Real Estate Investing

[97guns]

my advice is to save up and buy the first property outright, you can always tap the equity from it to help buy another or buy another property with a mortgage once you get a down payment saved.

do not use the equity from house #1 as a down payment, if you take money out of the property then only use it to buy another outright, always have at least 1 home you own free and clear.

the first one is the stepping stone

[Destind4]

That'll take me 10 years to pay for a house in full.

[Destind4]

Well here goes nothing lol. Day 1... only 3650 days to go.

[ScottRUnderwood]

All the options of real estates investments are good you you need to know that what is more profitable and affordable for you. Buying a new home and renting it also a better option to get a fixed monthly income.

[Wisedog]

Has anyone had any experience in real estate investing? I've been researching the subject for awhile, and have yet to scratch the surface. I've narrowed my approach down to two options: buying a house and renting it out or finding a great "Subject To" deal and take over existing payments. If anyone has any expertise in the field, how would you approach your first deal?

It's never a good Idea to buy a home and hope you can rent it a few years later - not unless you first know what it's like to be a landlord. Start small. And start with property that isn't your primary residence.

[Destind4]

It's never a good Idea to buy a home and hope you can rent it a few years later - not unless you first know what it's like to be a landlord. Start small. And start with property that isn't your primary residence.

What's illogical about making passive income from real estate? I could always hire a proptery manager to oversee and report back to me about any issues.

[syracusa]

i have 5 single family home that i rent out, you will always get the pros and cons but for me RE is THE best investment out there. i make 10-12% return on investment just on the rents with houses leveraged with a loan and 7-9% on homes that i own outright. i get my entire investment returned to me in 7 years with homes i have leveraged, year 8 and beyond is pure gravy in the pocket, not even mentioning the gains in equity

sure there are problems, right now i have a broken pipe in the concrete subfloor of one of them, i have to have the cement cut open and pipe repaired, second time in a year with the same house. claiming it on insurance again, last time i put 3K in my pocket, this time should be more. ive had to replace the water heater on all 5 homes and put new flooring in 3 of them but in the end i pay very little to ZERO income tax, have not paid income tax in the past 4 years, this coming year i will have to because i added #5 all cash.

there are lots of ways to get a good tenant in, i can share my managers practices if needed.

Thank you for your encouraging approach, 97guns (do you have 97 guns? ).
Most of the time, when someone mentions possibly investing in real estate, i tend to hear "rain on your parade" type of comments along the lines of "it's difficult, it's risky, tenants can be bad, things can break, capital appreciation is zero nowadays, you'd do better in the stock market".

I don't understand this approach because to me, the stock market is something you do for retirement while you work at another job. Money in the stock market doesn't provide a regular stream of income, it's just kind of there to grow on its own for the long term.
The real estate thing sounds more like a job (or extra job) to me. You do it for the monthly income stream. And if you have a few good units, then it can turn into a very nice job. If you have way too many units, you contract out some of the management.
Sure, you work at it (some) but when You compare it to "employment" providing a similar stream, the advantages are tremendous.

No bosses, no rat race, no office politics, no dealing with back-stabbing and self-promoting coworkers, no never-ending piles of loads dropped from above, no punching the clock daily. No matter how terrible your tenants are or how unlucky you are with things breaking, I refuse to believe a landlord works 8+ hours a day, every day, desperately trying to stay on top of his loads.

My parents who live in Europe have about 3 units to supplement their small state pensions. They are both 70 yo and other than the fact that they must bother with collecting the rents and the occasional turnover, I don't hear anything about things breaking or the hardships of being a landlord. They enjoy a perfectly laid back and secure retirement. Maybe it's because those cement units in Europe can't really be broken Hard as you might try, but still: there is plumbing, there are appliances...but not much ever seems to be breaking for them.

Having seen this working in my family,I want to start the same thing - but it's a bit disconcerting when you constantly hear about how sour things are "likely" to turn out.
I always felt that if we pay cash, things can't get That horrible -unless the market crumbles again and we lose what we put in.

[Destind4]

No bosses, no rat race, no office politics, no dealing with back-stabbing and self-promoting coworkers, no never-ending piles of loads dropped from above, no punching the clock daily. No matter how terrible your tenants are or how unlucky you are with things breaking, I refuse to believe a landlord works 8+ hours a day, every day, desperately trying to stay on top of his loads.

[97guns]

Thank you for your encouraging approach, 97guns (do you have 97 guns? ).
Most of the time, when someone mentions possibly investing in real estate, i tend to hear "rain on your parade" type of comments along the lines of "it's difficult, it's risky, tenants can be bad, things can break, capital appreciation is zero nowadays, you'd do better in the stock market".

I don't understand this approach because to me, the stock market is something you do for retirement while you work at another job. Money in the stock market doesn't provide a regular stream of income, it's just kind of there to grow on its own for the long term.
The real estate thing sounds more like a job (or extra job) to me. You do it for the monthly income stream. And if you have a few good units, then it can turn into a very nice job. If you have way too many units, you contract out some of the management.
Sure, you work at it (some) but when You compare it to "employment" providing a similar stream, the advantages are tremendous.

No bosses, no rat race, no office politics, no dealing with back-stabbing and self-promoting coworkers, no never-ending piles of loads dropped from above, no punching the clock daily. No matter how terrible your tenants are or how unlucky you are with things breaking, I refuse to believe a landlord works 8+ hours a day, every day, desperately trying to stay on top of his loads.

My parents who live in Europe have about 3 units to supplement their small state pensions. They are both 70 yo and other than the fact that they must bother with collecting the rents and the occasional turnover, I don't hear anything about things breaking or the hardships of being a landlord. They enjoy a perfectly laid back and secure retirement. Maybe it's because those cement units in Europe can't really be broken Hard as you might try, but still: there is plumbing, there are appliances...but not much ever seems to be breaking for them.

Having seen this working in my family,I want to start the same thing - but it's a bit disconcerting when you constantly hear about how sour things are "likely" to turn out.
I always felt that if we pay cash, things can't get That horrible -unless the market crumbles again and we lose what we put in.

my father lived off dividends for the last 20 years of his life so the stock market can create income but i prefer my money to be in hard assets, i am not a paper asset kind of person, i feel much better when i have a physical item that can be touched.

[disneysteve]

Money in the stock market doesn't provide a regular stream of income

Have you not heard of dividends?

my father lived off dividends for the last 20 years of his life so the stock market can create income

Exactly. My mother has been living partly on dividend income for the last 25 or so years.

[krantcents]

As a former landlord, I can tell you it is all front end loaded. Selection of property and tenant is paramount! A good property is rented quickly. Selecting a good tenant is a little bit more difficult. You have to screen them for credit worthiness and if they will take care of your property. Although I rented out my personal residence for a few years, I mainly invested in actual (9, 10 & 24 units) apartment buildings. It spread the risk better than a single family home.

[snafu]

Destined, I jumped to the conclusion that you planned to buy a SFH as an income property. When you are in a position to buy a home with 20% down and relinquish some privacy to rent rooms you can follow through with your plan in baby steps. You will have a better understanding of a landlord's contribution, learn a lot of skills and get the dwelling you've chosen paid off PDQ. 97 and Rachael are terrific mentors.

My experience was as a live-on-site property manager of a small, six suite apartment complex, newly married and a university student. I was woefully unprepared for the unending demands the tenants I selected made. It was a cute building and I stupidly chose newlyweds thinking they would make an effort to keep their 1st apartments looking nice.

Cripes, they had ovens catch fire, dropped weighty cosmetics in the porcelain sink and cracked/broke it, left food to rot and stink in the fridge, overflowed and broke handles and even commodes, left/forgot laundry in the downstairs washers, frustrating the other tenants, were unfamiliar with angle parking causing regular visits from police [having a cruiser parked out front scares neighbours], pulled towel racks from the walls, caused closet rods to bow, had no idea how to use the trash dumpster in it's 'cottage-like' cover, neglected their own, locked mail box unit and collect mail regularly [puts you in grief with Canada Post], forgot pots on the stove causing them to burn out with the scream of smoke detectors...worse yet, they took the batteries out of smoke detectors and scared me with silent, billowing smoke etc.

[Destind4]

My plan has been revised to paying for a house in cash. At that point I will have a positive cash flow as soon as I'm able to find a tenent. I will run background & credit checks on top of requiring a security deposit. Any unexpected turn of events will be covered with no worries since I won't be in the "red" so to speak. I will have 70k in 5 years time. I am one day closer to my goals.

[Destind4]

Thanks for the insight!

[JodieWRoberts]

My plan has been revised to paying for a house in cash. At that point I will have a positive cash flow as soon as I'm able to find a tenent. I will run background & credit checks on top of requiring a security deposit. Any unexpected turn of events will be covered with no worries since I won't be in the "red" so to speak. I will have 70k in 5 years time. I am one day closer to my goals.

yeah, that is great.