hollowdweller said:
How old are you RR? I'm thinking you are still fairly young, and if so that is especially cool. We got our plalce when I was 27 (1987) and paid it off in 2000. It was like getting a 400 dollar a month raise.:thumbup: If you can get some property young, and get it paid off then no matter what happens economically you can usually scrape by:thumbup:
Completely agree with this. I was 22 when iI bought my first house. $11,000. That was in Ansley Park area of Atlanta. A year later I was offered $25,000. I thought that was neat, but did not sell because I needed a place to live and I liked the house.
In 1968 when my first son was born, I was offered $50,000! still did not sell because of the above reasons. Glad that I didn't.
Borrowed some money on the equity in that house and bought two more. Rented them for the mortgage payment plus $100 per month each Cashflow.
That was just the beginning. Buy, refinance, hold, refinance, buy more, hold. Repeat. Develop very tough skin. Evict people who can't pay. Learn the Landlord-Tenant Law.
Trade several houses (1031 Tax Deferred Exchange) for commercial property. Refinance, buy more, more tenants.
It is a very simple business, but very hard. You have to make decisions as a landlord that affect peoples' lives. Some are good people who can't pay the rent --- some are cons who never intended to pay the rent.
Either way, if they can't pay the rent, they must go. My mortgage holders do not accept excuses. One house was foreclosed because I could not make the payments because the tenants could or would not pay.
And it is infuriating to go by a house with unpaid rent and find a huge TV in the living room. That will happen when you are a landlord.
There are parts of this business that I have to make very hard decisions, but overall, I would never have had any other way of making a living.
The majority of our tenants are good people. We do our part and more. Constantly upgrading properties and making sure the good tenants are happy.
But look at it this way, if you put down $10,000 on a $100,000 house and it increases 5% you have made a 50% return on your money! Even if the tenants just make your mortgage! I like a 50% return on my money! This is called "GOOD!"
My suggestion is that you first learn the Landlord - Tenant law in your state. Learn the ins and outs of being a landlord. Also build up your credit. Play your credit cards against each other, "My VISA has upped my limit, MasterCard, what can you do for me?" See if you can get a line of credit from a bank. Talk to relatives about your investing ideas. See waht cash they might invest.
Then you find someone who has a house that they are trying to rent. Usually they have inherited it or two people who each owned their own home married and moved into one of them.
I can almost guarantee that the average untrained person will not make a good landlord. AND I can almost guarantee that they will make you a good price on their house.
Also if you have built up your credit and banking relationships, you can move quickly.
I got a $100k line of credit.
I call an ad for rent in the newspaper. Look for ads that have two phone numbers. The guy is trying to rent his house while he works a regular job. He is probably not a professional. Look for ads in the middle of the month. Tenants are "just looking" and wasting his time. Very frustrating!
Go talk with the guy. Find his selling temperature. Just talk with him. The more bad experiences he has had with the property, the lower the price. I have gotten great deals on houses with bad tenants in them. Prices so low that I did not even need to see the inside. I know the procedure to evict a bad guy. No big deal.
I have had sellers thank me for taking that burden off them.
STAY AWAY FROM NO MONEY DOWN DEALS! I have been buying for over 40 years. I think that, in the main, no money down deals are a stupid idea. I have done a few, but they are very hard and few.
I have beat out a lot of no money down buyers by offering cash at a much lower amount.
Think about this. If you were a potential seller and one guy is offering to buy your house for no money down and payments about what you should be getting (and haven't gotten) from a tenant --- and there is another guy offering far less to "take that burden off your back" and he is saying, "I will pay you cash as soon as my lawyer can make sure the title is clean. You will be out of this clean and forever. You will never worry about having to take it back because Mr No Money Down can't make his payments."
"I will bring you a check for $40,000 on Friday. Do you have any use for $40,000?"
I am amazed at how many people like this idea!
Then I go to my mortgage broker and borrow, legitimately, $50 - $60,000 on it. A tenant pays the mortgage and I have an additional $10 to $20k for the next deal.
REPEAT. REPEAT, REPEAT.
Did I steal their house? I don't think so. I took their burden. It was a free exchange. They are free to say, "no." or "NO." Or "HELL NO!" That is fine with me, I smile and go find another person who does not want to be a landlord. Someone who would rather watch TV at night than replace water heaters.
One last suggestion. A rich area "farming" is your local Dispossessory Court. Every landlord there is a great prospect for selling you rental property. I have made a lot of contacts there and bought a lot of properties.
And most of the landlords there made the cardinal mistake of keeping a non-paying tenant too long.
from Robert Kyosaki's marvelous book, "Rich Dad -- Poor Dad,"
"The poor have expenses
"The middle class have liabilities they call "assets."
"The rich understand that an asset is something that brings you in cash."
A new car is not an asset. A Rolex is not an asset. A new TV is not an asset. Jewelry, Armani, Hummer, a vacant rental property, not assets ---- get the picture?
You can make a living on your own, but to get rich, you must invest in cash producing assets, or hire people to work for you.
Buying your first home can be both the most rewarding and most frusterating thing a young man can do. I've been in mine for a year...still not unpacked
