• Changing RCF's index page, please click on "Forums" to access the forums.

Real Estate Investing

Do Not Sell My Personal Information
I've been looking into this a lot lately. I'm tired of renting and just throwing away $12000 a year towards someone else's mortgage.

I can tell you one of the biggest attractions of real estate opposed to the stock market is the insane leverage factor. You can margin trade with stocks but it's a lot of risk and if you get margin called at a shit time there's not much you can do. You invest 100,000 into the stock market and you've got 100,000 in assets.

For a rental property it's the long game. Let's say you put down $30,000 on a $300,000 house. You probably aren't going to want to rent at a loss so let's just use bob's experience and say you're making 150/month in profits on that house after MI, taxes, mortgage, repairs. That's 1800 per year for 30 years is 54,000. Now it's extremely likely you will be able to steadily increase rent over those 30 years while the mortgage payments stay fixed but honestly that isn't even the fucking point

You put down $30,000. People paid off your mortgage for you by renting your place. You made a profit on top of that. And now you own the entire house. And guess what, that house isn't worth $300K at the end of that period... didn't even take into account appreciation of the home.

That's the attraction. You don't get that from the stock market.

Now look I oversimplified the shit out of this but I'm just trying to illustrate where the allure is over the stock market. No one is going to pay to rent your stocks while you still maintain ownership.

Now imagine reinvesting the Monthly profits into more rental properties... there's a reason the market is pretty competitive right now.

You won't rake in the cash flows in the short term, but in the long game you're building a nice chunk of equity on another dudes dime

Reasons people don't do it is the vast majority of Americans don't have even close to 10K in savings and really aren't very financially literate.

Yeah, my bigger concerns are how much you have to put into a property in repairs and whatnot. Even if I made $0 ever month I wouldn't care too much as long as I'm not seeing negative cash flow in a year.

Seems like multi family would cash flow more, but the building are typically older. Maybe not necessarily a bad thing, but I would expect high maintenance costs in general. Single family seem like they'd cash flow less but would have less repair costs and probably have tenants that would treat the place a bit better. But as far as roof repairs go, you have a roof per door in SFH, and one roof per multiple doors in MF.

Also if you have to sell a property earlier than anticipated for whatever reason, realtor fees will add up quickly.

Biggerpockets.com is all you need to learn. Read up, ask questions, and jump in if you're serious. Cleveland is a hot area right now, but certainly more affordable and easier to get started in than Columbus (where I'm at).

I have looked at Bigger Pockets a bit. Seems like there is almost too much information there to sift through. I actually have a phone interview for a job in Columbus on Thursday. I'm in Cincinnati now but will be done with my job here at the end of March. So is Columbus not necessarily a great place to get started with REI then?
 
If you are getting into because it is your first time house, then it is a great idea. I bought my first house as a duplex, the one side had a tenanted already in it, so was perfect, was able to do the first time buyer and out 4% down. Payment was around $950/month, rented out the other side for $650. I stayed 3 years, then bought another duplex, it was nicer, as my wife and I wanted a bigger house, almost 1600 sqft, because I was moving more then 50 miles for work I qualified for first time homeowner loan again, 3.5% down, note was $1900/month rented out the other side for $1400. I was able to use the savings to put a 20$ down payment on my current home, single family, and now cash flow on the other 2 homes.

A couple of tips, it is hard to get into the game with out a ton of capital, unless you are willing to live in the home for the first few years, as most banks require 30% down on a investment property. The second hurtle is with forecloses, most sell to cash buys, unless it is a HUD which requires you to live in it for a year. I have been lucky with good renters, but I have friend who have been burned bad, one was a couple 2 incomes, both lost their job within a month of each other, never told my friend, was late on rent, and ended up trashing the house. He ended up losing out on 2 months missed rent, and had a 10K bill to repair the damages they made. He will struggle to ever turn a profit on the house, even after he sells it.
 
Yeah, my bigger concerns are how much you have to put into a property in repairs and whatnot. Even if I made $0 ever month I wouldn't care too much as long as I'm not seeing negative cash flow in a year.

Seems like multi family would cash flow more, but the building are typically older. Maybe not necessarily a bad thing, but I would expect high maintenance costs in general. Single family seem like they'd cash flow less but would have less repair costs and probably have tenants that would treat the place a bit better. But as far as roof repairs go, you have a roof per door in SFH, and one roof per multiple doors in MF.

Also if you have to sell a property earlier than anticipated for whatever reason, realtor fees will add up quickly.


One thing to consider too, is how handy you are. Are you able to change a toilet, do small repairs to a furnace or hot water tank.

As far a single family homes vs multi units, yes there is more repair cost, but you have 2+ units, the repair cost per unit is usually the same or less then a single family home. What makes single family homes a positive, is you can sell them easier, as you have a larger market, and they tend to appreciate, multi units dont tent to go up as fast or as much as single family homes, as you have limited market to sell them too.

Other thing is dont count on 100% occupancy. What if you have a single family home, you might have a 1-2 month gap between renters, which kills your cash flow, if you are changing tenants every year or two. Where as with multi units, you can stagier the term dates, so you always have some kind of cash flow coming in.

The last point, dont go into this, unless you have some cash reserves, as you will need to have cash or credit available to make repairs, you cant just save up and fix when you have the money.
 
One last point. You have to ask yourself why I am doing this. If it is to make a living to live off, then you have to commit to it full time, for myself I make enough at my current job, that the opportunity cost is not worth growing my homes.
 
Yeah, my bigger concerns are how much you have to put into a property in repairs and whatnot. Even if I made $0 ever month I wouldn't care too much as long as I'm not seeing negative cash flow in a year.
This is my worry too going into it. I haven't done as much research as I need to yet on it. My background is on the financial side of things and not the real estate side which worries me as well. Being able to tell if there are hidden costs in a house, if a big repair is on the horizon, or even something like if the property is a value are all things I am not good at right now. But I guess that comes with complete inexperience.

Also if you have to sell a property earlier than anticipated for whatever reason, realtor fees will add up quickly.
Yeah that's why I'm still renting. My current company is sputtering out of control which is extremely inconvenient because I love the area I'm in and think it is growing. Oh well.

One thing to consider too, is how handy you are. Are you able to change a toilet, do small repairs to a furnace or hot water tank.
I've never had to be handy, but I'm a quick learner. Are these things that can be learned through a youtube video or more in depth?
 
This is my worry too going into it. I haven't done as much research as I need to yet on it. My background is on the financial side of things and not the real estate side which worries me as well. Being able to tell if there are hidden costs in a house, if a big repair is on the horizon, or even something like if the property is a value are all things I am not good at right now. But I guess that comes with complete inexperience.

This is the hardest part, and one of the most unknowns. Best bet it to look at worst case scenarios when doing your analysis. If you can break even or come close to break even then it is a property you should consider.

Yeah that's why I'm still renting. My current company is sputtering out of control which is extremely inconvenient because I love the area I'm in and think it is growing. Oh well.
This is tough, if you think you will be there at-least a year, I would go the duplex route. Worst case, you move in a year you rent out your side and still cover your note. If you are living in one side, it is a lot easier to manage the property as you get your feet wet.
I've never had to be handy, but I'm a quick learner. Are these things that can be learned through a youtube video or more in depth?

Yeah, I learned a lot from youtube, but also had family who could help me in some areas. You have to be willing to learn, and give up the time to make the fixes. This is true in home buying in general though. Paying a handy man gets expensive quick, with a renter thought, you cant delay a fix to long though.
 
This is the hardest part, and one of the most unknowns. Best bet it to look at worst case scenarios when doing your analysis. If you can break even or come close to break even then it is a property you should consider.



Yeah, I learned a lot from youtube, but also had family who could help me in some areas. You have to be willing to learn, and give up the time to make the fixes. This is true in home buying in general though. Paying a handy man gets expensive quick, with a renter thought, you cant delay a fix to long though.
Thanks for the tips man. My lease ends in July and I plan on spending a lot of time looking into the option of buying a duplex before deciding to rent again. I'm sure I'll be very active in this thread and appreciate the advice.
 
Yeah, my bigger concerns are how much you have to put into a property in repairs and whatnot. Even if I made $0 ever month I wouldn't care too much as long as I'm not seeing negative cash flow in a year.

Seems like multi family would cash flow more, but the building are typically older. Maybe not necessarily a bad thing, but I would expect high maintenance costs in general. Single family seem like they'd cash flow less but would have less repair costs and probably have tenants that would treat the place a bit better. But as far as roof repairs go, you have a roof per door in SFH, and one roof per multiple doors in MF.

Also if you have to sell a property earlier than anticipated for whatever reason, realtor fees will add up quickly.



I have looked at Bigger Pockets a bit. Seems like there is almost too much information there to sift through. I actually have a phone interview for a job in Columbus on Thursday. I'm in Cincinnati now but will be done with my job here at the end of March. So is Columbus not necessarily a great place to get started with REI then?

Depends on your financial situation. As a recent college grad, it's hard to acquire the initial capital to get started because the housing market is the most expensive in Ohio. Relative to other parts of the country it's low though. If you can afford to start investing in off-campus housing off the bat you can make a killing.

BiggerPockets is a lot to take in, but you really need to do your due diligence when jumping into REI. You make your money when you buy, and finding a good deal that provides cash flow is tough. I listen to their podcast at work when I'm bored and have learned a lot through that alone.
 
Depends on your financial situation. As a recent college grad, it's hard to acquire the initial capital to get started because the housing market is the most expensive in Ohio. Relative to other parts of the country it's low though. If you can afford to start investing in off-campus housing off the bat you can make a killing.

BiggerPockets is a lot to take in, but you really need to do your due diligence when jumping into REI. You make your money when you buy, and finding a good deal that provides cash flow is tough. I listen to their podcast at work when I'm bored and have learned a lot through that alone.

I saw there's a duplex in Columbus for sale for $339k on E17th... claims both sides rent for $1900.

20% down and 20 year mortgage would be $1650 a month. 5% down and 30 year would be $1566 a month. Seems like would cash flow at least $1000 after taxes, insurance, etc. Of course if you're putting 20% down you're putting down $67k basically.

Are there specific areas in Columbus (I have never been there) that you refer to as "off campus" that are good neighborhoods to invest in, where you are likely to have good tenants? Where I previously lived in IL I kicked around the idea of buying two new small condos that were built in the last 5 years or so for $90k each and renting one and living in the other. Part of me thinks there is more appeal in buying something small and new like that (but not under one roof technically) than buying an old building I know nothing about as a multi family and learning all the quirks of the building as I go. Seems like repair costs would be less on newer property.

Of course who knows if I will even land the job there, much less do any REI any time soon, so not sure why I'm asking all these questions or spending time looking. LOL
 
Viewing a house on Wednesday. It's half a duplex but it's split into a 1 bedroom unit and a 4 bedroom unit. Currently taking in $2,520 in rent per month. The house is $389,000

A few very important questions

1. This is a historic landmark home. When I told one of my friends that he said that could be trouble because you need to clear any repairs you do with the gvt. Does anyone have any experience with this?

2. What should I look for when I view?

3. Has anyone used property managers before to manage a house? I plan on living anywhere I buy and renting out the other portion but if I move within a few years I don't want to just sell it. Is working with a property manager a reasonable alternative?

4. It's in a really really good location. Can't imagine id ever have to spend much time looking to rent it out or much vacancy time. However one of the current leases goes until 8/2018 so I can't raise rent for a good bit. Is $2,520 on a 389K house too little or a good amount?


Thanks in advance. Also @Lee get in here you asshole. You can't not share your knowledge lol
 
Viewing a house on Wednesday. It's half a duplex but it's split into a 1 bedroom unit and a 4 bedroom unit. Currently taking in $2,520 in rent per month. The house is $389,000

A few very important questions

1. This is a historic landmark home. When I told one of my friends that he said that could be trouble because you need to clear any repairs you do with the gvt. Does anyone have any experience with this?

2. What should I look for when I view?

3. Has anyone used property managers before to manage a house? I plan on living anywhere I buy and renting out the other portion but if I move within a few years I don't want to just sell it. Is working with a property manager a reasonable alternative?

4. It's in a really really good location. Can't imagine id ever have to spend much time looking to rent it out or much vacancy time. However one of the current leases goes until 8/2018 so I can't raise rent for a good bit. Is $2,520 on a 389K house too little or a good amount?


Thanks in advance. Also @Lee get in here you asshole. You can't not share your knowledge lol

For #1, I'd worry about repair costs. Getting windows that meat "historic home" standards or whatever is not cheap I believe.

$2520 seems low to me but it probably depends on a lot of factors. Will it appreciate while you own it? Mortgage alone is $1500 a month (if you put $90k down and it's $300k for 30 years at 4.1%), not counting insurance and real estate taxes. If you aren't putting 20% down then it's a higher payment, obviously. Doesn't seem like it will have much cash flow if that's at all your goal.

For comparison, the property I posted above is $340k and rents for $3800 ($1900 a side). Of course I've never been in the areas/seen either property to compare.

This is all just my opinion. Don't think I'd be jumping on that deal personally unless I thought the home was going to appreciate a lot, but I'm trying to learn these things myself.
 
For #1, I'd worry about repair costs. Getting windows that meat "historic home" standards or whatever is not cheap I believe.

$2520 seems low to me but it probably depends on a lot of factors. Will it appreciate while you own it? Mortgage alone is $1500 a month (if you put $90k down and it's $300k for 30 years at 4.1%), not counting insurance and real estate taxes. If you aren't putting 20% down then it's a higher payment, obviously. Doesn't seem like it will have much cash flow if that's at all your goal.

For comparison, the property I posted above is $340k and rents for $3800 ($1900 a side). Of course I've never been in the areas/seen either property to compare.

This is all just my opinion. Don't think I'd be jumping on that deal personally unless I thought the home was going to appreciate a lot, but I'm trying to learn these things myself.

First, Moz I have been reading, not too much to add. I do mortgages, flipped 2 homes, but not really in the home investment game. I have financed quite a few, and sounds like you are looking at the wrong places.

North star, non owner occupied 2 unit would take 25% down, and rates are way up since Trump election. Looking at 4.625 if you are lucky.

You can find 100k houses in Indianapolis that rent for $800 a month or so. $400k for $2k a month seems way out of line if you are truly trying to invest. Not knowledgeable enough to say where you should go, but seen some great bang for your buck in Texas, indiana and even lesser areas of ohio.

Flipping is tough, i got lucky and jumped on some deals that fell at me, but wasnt really looking and when i did couldnt find anything. As for renting, i am not sold on that either. I am a mutual fund and 401k guy when it comes to my own money typically. I make my money in real estate, not sure i want my investments living the same roller coaster.

But thanks for thinking of me and calling me out, just not sure this is my exact area of expertise in real estate, I am not a realtor. (most of them are idiots though, lol)
 
Viewing a house on Wednesday. It's half a duplex but it's split into a 1 bedroom unit and a 4 bedroom unit. Currently taking in $2,520 in rent per month. The house is $389,000

A few very important questions

1. This is a historic landmark home. When I told one of my friends that he said that could be trouble because you need to clear any repairs you do with the gvt. Does anyone have any experience with this?

2. What should I look for when I view?

3. Has anyone used property managers before to manage a house? I plan on living anywhere I buy and renting out the other portion but if I move within a few years I don't want to just sell it. Is working with a property manager a reasonable alternative?

4. It's in a really really good location. Can't imagine id ever have to spend much time looking to rent it out or much vacancy time. However one of the current leases goes until 8/2018 so I can't raise rent for a good bit. Is $2,520 on a 389K house too little or a good amount?


Thanks in advance. Also @Lee get in here you asshole. You can't not share your knowledge lol

If you live in it, you can go fha, 3.5% down, same rate as financing, but there is pmi (MIP technically), and you are limited on purchase price, can look up tomorrow. Is it a legal 2 unit? If not financing becomes a pain.

FHA limit on owner occupied duplex is 353k financed, so on 389, its 35k down plus 5k for closing costs. Not sure how much down you have, but 353 with 4k in taxes and 800 insurance is $2300 a month all in, so you could live for free if you have the 1 bedroom rent the bigger place out,

As for a property manager, i am usually all for them, but stupid if you live in the place, waste of money, just self manager til you move out.
 
@Lee, I thought if you live in the residence it would be 20%? You could do FHA at any percent over 3.5%?

edit- nevermind, see you answered that above.
 
@Lee, I thought if you live in the residence it would be 20%? You could do FHA at any percent over 3.5%?

If he lives in it, yes, 20% or 15% down with pmi, i wasnt reading carefully, still not getting 4.125 on duplex
 
  • Like
Reactions: Zog

Rubber Rim Job Podcast Video

Episode 3-13: "Backup Bash Brothers"

Rubber Rim Job Podcast Spotify

Episode 3:11: "Clipping Bucks."
Top