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    Monday, January 25, 2021

    Real Estate Investing: Networth?

    Real Estate Investing: Networth?


    Networth?

    Posted: 24 Jan 2021 01:22 PM PST

    Prior to really understanding investing, I was an investment advisor.... Read that again, it's real lol.

    I would hear people talk about their networth and I would always say, that means nothing. It only matters when you sell (I came from a stock background).

    Well I read the millionaire real estate agent, and a line that stood out was, "it took me 20 years to make my first million. It took 3 years after that to hit $2m and another 2 years to hit $3m...".

    Can anyone else relate? On a MUCH smaller scale I've been tracking my networth for 8 years and we were growing on average $100k in networth every year for the last 4 years, until last year when we added $200k. Expecting to cross the million mark before 40 (I'm 38).

    I have come to realize it's not just about selling. It's about access to capital too. The more money you have access to, the easier it is to make money. Can anyone relate? Any similar experiences?

    submitted by /u/obie1cajoby
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    How to start Real Estate Business? Need Advice

    Posted: 24 Jan 2021 09:24 PM PST

    As the title says I need advice on starting Real Estate Business. My parents bought a piece of land many years ago and built an incomplete house. It just stays there and I don't know what to do. It's located in a fairly good place in town, not the best but it's okay. I'm 19 , a university student and currently flipping laptops. And I'm wondering how I can start real estate using this incomplete house. I don't have much money right now, only managed to save 1300$, but maybe I can also get some money from my parents. I feel like this house is an opportunity for me. But I need advice from someone who has experience. Thanks :)

    btw I don't live in US

    submitted by /u/kamranise
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    living in a shared investment

    Posted: 24 Jan 2021 10:43 PM PST

    so im in a group of people who are buying a home together and living in it. it is an up down split single home 3 beds up 3 down basically the same lay out up or down. the problem is we are debating on how fees should be shared. im of the opinion that whoever occupies the upper suite should pay more than the basement for the usual reasons basements are less sought after it seems unfair that we would all pay the same fees if someone gets the better space? their debates are that if they do so they should deserve a larger percentage ownership then the person paying less. on a side note. I think different logic should mabye apply to utilities im bringing a room mate with me i think i should pay more because that equals more gas water and such

    TLDR we are buying a place as a group I think fees should be split differently depending on who gets the better space but still keep the percentage ownership of the property the same. do you agree or disagree and why?

    submitted by /u/biatmolat
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    When it rains it poors

    Posted: 24 Jan 2021 08:13 PM PST

    Since the New Year I've gotten hit with:

    Bad HVAC repair - $2400

    Leaky roof - $800

    Plumping in the shower issue = $150

    Appliance not working = guessing a few hundred

    It's much more frustrating than just depositing rent checks. Grrr

    submitted by /u/dudeman456789
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    Just put my first rental (duplex) under contract! Review my numbers, please.

    Posted: 24 Jan 2021 05:12 AM PST

    EDIT: I apologize for the formatting. I copied this from a google sheet on my phone. I had it straightened out by line item after copying to Reddit, but when I post it the formatting condenses it again.

    NOTE: We just had our inspection and sent a negotiation offer that requires: 1. They get a licensed contractor to diagnose and repair the seemingly minor foundation cracks. 2. They repair two leaking water valves 3. They give $5000 in closing concessions based on the other number of findings and age of roof.

    Monthly Income
    Expected Rental Income $ 1,000.00
    Laundry $ -
    Storage $ -
    Misc. $ -

    Total Monthly Income $ 1,000.00

    Monthly Expenses Tax $ 119.00 Insurance $ 125.00 Utilities $ -
    Electric $ -
    Water/Sewer $ 50.00 lead paint certification $ 10.00 Garbage. $ -
    Gas $ -
    HOA fees $ -
    Lawn/snow $ 60.00 Vacancy $ 50.00 Repairs $ 50.00 Capital Expenditures (CapEx) $ 50.00 Property Management $ -
    Mortgage $ 264.18

    Total Expenses $ 778.18

    Monthly Cash Flow Income $ 1,000.00 Expenses $ 778.18

    Total Monthly Cash Flow $ 221.82

    Cash on Cash ROI Down Payment $ 21,225.00 Closing Costs $ 7,971.00 Repair/Rehab Budget $ 5,000.00 Misc.(seller credits) $ (340.00) Price of property $ 84,900.00 Total Investment $ 33,856.00 Annual Cashflow $ 2,661.84 Cash on Cash ROI 7.86% Time to recover Investment (yr) 12.7 Equity after 15 years $ 29,508.00 Selling costs $ 8,000.00 Income assuming no appreciation $21,508.00 Year on year equity return 4.24% Total yearly cash on cash return 12.10%

    submitted by /u/worthingrocks
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    Loan percentage?

    Posted: 25 Jan 2021 12:21 AM PST

    Hi, buying my first rental property. Some info:

    • Low rent ROI area. High demand. Found a pretty good deal for the area at ~4.25% rent ROI.
    • High appreciation area (averaged 3% over the last few decades, pretty consistently).
    • Low interest rate country. I can get the loan at 2% - 2.5% (ranging from 65% loaned to 75%).
    • Intention is to buy and hold.

    My question is whether I should max the mortgage at 75% (but then the property would be cash flow negative as the mortgage payments would exceed net income from rent). Or should I take a loan so that I'd be cash flow neutral. If I'm cash flow negative I'd probably just cover it with the money I save from salary.

    Is there some kind of rule of thumb of whether I should strive to be cash flow neutral / positive?

    submitted by /u/cstocks
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    Buying on numbers not desire?

    Posted: 24 Jan 2021 05:59 PM PST

    My wife and I have narrowed down some investments we may make in RE. The three are all 3x2 condos and all will have different cash flow based on our costs we ran. Lowest is $400/mo highest is $900.

    My wife loves unit 1, I love #2, and number 3 is ok.

    So my question is this:

    When in a predicament where you have a few options to pick from, what do you use to evaluate which is best? Cash flow both present and future? Future prospects of said property (redeveloped neighborhood, future resale value?) or do you consider diversification of your property portfolio even if the cash flow may not be $900/mo but maybe $400 instead?

    submitted by /u/SANMAN0927
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    Help with negotiation conversation

    Posted: 24 Jan 2021 04:17 PM PST

    Hey gang,

    This Wed I have a convo with my landlord to potentially buy the Duplex my wife and I live in. He's looking to get out of Real Estate (80+) and has said multiple times he wants to make sure he leaves the place to people who he likes and thankfully, we're those people.

    Original asking $414,000
    3/3
    Each unit rents for $1650
    Down payment $60,000 for 2.875 conventional, already prequalified and talked with lender
    Estimated Mortgage + taxes + insurance ~$2500

    We love the place, but feel like $414,000 is a bit much and even the landlord said he was surprised when the realtor wanted to list at that price. He really wants to cut out realtors as he would save a significant amount of $$$. Without going through realtors, we figure he saves .06% so around 25,000. This brings the price down to $390,000. We had my wife's dad take a look (used to flip houses) and he believes the roof will need replaced in about five years. Each kitchen needs considerable updates as well. Is this usually something that I could mention in consideration?

    I'm thinking of starting talks at $375,000-$380,000. Our highest price we can reasonably go in on is $400,000. Just don't want to start too low and have him insulted.

    Any thoughts? Any other angles I could use or more information that might be helpful to ya'll to give some advice?

    submitted by /u/Dipsendorf
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    What's your formula?

    Posted: 24 Jan 2021 04:50 PM PST

    So I have been in real estate for a number of years and really have no clue what I'm doing. I make ridiculous money because I was able to predict upcoming areas and get in for cheap. I sold.my first residential property for a 20k profit and used that to buy a commercial property for 220k which I now make 50k a year. I would.love to get more involved and relieve these deals are once in a lifetime. What is your formula you use to determine rents?

    submitted by /u/raredad
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    Out of country investors?

    Posted: 24 Jan 2021 06:58 PM PST

    I have a client from Japan who is trying to buy property in the US with all cash. I am working with their daughter who is a US resident with a work visa.

    Can the parents buy property with all cash, or must it be titled in an LLC, or must we use the daughter's name in the purchase?

    I typically broker US citizen transactions but this is a first for me. Thanks so much!

    submitted by /u/cactushatter
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    Investment Condo: Single bedroom high density area VS 2 bedroom less dense suburb

    Posted: 24 Jan 2021 10:18 PM PST

    As the title suggests, the pricing between a good 1 bedroom condo in Vancouver BC is comparable to a 2 bedroom some popular suburb regions 30mins outside Vancouver. The latter area has been developing a lot the past few years, malls, high rises, public transit lines...etc I'm debating purchasing my first investment property in either of these scenarios. Analyzing in terms of potential appreciation and stability with renters. Any advise is greatly appreciated.

    submitted by /u/KLocky
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    Cash out refi to buy foreign property

    Posted: 24 Jan 2021 08:45 AM PST

    I am considering a cash out refinance to buy property in a foreign country. Have 50% equity in primary residence, and considering taking 30% of it out. Has anyone tried this? Do lenders care how you use the cash? Are there any lenders that specialize in this kind of refi?

    submitted by /u/dezigeeky
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    Parents cosigning for rental property?

    Posted: 24 Jan 2021 03:14 PM PST

    I'm looking at houses in Binghamton, NY. Got my eye on a 3 bedroom house near Binghamton University going for $80k. When all said and done expenses are going to be about $800/month including hiring a property manager. I want to rent to college students, either the whole house or each bedroom individually, I estimate I can get about $1400/month for it.

    I'm worried I won't be able to get a mortgage even with my parents cosigning. I just graduated college and working my first "real" job making $45k/year. I've only been working for a month so far and my credit history is thin, only 1 credit card that I've had for 3 years. My credit score is 729 last I checked. I also have $63k saved up from working during high school and college.

    Do I stand a chance of getting a mortgage with a cosigner? My parents make $220k/year so I may have a shot but I'm unfamiliar with the process. Also, is buying a cheap house to rent to college students a smart investment? Right now I'm young and anxious to get started but I don't want to rush into anything and bite off more than I can chew. Thanks for reading

    submitted by /u/crunchylettuce24
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    Sacramento is step closer to eliminate traditional single-family zoning. Any insight on how to approach this with an eye toward picking up SFH to later convert to 2/4-plex?

    Posted: 24 Jan 2021 11:13 AM PST

    The cities of Portland, Oregon, and Minneapolis have passed similar ordinances in recent years. Can anyone with familiarity in these markets chime in with insight or concerns?

    article discussing it

    submitted by /u/smw2102
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    Has anyone been successful with rental arbitrage the past year?

    Posted: 24 Jan 2021 07:31 PM PST

    Just curious if anyone has been successful with rental arbitrage on any of the STR platforms. Are these markets becoming saturated or is there still room to pop in

    submitted by /u/bmoffitt1990
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    Buying a foreclosed home to live on?

    Posted: 24 Jan 2021 01:27 PM PST

    I'd like to participate in an auction here in AZ. I am currently living in a 2 bedroom townhome in a small town, south of Arizona which houses 4 family members (me, dad, brother, and uncle). We are all adults btw but we are used to this setup of living together. However, we live in a 55+ community and we are expecting my stepmom to immigrate later this year. The house will be too crowded for all of us and I know my dad and stepmom will want some privacy so my brother can't share a room with dad anymore.

    I've been eyeing some foreclosed homes in Phoenix or Chandler. But I don't have any experience doing it. I am planning on going to the courthouse one of these days just to see how it goes but I'd like to know if anyone would be willing to share their experience with the whole process of bidding a house at an auction?

    I probably won't be bidding anytime soon, I'd like to save some more but maybe I'll do it later this year or early next year but I'd like to prepare by learning the process. Any tips? reading suggestions? If you have any questions please let me know.

    **idk if this will help but I am the highest earner in the house. i am thinking about chandler or phoenix because I am thinking about grad school and the schools are located there. I'm hoping to be able to do grad school while continuing on working since there are a quite a few hospitals in the valley. Dad works at walmart, and brother has a contractual job. uncle is retired. I am hoping to buy maybe a 5 or more bedroom house so I can have one of the rooms rented. Is this too much?

    submitted by /u/Any_Addition9295
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    BRRRR with Partners?

    Posted: 24 Jan 2021 02:27 PM PST

    I'm familiar with the BRRRR method, but have a question in my current situation I haven't faced before.

    There are 2 other guys I'm going into this SFH deal with. One of them bought it all cash last month, so he owns it outright. We're planning on paying him 33% to own a third of the property each. We're also planning a refinance in the next 6 months.

    What chronological sequence of events needs to happen? Pay him for third ownership and get added to the title first, then refi?

    Or should he initiate the refi, and then at closing get added to title and pay him for the third ownership at closing?

    We've got an LLC we would want to transfer it into down the road. What's the best way to go through this process? We're planning on hiring a real estate attorney to help ensure all our bases are covered. Thanks!

    submitted by /u/MrGatas
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    How important is a real estate license for personal investing?

    Posted: 24 Jan 2021 05:49 PM PST

    Hi! I have saved up a bit from work and am looking to start investing into real estate. Is it worth getting a license for personal needs? I heard that I cannot buy myself a house using my license, is this correct?

    Thanks!

    submitted by /u/I_Is_Batman
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    Using a non mortgage type loan for a property

    Posted: 24 Jan 2021 05:41 PM PST

    I recently got my loan preapproval "revoked" due to a recent job change & I'm super defeated. I've been saving up for a house for years and now my lender is saying I need one whole year at this new job before I could get another loan approved.

    I already have almost $100k saved up.. Is it possible to get a regular bank loan of like $20/$30k for purchasing a property? I live in Minneapolis MN so the housing market is expensive & $130k can't get you a SFH but it could get you a condo & I'd do anything to quit paying rent sooner rather than later.

    Any insight helps! Thanks!

    submitted by /u/PaintOpen1494
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    Whats the honest story behind your first investment property

    Posted: 24 Jan 2021 05:12 PM PST

    I'd like to hear your honest stories of the first real estate investment you entered. Did you make money? Did you lose money? Were there any big mistakes you made?

    Hello, I often see RE investing YouTubers talk about how they made x million by the age of 25 flipping homes and buying rentals. As a hungry 21 year old I'd like to dip my toes into RE after leaving university.

    submitted by /u/AthleticMoney
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    Should I become an appraiser or agent.

    Posted: 24 Jan 2021 05:08 PM PST

    I'm looking at becoming an agent or an appraiser. which do you think would better prepare me more for becoming a residential investor? From an educational stand point. Should I try to do both?

    submitted by /u/jarrett312
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    Up/down duplexes. Bad idea?

    Posted: 24 Jan 2021 01:20 PM PST

    I have a couple opportunities to purchase a property that is effectively a two story house with separate upstairs and downstairs suites. The numbers make sense, but I have a slight concern about finding tenants that are compatible with each other when it comes to upstairs noise.

    Side by side is obviously preferable, but there aren't any in my area at the moment.

    Any tips or warnings from landlords that have done this before?

    submitted by /u/titosrevenge
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    Does DTI/max loans check mortgage deeds or just loans?

    Posted: 24 Jan 2021 04:35 PM PST

    Sorry if this has been clarified before, I couldn't find the answer in a search.

    My wife and I are trying to maximize the number of properties we can eventually get into by keeping DTI and max loans counted against only one of us on each property.

    To do this do we only need to make sure that only one of our names are on the loan, or that only one of our names are on the title also?

    So for instance we are making an offer on an investment property now. What I assume we need to do is...

    1) Write offer with both of our names on it

    2) Put both of our names on the title of the home

    3) Do the loan in only my name

    So then later if we go to get a loan on another property under only my wife's name this property shouldn't count against her DTI or max number of loans, right? Or would it count against her because her name is on the deed and was on the offer?

    submitted by /u/Vcize
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    First Time Home Buyer, Multi-family House. Your advice would be much appreciated.

    Posted: 24 Jan 2021 11:56 AM PST

    First time home buyer, need advice.

    Asking price: $400k. House was sold in 2014 for half this price, and it seems some substantial upgrades were made (roof, gutters, interior updates to kitchen/bathrooms, store fronts renovated)

    Multi-Family

    • Four 2-bedrooms (currently renting for $975 each, heat & water included)
      • I will live in one, so I will subtract one units rents later on
    • Two store fronts (1 vacant, other rents for $1000)

    Brick building in LCOL residential area. 100 years old.

    I qualify for 3% down, and fully intend to use that. Still waiting to see what mortgage rate my lender can offer me. So some of these numbers below are estimates, according to Trulia.

    • Mortgage $1562
    • Property tax $543
    • Home insurance $75
    • PMI $313

    Total=$2,493/month

    Rental income = $3,925

    Below are some other estimated numbers (I was quite conservative for worst case scenario)

    • Vacancy -10%
    • Maintenance -15%
    • CapEx -15%

    Just from these 3 expenses above, let's remove 40% of rental income....

    3925 (rent from units) - 1570 (Vacancy, Maintenance CapEx) = $2355.

    $2,493 - $2,355 = $138

    With my math, I would be paying $138/month to live there and build equity. And this does not include potential rent on the vacant store front.

    Since I am a complete novice here, I am sure I may have missed something/inaccurate with my numbers. If someone could offer any guidance, that would be helpful.

    Basically I am trying to figure out if this is a good deal or not. It seems to be renting for more than 1% of purchase price which is a good sign. What am I missing? Thanks a bunch for reading

    submitted by /u/ramrod155
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