Wealth building with Real Estate

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Comment by Michael Galvan on February 2, 2012 at 12:39pm

Thomas

glad to hear your excitement and confidence level is reaching enthusiastic levels.  This bodes well for your success.  I would love to hear some of the new strategies that you learned from the conference.  Can you share them here?

Mike

Comment by Thomas H. Riche on February 1, 2012 at 6:27pm

I am more confident than ever now.  Just returned from the Renatus  (real estate education and investment company) annual conference in Utah.  I met a lot of really successful investors and learned strategies I never knew was possible.  As you can tell, this is very new to me but my learning curve has narrorwed.  Thanks for all the great input on this board.

Comment by elaine bright on January 21, 2012 at 12:24am

Michael, 

y, a lot of things I buy I write off to the rental biz.  I do like to do the lawn mowing myself.  It gives me an excuse to be on the property and see things that are going on and need to be fixed.  Then I use the same equipment at my own house.  I got a power washer on sale last summer and wrote that off to the rental but will use it on my own property more.  

Most gals like to go shopping at Neiman Marcus but home depot is my shopping therapy.

Comment by Michael Galvan on January 20, 2012 at 10:44pm

Elaine, great point.  One of the best things about real estate investing are the tax benefits.  I use those to my advantage and even on a sale I still am in the lower end of the 3 main tax brackets.  Earned income up to 39%, capital gains at 15% and passive/rental income as low as 0%

 

Comment by elaine bright on January 20, 2012 at 10:16pm

daniel, 

I started out with rental property thinking that I could do a lot of the work myself, too.  I quickly realized that if I ever wanted to get the project done I needed to get someone else to do it especially if I needed a quick turn around for releasing.  Also realized that I for rental property I could write-off on my taxes what I paid someone else to do but if I did it myself it was only sweat equity.  Now, rental property vs living in it to flip later would be different as you would not have the rental write-off option if you were living in it.

Comment by Michael Galvan on January 20, 2012 at 9:34pm

Daniel, 

What is your investment objective when it comes to investing in real estate?  What are your short (1 yr) and long term goals (5 yrs) with real estate?  If you are interested in making a few thousand dollars per deal than Brent Longs model of wholesaling is a great one to emulate but if you want to build your wealth then you will need to expand on that.  Regarding a foreclosure, my experience is that  a year after foreclosure lenders will do business with you.  Regarding owner financing, it is not hard to find and I offer owner financing on most of my "sell" deals.  The key is a good rapport and a level of credibility with the owner.  If he isn't confident that you will pay him back than owner financing may be tough to get.  There are a lot of websites out there just search "for sale by owner" and look for the ads that indicate seller financing as an option.  The more money you can pay as a down payment the better your chances for owner financing.  I think most owners are having a tough time selling in this market which also helps your chances.  As far as working overtime to pay for major repairs consider that a typical 20 square roof will cost you around 4500 which means that at 33/hr you would have to do an 80 hr work week for about 6 weeks.  That is a tough schedule when you consider that you also plan on doing most of the remaining rehab yourself and paying for the remaining materials, mechanicals, with overtime too.  I don't see the plan being very practical but again depending on your objectives it could work for you.  When I started investing I did all my own work but I quickly realized that between my family, 40 hr job, and rehabbing I was way out of balance with my life and had to make some adjustments.  

Remember to have a written plan so that you can refer to it often and remember that investing is a team sport and is difficult to do by yourself.  Build your team discuss your plan with them and allow them to help you improve it if needed.  Keep learning and considering using a real estate coach to help you compress your time frame.  Hope this is helpful for you.  

Comment by Brent Long on January 19, 2012 at 9:08pm

If you're passionate about real estate and short on cash I recommend wholesaling. We did that in the beginning to make enough money to put a down payment on a flip. After rehabbing 4 houses we've actually decided we prefer wholesaling (we've completed about 15 wholesales in all)! We would rather make $4-5k on a wholesale (we've made as much as $15k and as little as $3k) in a couple weeks than $20-25k in a few months. Not to mention that you completely eliminate the risk of being stuck with a house you can't sell. Our 2012 strategy doesn't include any flips (and we did very well on each of the rehabs we completed). If you're interested, I strongly recommend Steve Cook as a resource. He's a very ethical man who doesn't believe in borrowing money for anything (including real estate) and is a great teacher. Maybe not as flashy as some of the other gurus out there but he does the deal and keeps it simple.
Best-
Brent Long

Comment by Daniel Griffin on January 19, 2012 at 8:36pm

I went through a tough time in the early 2000's with real estate like a lot of people through out the country (I have a foreclosure on my record). So I don’t think bank funding will be an option for me. I have saved up roughly about 5000 to get back into the real estate. I plan to be much smarter this go around. I plan to actually move in and live there while I fix it up. My question is owner financing really tough to get and does any one know any information that would assist me in getting owner financing. Is there any website where homeowners who are having a tough time selling through tradition funding are advertising there houses, or any system I should read up on that is really worth it. I have checked out craigslist and there are some on there but most of those are really bad neighborhoods. I don’t really want to partner up with a contractor because I want to be able to do this at my own pace, and all the contractors I know are not really reputable people

One other question. I really don’t want to get a loan to do the fix up. My job offers plenty of overtime. So my plan was to work overtime and gather larger sums of money when needed to just pay cash for repairs and parts and supplies. Example if in need a roof repaired I will work an extra 40 hours per week of o.t for the amount of time it would take for me to pay a contractor to do the roof and then just pay them. Minor things I will buy the parts and install or do myself. my thinking is I will move in do all the repairs have overtime pay for the repairs, and after about a year or a year and a half I will have it completed, then sell it on land contract or through traditional banks, then live in a week to week efficiency apartment until I can buy another one and do it all over again. Does this plan seem feasible or is there a loop whole in my plan that I’m missing.

 

Comment by Michael Galvan on January 17, 2012 at 12:45pm

Daniel, it sounds like you are a hands on type of guy.  It also seems that you are willing to try things and learn as you go.  Regarding real estate......if you can purchase with cash, as you mentioned, then a bank would probably finance your rehab costs.  If bank financing is not an option then partner up with a good reputable contractor who would be interested in getting involved with real estate investments.  Make a deal with him to allow you to watch and learn while he rehabs and you could give him 50% of the profits in exchange for his work or any other arrangement that works for both of you.  The key is building a mutually beneficial relationship.  I believe that the best way to become skilled at the construction trades is to be mentored and taught as you do the work.  Mentors will compress your time frame.  Remember to buy and sell for cash so that you can buy and hold for wealth.

As far as what "sells" or has value in real estate the quick answer is location (good neighborhoods), kitchens, bathrooms.  From my experience people want a quality home for a good price or rent.

Comment by Daniel Griffin on January 17, 2012 at 4:50am

Hello everyone I have a real estate investing start up question. I would like to buy older houses in the city of Cleveland Ohio and eventually surrounding suburbs. (I know your properly wondering why in the world would you buy in the  city of Cleveland), I grew up there and still live there I am familiar with each neighborhood, i know what is bad or border line or good and just have low priced homes, the reason is I have been a cable TV installer and computer repair person in the area for some years now. Some more back ground, I have bought lots of older cars and fixed them up. either I have sold them or kept them and drove them for a couple of seasons and then sold them. I have a job where I build industrial furnaces (pays $22 per hour not horrible for Cleveland Ohio) but I need to move more into an independent more entrepreneurial line of work, because in Cleveland or in general things will change on you at the drop of a dime, so I was thinking a great fit for me to transfer those skills is to start me a small house rehabbing and then selling or renting business. I was wondering if anyone has heard of or ran across an online course teaching the repairing part of rehabbing, more of the actual labor what are the basics to get the house up to highest relative value compared to surrounding comps. Most of the house books I run across are get rich schemes of flipping and using bank financing to play tricks, a lot of out dated in early 2000’s flip house crap. Although I did get a little into part of that in the early 2000 and bought 2 houses and fixed them up very basic myself then. But I wanted to get back into this now with cash to buy these bank owned houses that people have left to rot and do %70 of the work myself, well as much as possible myself. I figure I will do the landscaping, the dry walling, the wall repairs, install the light fixtures, maybe install the windows, do all the cleaning, lay the flooring down, install the ceiling fans. And I was thinking I will contract out the major plumbing, electrical, and roofing.
So I have a good idea of what I want to do and am laying out a plan but I figured I should see if there is someone offering some form of course to shorten my learning curve, like Dan miller suggest we do.

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