now? I'd say go to a low Cost of living area, OR use a property manager and buy from out-of-state

Every inexperienced owner of a franchise I've ever known was always in way over their heads and constantly stressed out. I worked for a Jimmy Johns bought by these young-20s couple and they were clueless. The guy was putting in like 70-80 hours a week and his wife was only doing a max of 30 because she was such a mental wreck, you could hear her screaming in the freezer just about every day. It was the only one in the state, it hadn't become giant yet and it wasn't getting a ton of business. I had to quit when they refused to pay me my tips for the second time (I was a delivery driver) because I was 5 minutes late during a snowstorm. If they didn't sell that year I am sure they're doing fine since JJ's is huge now, but fuck it made me not want to ever own a franchise.

At gas stations you have to worry about getting robbed. Fuck that.

I live in philly but I hate it. I want to move where it's warm and chill and there's money to be made. How is miami? Is that a good spot? There are some low cost of living areas around there. I can slowly move up to luxury.

Maybe I could get a duplex in a cheaper part of town.

By the way. Where do you have your savings?

I would just have the savings in cd accounts I guess. What's a better place to put them in?

Which bank, and what rate are you getting?

Orlando has a decent rental market (good price to rent ratio).

However the absolute best markets are in the Midwest ($65k duplexes in neighborhoods where you won't get shot, that cash flow about $500 per month)

I currently use TD Bank. I'm going to use ally bank(online bank) and their cd accounts are like 2%.

Alright, moving to las vegas it is then?

bankrate.com/cd.aspx

You can get better rates than 2%.

My point is. Start shopping for banks, you don't need to stay faithful to your bank throughout your whole life.

Also, check out index to invest in, with no fees