REAL ESTATE INVESTING THREAD

[poeticjays]

Originally Posted by 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.

Hey VaGixxer,

where did you learn about the different types of real estate investment? I learned most of what I know from a college professor who basically taught us how he got rich based on the income producing properties. I have most of my capital tied up in that now, but I'd like to learn about the other forms of investment, preferably ones that aren't quite as capital intensive.

 

[eiddyfouw]

Studying my Msc in Construction Economics and Management right now...
Working on a valuations course right now....and this book just arrived:

I'll def be checkin on this thread regularly...

 

[kix4kix]

Originally Posted by Al Audi

Originally Posted by kix4kix

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

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

Really? Real Estate is down so buy buy buy!! right? Wrong! If you buy a property and try to flip it *after investing thousands into it btw. It could very well be worth less than what you bought it for 3 or five years from now. 
I would personally rather invest in something - like stocks, that have the potential to make exponentially more money for any period of time right now. Million dollar homes can't sell for half of what they are "worth" but do you bro, I'm cool with looking like a fool 

 

[hombrelobo]

Originally Posted by kix4kix

Originally Posted by Al Audi

Originally Posted by kix4kix

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

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

Really? Real Estate is down so buy buy buy!! right? Wrong! If you buy a property and try to flip it *after investing thousands into it btw. It could very well be worth less than what you bought it for 3 or five years from now. 
I would personally rather invest in something - like stocks, that have the potential to make exponentially more money for any period of time right now. Million dollar homes can't sell for half of what they are "worth" but do you bro, I'm cool with looking like a fool 

This guy.

A lot of green peeps in here. I look forward to seeing where this thread goes.

 

[2lipslegit]

Originally Posted by 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.

I get the entire first part, just never heard of this 1031. Ill definitely try to keep this in mind for the future.

 

[poeticjays]

Originally Posted by kix4kix

Originally Posted by Al Audi

Originally Posted by kix4kix

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

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

Really? Real Estate is down so buy buy buy!! right? Wrong! If you buy a property and try to flip it *after investing thousands into it btw. It could very well be worth less than what you bought it for 3 or five years from now. 
I would personally rather invest in something - like stocks, that have the potential to make exponentially more money for any period of time right now. Million dollar homes can't sell for half of what they are "worth" but do you bro, I'm cool with looking like a fool 

You do realize there are more ways to invest in real estate thatn 'flipping' right?

 

[dtothed]

Originally Posted by PoeticJays

Originally Posted by kix4kix

Originally Posted by Al Audi


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

Really? Real Estate is down so buy buy buy!! right? Wrong! If you buy a property and try to flip it *after investing thousands into it btw. It could very well be worth less than what you bought it for 3 or five years from now. 
I would personally rather invest in something - like stocks, that have the potential to make exponentially more money for any period of time right now. Million dollar homes can't sell for half of what they are "worth" but do you bro, I'm cool with looking like a fool 

You do realize there are more ways to invest in real estate thatn 'flipping' right?

tx market flipping is picking up big

only reason i have not done a flip is trying to find something that dues not hit the mls.  i feel that buyers who sees transactions sold on the mls are aware of what you purchased the home for before you rehab it and put it back on the market.  thus causing lowballers and causing less spread. i know too too too many ppl who are locked up in hard money deals w properties they purchased to flip and can not.  another problem is that they did do not have enough to refinance into a conventional loan.  over leveraging the deals b/c hard money orders appraisals with a subject to.  this causing values to be out of wack b/c conventional appraisers are uber conservative.  

there is a guy at networth realty, mid 20's that has flipped 10 deals+.  in the past few deals.  last deal grossing 80k 

 

[dkjordan23]

anyone want to chime in on the factors that go into making predictions in the real estate market?

 

[gottabeem21]

Bought a 3 family house in CT (near where I live) about 8 months ago.  So far so good, looking to get into more real estate ventures, just need to save up some money and build equity in the house I own.

 

[mitchellicious]

Yo that eBay link is crazy. 10k for a house. This can't be life.

 

[eiddyfouw]

Originally Posted by kix4kix

Originally Posted by Al Audi

Originally Posted by kix4kix

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

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

Really? Real Estate is down so buy buy buy!! right? Wrong! If you buy a property and try to flip it *after investing thousands into it btw. It could very well be worth less than what you bought it for 3 or five years from now. 
I would personally rather invest in something - like stocks, that have the potential to make exponentially more money for any period of time right now. Million dollar homes can't sell for half of what they are "worth" but do you bro, I'm cool with looking like a fool 

Most people I know who flip homes, don't try and flip million dollar homes. 
You make your money on lower income properties, because there will be less money spend on fittings etc. 

There is still LOADS of cash to be made in property.  Don't get it twisted....

 

[frankmatthews]

Originally Posted by dkjordan23

anyone want to chime in on the factors that go into making predictions in the real estate market?

For the past 70 or so years the housing market has been the main driver behind our credit economy and the tremendous growth the country has seen in that timespan and really, if you think about the foreign dependence on US dollars, the expanding money supply helped grow many other economies as well.

However, credit economies mean interest, which is exponential, infinite.  In reality, people and resources are finite and the demand for housing, the main driver remember, is not able to compensate as the exponential equation spirals out of control. 

This is why you saw the predatory lending that is usually blamed for the housing crisis.  Reliable buyers no longer supplied enough growth, so lenders turned to unreliable buyers.

We have seen improvement in all facets of the economy and tremendous gains in the stock market since the recession yet real estate is lagging all economic indicators.  The driving force behind our credit economy is now government borrowing.  Bailouts, stimulus plans, government provided healthcare and now it's time to raise the debt ceiling.  Yeah I bet, it's all exponential. 

A legit real estate market, one in which the vast majority of buyers are people buying a house to live in, can no longer provide the economy with the growth it needs.  High unemployment? Lower wages?  I wonder how much the average credit score has fallen in the past 4 years?  Many people seem to think that the economy is in much better shape nowdays but in my opinion that couldn't be further from the truth.  Commercial real estate is another big shoe that has yet to drop.  The balance sheets of all our financial institutions, the facilitators of the credit economy, have been cleaned up with accounting tricks and financial crisis regulations.  They hold unfathomable amounts of MBS's that are not paying, and if they can't maintain their business there are unfathomable amounts of CDS's that cannot be paid.  The housing market will need to get back to 2005 levels and beyond to unwind all that stuff but as I said it is clearly lagging all other aspects.  It is no longer a viable driver of browwing, or credit for this economy.  I hear carbon credits are the next big thing. 


Having said all that, obviously there is money to be made if a good opportunity is presented and you have enough capital to avoid getting trapped in that credit equation, being put on to some of the stuff in this thread helps a lot i'm just being cautious  as I think everyone should.  I imagine the disaster stories far outnumber the success stories recently. 

 

[noskey]

I learned a lot about investing in properties in my Intro to Investments class last year. Long story short, this thread makes me wish I had some money to put into the housing market.

 

[vagixxer]

Originally Posted by PoeticJays

Originally Posted by 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.

Hey VaGixxer,

where did you learn about the different types of real estate investment? I learned most of what I know from a college professor who basically taught us how he got rich based on the income producing properties. I have most of my capital tied up in that now, but I'd like to learn about the other forms of investment, preferably ones that aren't quite as capital intensive.

Man to be honest I've been blessed. Girl I was dating during when I graduated highschool. Her mother had retired at 42 and I told her I wanted to do real estate. She introduced me to some folks that she knew and one of them took me in and started mentoring me. After about a year an a half, I realized that I was doing all the work for the guy and he was making all the money. He told me he was waiting to see how long it took me to realize that. He provided funding for that first deal and has been my main private lender ever since. I'm a 25 year old black guy who has made his way in to pretty decent circles or whites an jews in my area. ALL of them have been very supportive and have helped me a long the way. Education from books seminars etc is great also. Just got to go to the right ones. 

 

[2lipslegit]

Originally Posted by Noskey

I learned a lot about investing in properties in my Intro to Investments class last year. Long story short, this thread makes me wish I had some money to put into the housing market.

yup

 

[antbanks81]

Originally Posted by PoeticJays

Originally Posted by Al Audi

Any other NTrs have cash flow from real estate? Are you part of any investor communities? success/fails, tips etc?

you should check out www.biggerpockets.com

if you have the means, right now is the BEST time to get into real estate investment (income producing properties). You know how everyone always says 'buy low, sell high?'. Well now is the time to buy low. You have a perfect storm:

1) Housing prices at record lows
2) Record low interest rates (lock in a 30 year fixed for something like 4.5%)
3) Foreclosures + short sales = more supply of tenants = rent increases

I live in the Bay Area which has historically been a difficult place to make money off income producing properties due to the high real estate prices. But now, I see plenty of homes where you can easily make 10-15% net profit, after subtracting all operating costs. And this doesn't include the tax benefits from depreciation. Or any appreciation in the future. Even if prices go down even more, you'll still make enough in rent to cover all costs. So it's literally low risk, high return.

Do your homework. Find a good tenant. And stack them checks

Thanks for posting. I am always happy to get more information.

  

 

[xx name brand xx]

There are opportunities to capitalize in this market. Like someone said in an earlier post, a lot of small investors who are active currently,  will become big investors in the next 3-5 years. For those of you who don't have that much money to invest, I would suggest partnering with a private lender or hard money lender. Also, you can buy and sell homes with no money down, either through a contract assignment or double close. This is the best way to get started with little to no funds, it just takes consistency and a good knowledge of valuations in your local real estate market. I'm a Realtor.

 

[yanky]

Let's bring this thread back to life. Anyone here still got money in real estate? I'm a bio major right now but real estate has me really interested. After watching MDLA, NY, and reading about others success I know it's not easy but it has intrigued me to put some money aside and buy a property in the future.

 

[antbanks81]

I'm still waiting my turn. In the past I either had cash and poor credit or damn good credit and not enough cash. I'm thinking about refinancing my crib and pulling some cash out to buy a rental. I'd then like to rent out my place and get something bigger for the family. To anybody with the means, I would suggest moving now. I'm seeing so many decent cribs out here for the low that don't need that much to meet section 8 standards and get that guaranteed rent monthly.

 

[al audi]

Antbanks I had an interview today my tenant is going to school an is moving to a diff area. My joint is section 8 approved. Its guaranteed like you said......this spot ain't in the hood it's a nice multi Fam crib. Just had to meet the standards an the state checks it out. Great tenant.....the first one was a nightmare after that got section 8 approved and did more depth background check. Def a learning experience first time around.

 

[vagixxer]

Glad to see this thread pop back up, in the past two years I've bought and sold about 35 properties. Currently, I'm getting ready to start my first new construction ( submitting plans Tuesday to the city) as well as looking at some other lots and finishing current rehabs. Keep at it fellas. I got in to this business back in 04-05 and didn't really see things take off until 2010.

 

[younghollywood]

Antbanks I had an interview today my tenant is going to school an is moving to a diff area. My joint is section 8 approved. Its guaranteed like you said......this spot ain't in the hood it's a nice multi Fam crib. Just had to meet the standards an the state checks it out. Great tenant.....the first one was a nightmare after that got section 8 approved and did more depth background check. Def a learning experience first time around.

U haven't ran into any section 8 tenants that damaged ur property yet?  I've heard bout that a lot

 

[al audi]

U haven't ran into any section 8 tenants that damaged ur property yet?  I've heard bout that a lot

First tenant I had was a ratchet nightmare.......but came off as god loving thankful woman. Huge learning experience.......it was more of a favor and she was in a jam.......never again. Talk that good talk. Next chick.......total opposite single mother good head on her shoulders to do better an very polite. Section 8 ppl so far be appreciative an respectful......cuz state involved also an it'll hurt them more than you in the long run. Win/Win both sides. Guaranteed cash flow and they respect that house. First person was before goin through the section 8 late on rent etc. Left damage Smh terrible.

 

[younghollywood]

First tenant I had was a ratchet nightmare.......but came off as god loving thankful woman. Huge learning experience.......it was more of a favor and she was in a jam.......never again. Talk that good talk. Next chick.......total opposite single mother good head on her shoulders to do better an very polite. Section 8 ppl so far be appreciative an respectful......cuz state involved also an it'll hurt them more than you in the long run. Win/Win both sides. Guaranteed cash flow and they respect that house. First person was before goin through the section 8 late on rent etc. Left damage Smh terrible.

How many units is ur property and what kinda cap rate u getting from it?

 

[wr]

Majority of new home sales are investor purchases

It was recently announced that government will be scaling FreddieMac out of the mortgage guaranty business

Obama urges shutting down Freddie Mac and Fannie Mae http://www.nbcnews.com/business/obama-urges-shutting-down-freddie-mac-fannie-mae-6C10860677

. This is another big story getting washed to the side by twerking lol.

between the lawsuits, the computer systems holding peoples mortgages and fallout of TARP there's no telling which way the market is about to go and major reform is in store shortly.

It's a good time to buy a house to live in for cheap. The only way to make money off of flipping houses in this market would be by large volume, or taking advantage of local grants and programs for developing land in improvement districts.