Author Topic: Real Estate Q&A  (Read 2528 times)

Cwadda

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Real Estate Q&A
« on: March 12, 2014, 05:26:20 PM »
I am relatively young but I've always liked the idea of buying a house for a rental investment. I don't have a lot of credit but I'm working hard on it and on making money. I just wanted to ask a few questions to the individuals on here who have experience with real estate investing.

1. How old were you when you acquired your investment property? How long did it take to get the credit?

2. Approximately how many houses do you research/look at before making the purchase?

3. How much work do you put into fixing a house up to make it rentable?

4. How long have you been doing real estate? Have you ever had to evict someone?

5. In your opinion, what is the number one benefit of real estate investing?

6. Are there any other comments you'd like to make?


And here are the questions in code form. Just press 'select', copy, and paste.
Code: [Select]
1. How old were you when you acquired your investment property? How long did it take to get the credit?

2. Approximately how many houses do you research/look at before making the purchase?

3. How much work do you put into fixing a house up to make it rentable?

4. How long have you been doing real estate? Have you ever had to evict someone?

5. In your opinion, what is the number one benefit of real estate investing?

6. Are there any other comments you'd like to make?

I appreciate your responses. Thanks!
« Last Edit: March 12, 2014, 05:31:01 PM by Cwadda »

Cwadda

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Re: Real Estate Q&A
« Reply #1 on: March 13, 2014, 09:11:24 AM »
Bumping for responses...

ketchup

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Re: Real Estate Q&A
« Reply #2 on: March 13, 2014, 09:44:18 AM »
I'm not exactly a "real" investor, but I'll offer my perspective anyway.  I own one rental, originally bought as primary residence.  I'm no pro.

1. How old were you when you acquired your investment property? How long did it take to get the credit?

I was 20 (just over two years ago).  The seller financed the sale.  20% down, 5yr loan.  All he had was my word and a contract.  I had extremely limited credit history at the time.

2. Approximately how many houses do you research/look at before making the purchase?

This was the only house I looked at, due to the (very low) price.

3. How much work do you put into fixing a house up to make it rentable?

While living there, I painted all the interior walls and replaced some floors (Pergo).  Few hundred bucks in tools, some more hundreds of bucks in materials.

4. How long have you been doing real estate? Have you ever had to evict someone?

I've had a tenant in there for just under a year.  Friend of my girlfriend.  She's needled about rent and hasn't always been timely, always going through my girlfriend to try to get me to be more flexible than reasonable.  She is also a very ungrateful person, as I am cutting her a bit of a deal even though she thinks she's overpaying.  It's very frustrating.  Do not rent to friends or friends of friends.  I won't be doing that in the future.  But she's moving out in a few months.  Not sure yet if I'll hold onto the house or sell it.

5. In your opinion, what is the number one benefit of real estate investing?

Leveraged returns.  It's also terrifying, even with my relatively low value house.  I'm sure that gets less scary as time goes on.

6. Are there any other comments you'd like to make?

Vacancy and holding costs can be brutal.  Even with my cheap house sitting for only four months after we moved out, it still cost me a lot.  Getting all the stupid little things like trash service set up can be way more of a hassle than you'd think.  "The furnace quit last night, and it's cold" is not nearly as bad a call to get as "A fucking woodchuck broke in through the bathroom floor, got dirt all over everything, and ate all my tampons."  And again, do not rent to friends, or friends of friends.

Cwadda

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Re: Real Estate Q&A
« Reply #3 on: March 13, 2014, 09:53:29 AM »
Thanks for the reply. Can you explain how the seller financed the sale?

ketchup

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Re: Real Estate Q&A
« Reply #4 on: March 13, 2014, 10:50:23 AM »
Thanks for the reply. Can you explain how the seller financed the sale?
It was via a Land Contract.  The realtor set up the contract from an online template, then I ran it by a real estate lawyer, and $340 later I had some minor corrected wording to cover certain things.  It also made insurance more complicated, but once I found a company willing to do it (State Farm), they pretty much did it all themselves.  Then we met at the bank, we all signed the contract, I handed the seller my down payment, and he gave me the keys.  I pay each month by depositing it into his account at his bank.  I have a spreadsheet to keep track of all the payments and everything.

Daleth

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Re: Real Estate Q&A
« Reply #5 on: March 13, 2014, 11:02:18 AM »
1. We invested before in several different properties starting in our late 20s/early 30s, but just got into residential rentals at 40.

2. I just surfed local real estate websites, found houses that looked good and went to see them. Literally only looked at three houses and bought one; then only looked at one house and bought it. That was partly luck but partly also having a very clear idea of what I was looking for, so I only went to see houses that appeared to check all my boxes. The other rentals are part of the property we live in, and again, that was just a matter of surfing real estate sites for years looking for a particular kind of place, and swooping when we saw it.

3. How much work do you put into fixing a house up to make it rentable?
a- About $10k (for a two-unit); b-$0 (great shape, just had it cleaned and it was rented in two weeks); c-one unit required no work (came with a tenant in it) and the other required about $8k.

4. We've only been doing residential rentals for a few years. Haven't had to evict anyone.

5. The number one benefit of real estate investing is that someone sends you a check each month for doing nothing, and that check buys you a house AND gives you a profit each month! Most of the work is up front (fixing up, looking for tenants). If the tenant's plumbing breaks we call a plumber and he goes over to fix it, because we both work, so it's no time out of our day. Basically this is like buying an annuity: you get a check every month and usually don't have to do any additional work for it, beyond what you did when you bought it and right before getting each new lease. And this check increases over time, since rent goes up, while the mortgage generally stays the same (modest increases if insurance goes up, perhaps rare adjustments if property taxes increase--the mortgage itself, though, is fixed).

6. Are there any other comments you'd like to make?
You have to be stringent in evaluating tenants. Credit checks, criminal background checks, calling past landlords, calling employers. I am a total softie and would have great trouble evicting a tenant who was having financial problems, so I have to avoid renting to tenants who are likely to have problems.

That said, we have rented to foreign grad students, on whom it's obviously impossible to do credit or criminal checks, and if they've just arrived from overseas it's generally impossible to call past landlords. I trust the fact that the US Consulate in their home country had to run checks on them before giving them a visa, and those checks were (1) any criminal background? and (2) do they have enough money to support themselves in the US? Also, they're usually scared of running into trouble/being deported, so they're less likely to make trouble. But I do call their colleges and confirm that they're students there.