Anyone here into real estate investing?

#1

BAJAvol

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#1
Decided last year that I wanted a jumpstart my F.I.R.E goal and not work until I’m 65 (I’m 28 now). 2021 was a pretty good year for a newbie like myself. I flipped two houses, wholesaled a few deals, and bought my first rental. I’m in the process of purchasing my next flip, but may park it into my rental portfolio if the numbers make sense. My first flip really opened my eyes to what real estate could do. I made 75% of my salary in 87 days. My second flip was literally $0 In renovation cost and made 20k In 41 days. Although I made my salary, I reinvested most of year 1 profits back into the business and traditionally financing a SFH for a long term rental. I’ve done a little touch of everything so far, but I’m still working to find my true niche. I’ve been really patient, but I’ve really zoned in on my off market acquisition strategy, so I’m ready to start scaling.
 
#2

walkenvol

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#2
Congrats - wish you continued success. Although I’m retired, I’m a big fan of the FIRE model and keep sending articles to my adult children hoping to peak their interest. Seems like the key is to learn how to get true value from your purchases and not falling into the trap of increasing your standard of living proportionality with your rise in income.

With rising interest rates I have to wonder if real estate isn’t going to pull back from these crazy high prices we’ve seen the past few years?
 
#3

BAJAvol

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Congrats - wish you continued success. Although I’m retired, I’m a big fan of the FIRE model and keep sending articles to my adult children hoping to peak their interest. Seems like the key is to learn how to get true value from your purchases and not falling into the trap of increasing your standard of living proportionality with your rise in income.

With rising interest rates I have to wonder if real estate isn’t going to pull back from these crazy high prices we’ve seen the past few years?
Yeah I’m in my forever home and that’s the only personal debt I have. I’ll never finance a car or boat again. It’s nice only having a mortgage. Rates have caused me to flip properties that I intended to cash-out refi and hold. I got a quote yesterday on a 30 yr fixed for a 4-plex and it was 6.99%. Definitely making the BRRRR strategy much harder unless you have an absolute killer deal.

I put one under contract this week that is an absolute gut job, but will make a great rental. My GC is out of pocket for a bit so I may just sell the deal.
 
#4

Go aeiou

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#4
Yeah I’m in my forever home and that’s the only personal debt I have. I’ll never finance a car or boat again. It’s nice only having a mortgage. Rates have caused me to flip properties that I intended to cash-out refi and hold. I got a quote yesterday on a 30 yr fixed for a 4-plex and it was 6.99%. Definitely making the BRRRR strategy much harder unless you have an absolute killer deal.

I put one under contract this week that is an absolute gut job, but will make a great rental. My GC is out of pocket for a bit so I may just sell the deal.
I've been in the business for 30 years, but mostly retired now. Developed about 500 residential lots between 92 and 2012. I built about 30 custom homes.
I Currently only have Commercial property and raw land as residential is over priced imo. My partner has several developments, but only in the upper price range which is less dependent on low interest rates.

There are many things that can go wrong, and quickly, and not because of anything you do/did. Don't get too extended.
 
#5

BAJAvol

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#5
I've been in the business for 30 years, but mostly retired now. Developed about 500 residential lots between 92 and 2012. I built about 30 custom homes.
I Currently only have Commercial property and raw land as residential is over priced imo. My partner has several developments, but only in the upper price range which is less dependent on low interest rates.

There are many things that can go wrong, and quickly, and not because of anything you do/did. Don't get too extended.
That’s awesome man! I’ve got some people in my network that do just that. They’re struggling to find land right now though! I’m usually conservative on my numbers. I always add in a 15% oh **** expense on my already inflated rehab budget. But you are correct, it can go south in a hurry. Thankfully we haven’t hit that yet.

I’m a debt free motto person on my personal finances. But, using leverage effectively allowed me to really get off the ground. I did a cash out refi on one property that was more than my initial purchase and rehab. It was tax free money and it cash flows about 475 after dest service and expenses. My goal is about 30 of those.
 
#6

VolunteerHillbilly

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#6
That’s awesome man! I’ve got some people in my network that do just that. They’re struggling to find land right now though! I’m usually conservative on my numbers. I always add in a 15% oh **** expense on my already inflated rehab budget. But you are correct, it can go south in a hurry. Thankfully we haven’t hit that yet.

I’m a debt free motto person on my personal finances. But, using leverage effectively allowed me to really get off the ground. I did a cash out refi on one property that was more than my initial purchase and rehab. It was tax free money and it cash flows about 475 after dest service and expenses. My goal is about 30 of those.
So you jacked up your cost basis and you'll have to pay the taxes down the road, or am I missing something?
 
#8

HoleInTheRoof

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#8
This thread hasn't been updated in a few months - and the one started back in 2018 didn't make it past one page. So I'm guessing this isn't too hot of a topic.

That said, I'd like to try and re-open the discussion as my wife and I are rookies at this and dabbling in residential long term rentals. We have two units currently. She wants to wait until after the new year before we pursue a third (original goal set of one new property a year) but I can be slightly impatient.

I know we're making rookie mistakes by using our own personal finances for these purchases, as well as not doing anything under an LLC. Creating an LLC has been on the "to do list" and I'm sure its easy. Need to figure out the process of creating one and transferring our two rentals under it.

I'm also interested in flipping - providing it wouldn't be a complete gut job, as well as Id like to learn about getting involved in foreclosures. But I guess where I need to start with is finding funds - or rather how to access my current funds. Namely, taking advantage of the equity we have in our primary home as well as our first rental.

Any input on good resources (forums, books, websites, etc) or any other advice would be sincerely appreciated.

I always see all these commercials of how these people buy one home one year and by year 5 they have 30 homes in their portfolio. Not sure if that is info commercial BS or if it is something actually attainable?
 
#9

clarksvol00

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#9
This thread hasn't been updated in a few months - and the one started back in 2018 didn't make it past one page. So I'm guessing this isn't too hot of a topic.

That said, I'd like to try and re-open the discussion as my wife and I are rookies at this and dabbling in residential long term rentals. We have two units currently. She wants to wait until after the new year before we pursue a third (original goal set of one new property a year) but I can be slightly impatient.

I know we're making rookie mistakes by using our own personal finances for these purchases, as well as not doing anything under an LLC. Creating an LLC has been on the "to do list" and I'm sure its easy. Need to figure out the process of creating one and transferring our two rentals under it.

I'm also interested in flipping - providing it wouldn't be a complete gut job, as well as Id like to learn about getting involved in foreclosures. But I guess where I need to start with is finding funds - or rather how to access my current funds. Namely, taking advantage of the equity we have in our primary home as well as our first rental.

Any input on good resources (forums, books, websites, etc) or any other advice would be sincerely appreciated.

I always see all these commercials of how these people buy one home one year and by year 5 they have 30 homes in their portfolio. Not sure if that is info commercial BS or if it is something actually attainable?
Talk to your accountant and lawyer before doing an LLC. Depending on what state you're in, it could be cheaper to get more insurance than pay taxes on the llc.
 
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#10

Go aeiou

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#10
Talk to your accountant and lawyer before doing an LLC. Depending on what state you're in, it could be cheaper to get more insurance than pay taxes on the llc.
That's what we have always done. Huge, huge liability policy. That changed recently when we let some adult children buy in as LLC members. They are always your children.
 
#11

Go aeiou

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#11
This thread hasn't been updated in a few months - and the one started back in 2018 didn't make it past one page. So I'm guessing this isn't too hot of a topic.

That said, I'd like to try and re-open the discussion as my wife and I are rookies at this and dabbling in residential long term rentals. We have two units currently. She wants to wait until after the new year before we pursue a third (original goal set of one new property a year) but I can be slightly impatient.

I know we're making rookie mistakes by using our own personal finances for these purchases, as well as not doing anything under an LLC. Creating an LLC has been on the "to do list" and I'm sure its easy. Need to figure out the process of creating one and transferring our two rentals under it.

I'm also interested in flipping - providing it wouldn't be a complete gut job, as well as Id like to learn about getting involved in foreclosures. But I guess where I need to start with is finding funds - or rather how to access my current funds. Namely, taking advantage of the equity we have in our primary home as well as our first rental.

Any input on good resources (forums, books, websites, etc) or any other advice would be sincerely appreciated.

I always see all these commercials of how these people buy one home one year and by year 5 they have 30 homes in their portfolio. Not sure if that is info commercial BS or if it is something actually attainable?
Just saw on the news in Nashville that house prices are falling. Of course no one knows what the future holds.
 
#12

walkenvol

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#12
Just saw on the news in Nashville that house prices are falling. Of course no one knows what the future holds.
I don’t think it’s a stretch to predict falling housing prices. Small percentage of folks pay cash for their home and Mortgage rates have doubled. Saw an article the other day saying the monthly payment on a 30 year fixed is 42% higher vs January
 
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#13

yoyoyoyo

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#13
I don’t think it’s a stretch to predict falling housing prices. Small percentage of folks pay cash for their home and Mortgage rates have doubled. Saw an article the other day saying the monthly payment on a 30 year fixed is 42% higher vs January
People will start going back to a 5 year ARM to keep their payments down
 
#14

Big Orange#1

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#14
This thread hasn't been updated in a few months - and the one started back in 2018 didn't make it past one page. So I'm guessing this isn't too hot of a topic.

That said, I'd like to try and re-open the discussion as my wife and I are rookies at this and dabbling in residential long term rentals. We have two units currently. She wants to wait until after the new year before we pursue a third (original goal set of one new property a year) but I can be slightly impatient.

I know we're making rookie mistakes by using our own personal finances for these purchases, as well as not doing anything under an LLC. Creating an LLC has been on the "to do list" and I'm sure its easy. Need to figure out the process of creating one and transferring our two rentals under it.

I'm also interested in flipping - providing it wouldn't be a complete gut job, as well as Id like to learn about getting involved in foreclosures. But I guess where I need to start with is finding funds - or rather how to access my current funds. Namely, taking advantage of the equity we have in our primary home as well as our first rental.

Any input on good resources (forums, books, websites, etc) or any other advice would be sincerely appreciated.

I always see all these commercials of how these people buy one home one year and by year 5 they have 30 homes in their portfolio. Not sure if that is info commercial BS or if it is something actually attainable?
Any loans on residential properties taken now will be underwater by a year from now
 
#16

Big Orange#1

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#16
Why do you say that? Are you predicting a big reduction in property values?
Strong correction especially in extremely overheated markets like Phoenix, Boise, Nashville etc. My MIL is a realtor in middle TN she said it’s scary right now. Nervousness in the air as inventory has skyrocketed just over the last month. She said it’s ground to a halt and her brokerage only has 4 active buyer clients. In the 7 years she’s been there it’s never been below 15 buyers at any given time. The logical next step would be price reductions to bring back buyers with these skyrocketing rates.
 
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#17

BAJAvol

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#17
This thread hasn't been updated in a few months - and the one started back in 2018 didn't make it past one page. So I'm guessing this isn't too hot of a topic.

That said, I'd like to try and re-open the discussion as my wife and I are rookies at this and dabbling in residential long term rentals. We have two units currently. She wants to wait until after the new year before we pursue a third (original goal set of one new property a year) but I can be slightly impatient.

I know we're making rookie mistakes by using our own personal finances for these purchases, as well as not doing anything under an LLC. Creating an LLC has been on the "to do list" and I'm sure its easy. Need to figure out the process of creating one and transferring our two rentals under it.

I'm also interested in flipping - providing it wouldn't be a complete gut job, as well as Id like to learn about getting involved in foreclosures. But I guess where I need to start with is finding funds - or rather how to access my current funds. Namely, taking advantage of the equity we have in our primary home as well as our first rental.

Any input on good resources (forums, books, websites, etc) or any other advice would be sincerely appreciated.

I always see all these commercials of how these people buy one home one year and by year 5 they have 30 homes in their portfolio. Not sure if that is info commercial BS or if it is something actually attainable?
My main strategy is the BRRRR. I love finding a piece of **** and doing a full Reno, and pulling the majority of my investment back out when I’m done. Then renting it at a $400 minimum cash flow. Hard to find these right now but my website ranks #1 for motivated sellers. I do flip as well if it’s a bigger house or there is too much money to be made.
I use a private lender now, but I use companies that use DSCR loans to do my refinances. Rates are higher but as long as I hit my cash flow target I don’t care. You just have to know your ARVs, Rents, and construction costs before you buy. You make your money when you buy. I am loving this market correction because people call me every day wanting me to buy their piece of **** house. For flips, look into a reputable hard money lender like Kiavi and Longhorn if they service your area. I also used 401k loans. Paid like 4% on the 401 loans to profit 72k on my last flip.

I own 4 rentals right now that average $425 per month in cash flow. All have been refinanced and I have left a total of $8,700 in all 4 deal combined. That’s like investing $8,700 for a 234% return. Real estate is king

Read BRRRR by David Greene. Also read the book on flipping houses by J Scott as well.
 
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#18

yoyoyoyo

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#18
Strong correction especially in extremely overheated markets like Phoenix, Boise, Nashville etc. My MIL is a realtor in middle TN she said it’s scary right now. Nervousness in the air as inventory has skyrocketed just over the last month. She said it’s ground to a halt and her brokerage only has 4 active buyer clients. In the 7 years she’s been there it’s never been below 15 buyers at any given time. The logical next step would be price reductions to bring back buyers with these skyrocketing rates.
Strong correction is highly unlikely nationwide. Could it happen in spots, sure. There has only been one nationwide correction in housing prices in the last 100 or so years and that was in 2008. This is nothing like that. Foreclosures are basically nonexistent and that will only trickle back over time. Demand will vastly out pace supply for the next 3-5 years. People that think the sky is falling need to look at factual data and not go off feelings. Using emotion in real estate is how you lose your a**.
 
#19

Big Orange#1

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#19
Strong correction is highly unlikely nationwide. Could it happen in spots, sure. There has only been one nationwide correction in housing prices in the last 100 or so years and that was in 2008. This is nothing like that. Foreclosures are basically nonexistent and that will only trickle back over time. Demand will vastly out pace supply for the next 3-5 years. People that think the sky is falling need to look at factual data and not go off feelings. Using emotion in real estate is how you lose your a**.
Actually after 60 years of basically straight growth, There’s actually been two lengthy strong corrections or worse in the last 30 years. So we’re right about due for another correction using the last 50 years of data of real estate boom and bust cycle.

951109F7-FA54-4C18-A702-7CFD3247F0EB.jpeg
 
#20

walkenvol

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#20
The 2008 crash was mostly driven by poor lending policies and ARM’s IMO. Neither of those issues appear to be in play right now. There has been a highly irregular appreciation of housing costs over the last 5 years that is being attributed to lack of inventory, historically low interest rates, and crazy inflation of building materials. Lumber prices are still 2x - 3x the prices of 3 years ago.

I don’t see excessive foreclosures unless we see a prolonged recession with crazy high unemployment. The inflationary pressures were experiencing now should make the existing fixed rate more affordable. I could see the existing builders getting caught in a bubble building houses that were affordable 6 months back with a 3% mortgage but have become unaffordable with a 6% mortgage but I don’t see how that would cause a housing crash from foreclosures of existing mortgages?
 
#21

Go aeiou

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#21
The 2008 crash was mostly driven by poor lending policies and ARM’s IMO. Neither of those issues appear to be in play right now. There has been a highly irregular appreciation of housing costs over the last 5 years that is being attributed to lack of inventory, historically low interest rates, and crazy inflation of building materials. Lumber prices are still 2x - 3x the prices of 3 years ago.

I don’t see excessive foreclosures unless we see a prolonged recession with crazy high unemployment. The inflationary pressures were experiencing now should make the existing fixed rate more affordable. I could see the existing builders getting caught in a bubble building houses that were affordable 6 months back with a 3% mortgage but have become unaffordable with a 6% mortgage but I don’t see how that would cause a housing crash from foreclosures of existing mortgages?
Nail/head.
The fiancially foolish that believe in always taking out equity based on appraised value will eventually get caught in a downturn, but some people can't be helped.
 
#22

BAJAvol

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#22
Nail/head.
The fiancially foolish that believe in always taking out equity based on appraised value will eventually get caught in a downturn, but some people can't be helped.
I’m not sure what you mean by this. My partner recently took advantage of low rates and high home values by refinancing his entire portfolio. Even pulling all of the available equity out, his actual mortgages barely moved because he went from 5.5% - 7% rates to in the high 3s. He owns 52 units and all are still cash flowing. You can’t do a cash out refinance on investment properties at 100%. The max I’ve found is 80% appraisal.

So he pulled 75% appraisal value on his cash out refinances across his 52 units. So he still has equity. He also put 1.7 million in his pocket tax free thanks to that equity. How long would it take someone to make 1.7 million at their job? He does this every 5-7 years. And every unit still cash flows.

It takes someone with sense to manage debt smartly, which 90% of the population doesn’t have.
 
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#23

Go aeiou

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#23
I’m not sure what you mean by this. My partner recently took advantage of low rates and high home values by refinancing his entire portfolio. Even pulling all of the available equity out, his actual mortgages barely moved because he went from 5.5% - 7% rates to in the high 3s. He owns 52 units and all are still cash flowing. You can’t do a cash out refinance on investment properties at 100%. The max I’ve found is 80% appraisal.

So he pulled 75% appraisal value on his cash out refinances across his 52 units. So he still has equity. He also put 1.7 million in his pocket tax free thanks to that equity. How long would it take someone to make 1.7 million at their job? He does this every 5-7 years. And every unit still cash flows.

It takes someone with sense to manage debt smartly, which 90% of the population doesn’t have.
I was replying to Walkenvol's post that referenced the "2008 crash". That has little to do with people investing in rental property where each business must determine their threshhold for borrowing. 2008 was individual homeowners taking cash out of their homes to buy new cars, vacations and expensive clothes. It was also some banks lending money without even getting appropriate documantation or verifyng stated income of borrowers.

90% might be a little high, but "A fool and his money......."

My opologies. I believe this thread is about "investing in real estate". When I was a practicing CPA I had a few clients that got wealthy doing that. My partner in the real estate developement business is building 80 rental units now.
 
#24

BAJAvol

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#24
I was replying to Walkenvol's post that referenced the "2008 crash". That has little to do with people investing in rental property where each business must determine their threshhold for borrowing. 2008 was individual homeowners taking cash out of their homes to buy new cars, vacations and expensive clothes. It was also some banks lending money without even getting appropriate documantation or verifyng stated income of borrowers.

90% might be a little high, but "A fool and his money......."

My opologies. I believe this thread is about "investing in real estate". When I was a practicing CPA I had a few clients that got wealthy doing that. My partner in the real estate developement business is building 80 rental units now.
No worries and no need for apologies. I was just wondering what you meant. I agree most homeowners are not financially literate. For example, I love Dave Ramsey. I follow most of his advice except anything related to debt. But I see why he does that because he is speaking to the majority
 

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