REAL ESTATE INVESTING THREAD

[poeticjays]

Another great thing about investing in income producing properties vs flipping are the tax benefits.

When you flip, you have to pay tax on the capital gains.

When you invest in an income producing property, you can take depreciation on the property every year, so its possible to report a new loss on your tax return (and receive a refund) while actually making a profit. Also, when you do decide to sell your property, you can do to a 1031 exchange and roll your property into a bigger property (and collect bigger checks). And again, NO TAXES.

Do some homework.

 

[al audi]

Originally Posted by adiosburritos

honestly if anyone is interested in learning about real estates you shouldn't rely on TV infomercials, but take real estate classes at your community college or state college

it will be a much better investment than any info those get rich quick schemes could give you

This thread isnt for getting rich quick, i cant speak on all infomercials but the stuff i learned n ppl i met is def better than local community college personally. Besides becoming a real estae investor the importantance of asset protection is so crucial.

 

[poeticjays]

Originally Posted by ooIRON MANoo

It also depends on the area, where in SF? Prices dipped but if you are talking heart of SF, prices didn't dip enough to make a 10%+ profit.



Outside cities, it's doubtful. You have to sit on properties and hope you break even for the next 2-3 years. Finding a good tenant is not as easy as it sounds. Tenants can be a nightmare.

Are you familiar with the bay area?

You can get a fairly new house in the Antioch/Brentwood area for about $100/sq ft. So a 2000 sq foot single family home will run you about 200K. Market rent is between 1800-2000 a month.

So assuming you put 25% down (typical for an investment property), your monthly numbers look like this:

1900 rent income (taking the middle number)
less:

A $150K mortgage assuming a 30 year fixed rate at 4.5% = $767 a month
Property tax (1-3% of property, lets assume 2%) = $333 a month
Insurance (national average annual premium is 480 a year) = $40 a month

So your operating profit is = $760 a month

Let's say you have something like Homeowner's association fees or other miscellaneous stuff, so subtract another $100 per month.

Your monthly profit is $660 a month.

Multiplied by 12 = $7,920 profit a year

On an investment of $50,000, that equates to 15.8% a year.

Where else can you make a relatively low risk 15% a year? And that's not even including tax benefits/future appreciation.

Of course you have to save some money for repairs/no rent due to finding tenants, but that still gives you a big enough cushion to make a profit regardless.

 

[al audi]

Iron Man tenants can be a nightmare, you had a bad experience before? All part of background an not to mention there are ways to make agreements so you're not aSsed out in case somethin goes sour. I'd def like to keep this thread goin but get into more details instead on topics. I'm about to get some rapid eye movement going. I know with all the wealth on NT dudes gotta be into real estate on here. Ill get into more detail on plenty knowledge an things I've done in my short span too.

 

[vagixxer]

Lot of bad information in here, some good.

I run a real estate investing business here in VA. I'm connected with a few other NTers in my area that do also and are very successful at it. If this thread picks up steam I'd be happy to supply a lot of content. Problem though it seems is that when you do try to provide some sort of knowledge people aren't receptive to it because they "got it figured out" Whoever does't think NOW is the best time to buy is smoking some of the best Kush on the planet. Once every generation you see TRANSITIONS in wealth. Just think, Gold. Oil. Automotive. Radio. TV. Computers. If you're not finding a way to capitalize in this market for profit then I don't know what to tell you. I've been doing this since 05 and have recorded my highest profits to date these past two years. Every area is different, but people are making money everywhere. Figuring it out is the thing.

Interested to see where this thread goes.

 

[kix4kix]

Real estate?????! NOW?!!!!! lulz

 

[i am that dude]

http://realestate.ebay.com buy a church or school for 50k in some podunk town and play hide and go seek then make it a haunted house every halloween.

 

[natch johnson]

Poetic Jays knows what he is talking about. I'm considering buying a fourplex in the Phoenix area, I can get 3,000 sq. ft for under 200K but I can't imagine the spazzes I would be renting to 

 Definitely money to be made in all facets of real estate right now throughout the country.

 

[toy collector123]

three properties under my belt. a lot of hard work and learning. that's all i'm saying. read up like I had to read up. aint got time to be giving out secrets. all properties producing a positive cashflow. could quit my job and live comfortably. dont believe the infomercials... especially the one that's been posted. aint no way you getting into real estate without money unless you're bird dogging with investors, and that's tough given the abundant amoutn of resources on the internt. byehaters

 

[cornzilla]

This definitely doesn't sound like a get rich scheme. But it's no lie to say that you will become successful if you put in the work. Same can be said for anything. 

 

[dtothed]

not a sales pitch, but learned from www.lifestylesunlimited.com
in the tx market b/c you can purchase homes with such a low price per sf. cash on cash return can go upwards to 40%+
1800sf+ hone purchase price $50-55k. minimal rehab, rent it out at $1000. 450-500 cash flow per month.
some investors pay cash for the property and after 6-7yrs they make 100% return on their investment and cash flow 800/month, ie after taxes, insurance, and hoa.
there is an older guy in his 60s that comes to our business and he has 400+ rental homes. purchased them starting in his 20's. in the late 60s - 70s.
all his properties are paid off now. leaves 10-15% vacant for tax write off purposes. rents from 500-2000/month. he went on a spending spree the past 2 months, pulled up in a new porsche 911 turbo, bently flying spur, and royce phantom.


also for those who dont have much cash, but decent credit.  hard money financing will help

 

[al audi]

Originally Posted by kix4kix

Real estate?????! NOW?!!!!! lulz

thats your opinion an cool but you sound like a fool.

 

[al audi]

Originally Posted by VaGixxer

Lot of bad information in here, some good.

I run a real estate investing business here in VA. I'm connected with a few other NTers in my area that do also and are very successful at it. If this thread picks up steam I'd be happy to supply a lot of content. Problem though it seems is that when you do try to provide some sort of knowledge people aren't receptive to it because they "got it figured out" Whoever does't think NOW is the best time to buy is smoking some of the best Kush on the planet. Once every generation you see TRANSITIONS in wealth. Just think, Gold. Oil. Automotive. Radio. TV. Computers. If you're not finding a way to capitalize in this market for profit then I don't know what to tell you. I've been doing this since 05 and have recorded my highest profits to date these past two years. Every area is different, but people are making money everywhere. Figuring it out is the thing.

Interested to see where this thread goes.

cool VAGixxer
well said man. ill be back later. 

ppl can be close minded all they want, or carry a sour attitude like that guy three2three who thinks with one narrow direction, but this thread can be cool for us who are actually into this. man i have no reason to lie to anyone on NT.

we can all share tips, advice, success, fails, etc. 

those who wanna worry about the stock market or some weak savings account that fine, real estate times some knowledge and work.

 

[cuffy]

Anybody interested on doing real estate should come to Detroit and make a killing. Abandoned buildings and foreclosed homes are in abundance...

 

[cuffy]

And you also could have added this whole topic to my how does one get rich thread

 

[gutta bob]

Originally Posted by Cuffy

Anybody interested on doing real estate should come to Detroit and make a killing. Abandoned buildings and foreclosed homes are in abundance...

yeah.. don't forget to bring loads of chocolate bars to lure the crackheads out your newly bought abandoned house though.

 

[ubuibeme]

I've always been interested in this field so I'll definitely be checking it out..

I was looking at places close to Ohio State's campus and reached out to my dad's boss who owns properties and does it part time. Granted that Ohio State is one of the largest universities in the US, Dennis( dad's old boss) informed me that some of the guys who own properties (and do it full time) are making 80K-90K per month off tenants.

It's definitely lucrative if you are in the right town or can capitalize on good opportunities.

Good luck.

 

[2lipslegit]

Originally Posted by PoeticJays

Another great thing about investing in income producing properties vs flipping are the tax benefits.

When you flip, you have to pay tax on the capital gains.

When you invest in an income producing property, you can take depreciation on the property every year, so its possible to report a new loss on your tax return (and receive a refund) while actually making a profit. Also, when you do decide to sell your property, you can do to a 1031 exchange and roll your property into a bigger property (and collect bigger checks). And again, NO TAXES.

Do some homework.

This sounds real slick, gonna look some stuff up when I have time.

VaGixxer, Im interested in what youve got to say

Im gonna be a sophomore in college this year, dont really have the money to get in on this but I guess learning can never hurt, and who knows maybe Ill be able to make some money later.

I know a cat who bought a huge house in a more rundown part of detroit for next to nothing, hes the only white guy within a few miles radius

 

[rocky437]

Im a Canadian living in Toronto, and I want to invest 1 Million into US property. CND dollar is stronger than USD now, Real Estate market is slumping in the US, same with the US economy. I'd like to see some viewpoints in here as to what I should do. I would prefer investing in markets which will eventually boom like crazy, IE: NYC, Miami or LA. My current thoughts:
- Buy two or three condos in Toronto Canada, a city whose real estate market is growing and where I'm familiar. Live in one, rent out the others. I could sell them for a higher price at a later date. 

- Buy one in Toronto, one on Miami Beach. Live in Miami and rent the one in Toronto.

- I'm seriously considering Manhattan New York. I know its very expensive always, but I could get something there for my budget. I doubt I would be able to move in, I would need to get American Citizenship and land a good job in NYC to pay for it. The thing about New York is if I bought there now I could make enormous profits in a few years if I sold it. 

I'm open to investing the entire sum into Toronto properties if I have to, or buying one here, two in the states somewhere. Condos I'm talking about, not really interested in a house at this point, I'm young, I'm one man, but throw ideas at me if you have them. 

Basically I'm looking for a plan that will make me the most profit in the long run. 

 

[frankmatthews]

I am open to real estate investing but here are my concerns:

My educated opinion is that housing prices will not rebound anytime soon and will in fact fall further in the coming years. I can see this situation resulting in more renters as opposed to home buyers, however, I would imagine that further deterioration of home prices will be in lock step with further deterioration of jobs, wages and the US economy in general. The rental property game is pretty crowded as it is right now and I believe it will be hard to compete price wise with some of the bigger players as competition and lower average household incomes force rent prices down. Any rebound in home prices over the past 2 years is primarily due to a resurgence of investors entering the market and secondarily due to the "attractive prices" those considering becoming homeowners found. Real Estate just had a clearance sale but the shelves are still full.

In my opinion real estate is just like anything else, you have to be experienced enough to know an opportunity when you see it. There are opportunities out there but I don't know if I would necessarily know it when I see it so this thread is appreciated.

 

[i am that dude]

Hey do any of you know anything about grants or other incentives for 1st time homebuyers? All I have been able to find that I qualify for is the bond program that pays 3.5% for your down payment.

 

[poeticjays]

Originally Posted by Rocky437

Im a Canadian living in Toronto, and I want to invest 1 Million into US property. CND dollar is stronger than USD now, Real Estate market is slumping in the US, same with the US economy. I'd like to see some viewpoints in here as to what I should do. I would prefer investing in markets which will eventually boom like crazy, IE: NYC, Miami or LA. My current thoughts:
- Buy two or three condos in Toronto Canada, a city whose real estate market is growing and where I'm familiar. Live in one, rent out the others. I could sell them for a higher price at a later date. 

- Buy one in Toronto, one on Miami Beach. Live in Miami and rent the one in Toronto.

- I'm seriously considering Manhattan New York. I know its very expensive always, but I could get something there for my budget. I doubt I would be able to move in, I would need to get American Citizenship and land a good job in NYC to pay for it. The thing about New York is if I bought there now I could make enormous profits in a few years if I sold it. 

I'm open to investing the entire sum into Toronto properties if I have to, or buying one here, two in the states somewhere. Condos I'm talking about, not really interested in a house at this point, I'm young, I'm one man, but throw ideas at me if you have them. 

Basically I'm looking for a plan that will make me the most profit in the long run. 

Real estate is a local game. If you're inexperienced, don't buy property halfway across the country that you can't keep tabs on. Start by buying in markets that you're familiar with. Something might look attractive on paper, but most likely you'll run into all types of little problems that you didn't foresee. If you're going in with the mentality that I'll buy now and make a huge profit a few years down the road, you lost already. That's called speculation, not investment. If you want to invest, buy something that will turn you a profit regardless if appreciation happens or not, and when it does eventually (historically, most markets have a big jump in price every 8-10 years, but that means you can have no appreciation for the first 7), that's just the cherry on top.

 

[poeticjays]

Originally Posted by FrankMatthews

I am open to real estate investing but here are my concerns:



My educated opinion is that housing prices will not rebound anytime soon and will in fact fall further in the coming years. I can see this situation resulting in more renters as opposed to home buyers, however, I would imagine that further deterioration of home prices will be in lock step with further deterioration of jobs, wages and the US economy in general. The rental property game is pretty crowded as it is right now and I believe it will be hard to compete price wise with some of the bigger players as competition and lower average household incomes force rent prices down. Any rebound in home prices over the past 2 years is primarily due to a resurgence of investors entering the market and secondarily due to the "attractive prices" those considering becoming homeowners found. Real Estate just had a clearance sale but the shelves are still full.



In my opinion real estate is just like anything else, you have to be experienced enough to know an opportunity when you see it. There are opportunities out there but I don't know if I would necessarily know it when I see it so this thread is appreciated.

Of course you have to educate yourself. There's no such thing as a risk-free investment (apparently not even US Treasuries..hah).

But housing prices are so low now, that the rental market makes a lot of sense. Run the numbers and see for yourself. All those homeowners that foreclosed on their houses in the past few years can't buy a home for 7 years. And they have to live somewhere right? so their only option is to rent.

The housing market is so depressed that if you have the cash, you can get in at such a low entry point that even if rents do come down, you still have such a huge margin of error that you'll be making a profit regardless.

Look at the history of great investors. Most of them are contrarian investors. When everyone thinks the world is going to collapse, THAT's when you buy.

 

[poeticjays]

Originally Posted by 2LipsLegit

Originally Posted by PoeticJays

Another great thing about investing in income producing properties vs flipping are the tax benefits.



When you flip, you have to pay tax on the capital gains.



When you invest in an income producing property, you can take depreciation on the property every year, so its possible to report a new loss on your tax return (and receive a refund) while actually making a profit. Also, when you do decide to sell your property, you can do to a 1031 exchange and roll your property into a bigger property (and collect bigger checks). And again, NO TAXES.



Do some homework.

This sounds real slick, gonna look some stuff up when I have time.

VaGixxer, Im interested in what youve got to say

Im gonna be a sophomore in college this year, dont really have the money to get in on this but I guess learning can never hurt, and who knows maybe Ill be able to make some money later.

I know a cat who bought a huge house in a more rundown part of detroit for next to nothing, hes the only white guy within a few miles radius

The reason you can do that is because depreciation is supposed to just be deferring taxes. Not sure if you know anything about accounting but I"ll try to explain in the simplest terms possible:

Say you buy a house for $500K (cash, assuming no mortgage).

If you sell that same house tomorrow for $700k, then that 200k in profit you made is capital gains. And you get taxed on that $200k.

Now say you hold onto the property instead. Rental property is depreciated over 27.5 years. So every year, you can take 1/27.5 ( equals $18,181)of how much you paid ($500k), called your cost basis, as depreciation (reduction to your original $500k basis). So let's say you make a cash profit of $10k for the year, after all operating expenses. After you take depreciation, on your tax return, it'll show a LOSS of $8,181. So not only do you not get taxed on that $10k you made, but you'll get a REFUND on that $8,181.

Now assume you've held your property for the whole 27.5 years and then now want to sell it. Because you've taken depreciation on it every year, your cost basis is now 0. So if you sell that same property for $700k, now you'll get taxed on the WHOLE AMOUNT (not just $200k).

But here's the true beauty of the game:

You can sell that property, and do something called a 1031 like-kind exchange where you take the proceeds and use it to invest in a 'similar property', TAX-FREE . So in theory, you can just trade up for a bigger property. And the whole process starts again. So in theory, you NEVER PAY TAXES, and just collect bigger checks from the property.

 

[vagixxer]

Aw yes. The good ol 1031 Exchange. Great tool to avoid paying gains, but be careful what company you choose to do this process with. Poetic is 100% correct though of deferring taxes. A good CPA pays. Biggerpockets.com is a phenomenal site. Enough information there to keep you busy for a very long time.

Don't continue to fool yourselves folks. Yes prices are depreciating, but steadily as compared to say 09. Great time to pick up rentals at a low price. I mean this opportunity market won't last long, your going to see some folks who were small players in the real estate business in your area before become major players.

I just finished a house that I was able to buy for 80k. It sold 6 years ago for 209k. We rehabbed it and put in 35k and sold it full asking price in 19 days at 169,900. It has 12 renovated sold comps in the last year, 3 of those being ours.

Their are different niches in real estate investing and it's important to figure out how you want to be involved first. IE: Wholesaler, rehabber, landlord, developer etc. That's the beauty of it though so many ways to make residual income. I'd encourage anyone that's a newbie to start in wholesaling. Give yourself a chance to meet some major players in your area and make some money at the same time. Wholesaling is what the late night infomercials are about. Now I will say that it isn't free and you won't get rich anytime soon, but I know some folks who make over 200k a year just wholesaling. wholesaling- NO RISK AT ALL. Takes a very little amount of money to complete a wholesale deal and while those late night spots are cheesy they do contain good starter information to help understand basic concepts and verbiage. I have some friends who currently sell courses they have created that I'd recommend over those because they have much more information and are much more realistic.

I do quite well with flips right now, but it's risky business too. There is some hard money out there, but that itself is generally to expensive especially right now. However, if you don't have any credit or a large amount of upfront cash it's a good option.

PRIVATE MONEY is how you fund deals. I fund all my deals using private funds of individuals looking to make a return on their investment that can't be provided in any other investment vehicle. Right now we are giving our investors 9-14% return on their money within 8 months. You can't beat that. Hard part is getting someone you know to see that if they aren't investment minded.