Real Estate Investing
#11
Gets Weekends Off
Joined APC: Aug 2009
Posts: 396
Bear in mind that by law REITs must distribute at least 90% of their taxable income as a shareholder dividend. That's why you see such high yields and typically not a wholelot of capital appreciation. Some REITs invest in properties, others in mortgages. There are all sorts of REITs that invest in specific areas such as retail, health care properties, residential etc... so you can focus on the sectors you'd like.
I own some mREIT's which make money off the interest rate spreads which should stay low for the near future. I'm getting roughly 12% dividend and have seen probably 20% cap gain as well since last year. They are a small but important part of my overall portfolio
By the way, I'm just a pilot. This does not constitute as financial advice
I own some mREIT's which make money off the interest rate spreads which should stay low for the near future. I'm getting roughly 12% dividend and have seen probably 20% cap gain as well since last year. They are a small but important part of my overall portfolio
By the way, I'm just a pilot. This does not constitute as financial advice
#12
Gets Weekends Off
Joined APC: Dec 2008
Position: 777 Cap
Posts: 199
I have been investing in RE for the last 27 years. If I was a young man again, I would be VERY tempted to go Sky's route and leverage up to aquire multiple properties at low valuations and very low interest rates.
I have always been very conservative in regards to the risk, so I have bought properties slowly and paid them off quickly. Now I am at the point, where the income from the properties allows me to pay off any new purchases within 3 years.
If I was levered up, I could own 10 times the amount of property that I currently hold, but the risk would be unbearable to me in this market. 100% occupied in a small commercial building as a result of being able to lower rents to market rate, and not suffer dire consequences. The market for commercial property is very soft, and we have lowered the rent from $6,200 mo to $4,300 a month. Not a big deal since the property is free and clear, but could have been catastophic if we were basing the decision to buy and dependent on that rent to pay for the property. Always leave a cushion when analyzing a potential property, although single family homes could probably get by with a smaller cushion.
I have been very lucky with tenants, and have no horror stories. I am also at the point where I can afford to hire work done and just manage the properties.
Best to set up each property in separate LLC, but that substantially increases the tax reporting and can be expensive depending on the location of the property.
I have always bought homes that I would be willing to live in myself. Easier to rent and probably greater appreciation.
I also don't raise the rents for tenants that stay in the property. They know this, and it results in longer rental terms. One property, I have had only three tenants since 1988.
I also try to buy local. The only true hassle I have ever had is when I had a long distance rental and it was difficult to manage.
RE is a very good LONG term way to build wealth. It's not sexy, but it works. Many different methods and risk models, but as long as you don't mind getting spending some free time working on building the business, and you have the cash flow to weather downturns, you should come out way ahead.
Good luck!
I have always been very conservative in regards to the risk, so I have bought properties slowly and paid them off quickly. Now I am at the point, where the income from the properties allows me to pay off any new purchases within 3 years.
If I was levered up, I could own 10 times the amount of property that I currently hold, but the risk would be unbearable to me in this market. 100% occupied in a small commercial building as a result of being able to lower rents to market rate, and not suffer dire consequences. The market for commercial property is very soft, and we have lowered the rent from $6,200 mo to $4,300 a month. Not a big deal since the property is free and clear, but could have been catastophic if we were basing the decision to buy and dependent on that rent to pay for the property. Always leave a cushion when analyzing a potential property, although single family homes could probably get by with a smaller cushion.
I have been very lucky with tenants, and have no horror stories. I am also at the point where I can afford to hire work done and just manage the properties.
Best to set up each property in separate LLC, but that substantially increases the tax reporting and can be expensive depending on the location of the property.
I have always bought homes that I would be willing to live in myself. Easier to rent and probably greater appreciation.
I also don't raise the rents for tenants that stay in the property. They know this, and it results in longer rental terms. One property, I have had only three tenants since 1988.
I also try to buy local. The only true hassle I have ever had is when I had a long distance rental and it was difficult to manage.
RE is a very good LONG term way to build wealth. It's not sexy, but it works. Many different methods and risk models, but as long as you don't mind getting spending some free time working on building the business, and you have the cash flow to weather downturns, you should come out way ahead.
Good luck!
#14
Gets Weekends Off
Joined APC: Dec 2008
Position: 777 Cap
Posts: 199
First two properties bought and sellers agreed to carry note. Win-Win, especially in this low interest rate era. Sellers happy to earn more than they can anywhere else
#16
How did you find these properties who had owners willing to finance the note? I'm guessing it wasn't on the MLS?
#18
It seems that you would want to find someone selling their house FSBO, or just a seller that wants to get out of town or is just moving out of the region.
MLS listings means they are working with an agent, who wants their cut. There are a couple of good articles and videos out there if you search subject-to or sub2 agreements.
MLS listings means they are working with an agent, who wants their cut. There are a couple of good articles and videos out there if you search subject-to or sub2 agreements.
#19
Financing
I started by buying homes and filling them with room mates. Eventually when the house was full I would move out and buy another one. Owner financing is easier and demands a lot less down than when buying investment non-owner properties.
Granted financing was easier in the late 1990's. however loan terms ease and restrict over time. We are due to see things get better. I was given nearly a blank check when I was a regional FO. Bankers knew how little I made but there was still some respect for the profession and they seemed to gloss over what to me were thin financials on my end.
I was buying new homes for 95K at the time. It only took a few thousand down per house. If you can secure some documentation like leases from potential roommates it can help with the loan. In any case check with several banks. They all are different in regards to what it is that they are looking for.
Rents go up over time while the payment is largely fixed.
Skyhigh
Granted financing was easier in the late 1990's. however loan terms ease and restrict over time. We are due to see things get better. I was given nearly a blank check when I was a regional FO. Bankers knew how little I made but there was still some respect for the profession and they seemed to gloss over what to me were thin financials on my end.
I was buying new homes for 95K at the time. It only took a few thousand down per house. If you can secure some documentation like leases from potential roommates it can help with the loan. In any case check with several banks. They all are different in regards to what it is that they are looking for.
Rents go up over time while the payment is largely fixed.
Skyhigh
#20
Gets Weekends Off
Joined APC: Dec 2008
Position: 777 Cap
Posts: 199
Looking at FSBO's helps. If the owners are retiring, they are usually looking for income as opposed to lump sum, so very agreeable to carry some paper.
You can do the same with MLS properties, and have the owner carry back a certain amount of the equity.
I have not taken advantage of short sales, but I have friends that have darn near stolen properties that are bank owned.
A very good time to but as rents are strong and houses are selling a a steep discount to comparable new construction.
You can do the same with MLS properties, and have the owner carry back a certain amount of the equity.
I have not taken advantage of short sales, but I have friends that have darn near stolen properties that are bank owned.
A very good time to but as rents are strong and houses are selling a a steep discount to comparable new construction.
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