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Home >> Stock Forums >> Getting Started...Wanna Tell Your Story?

Getting Started...Wanna Tell Your Story?

FirefighterB said: "I'm looking to get into real estate for my first investment. Being as though I currently live in New York City and, well, to start out investing here is pretty tough due to astronomical values, I'm thinking of investing in the town I very well might return to someday (possibly sooner rather than later) and that has huge growth planned in its future: Austin, Texas. But, I'm not exactly sure where/how to get started? I don't know if I should buy cheap and fix cheap, building up the $, or if I should look for the right deal on a more expensive house and go big first off. I've got a million different variables (kept for rental by friends/family, flipped, rented to strangers, kept as a personal residence, etc.), so I'll put off asking for guidance on a specific situation. However, it'd be great to hear some stories from other RE investors. I'm looking for all kinds of gritty details, if you don't mind providing them. Price, type, how you got the loan, what type of loan, what/how much was fixed/rehabed and it's cost, how long did it take, did you make budget, etc. Hahaha. Hell, might as well just tell the whole story, if you don't mind. Thanks in advance."

Aligator said: "In 1985 we built a set of townhouses. We lived in one side, rented the other. Some years later we managed to get both sides paid for. Then we moved to another house and rented the townhouses, which have only doubled in value over the last 22 years. Then: [QUOTE]I did, however score a big one on a distressed property I bought in 2001. Paid 9500...........did I mention it was DISTRESSED? Worked in it for 6 months..... Put 26,000 into it... Then I rented it for 5 years at 6000/year = 30,000 And Sold it for 65,000 Total......35,500 into it (plus my own sweat) And 95,000 out of it............over 5 years.[/QUOTE] In my experience, most people lose money in real estate; it just takes too long to make money and they lose heart. Most people who loan money, make money; most people who write books telling you how easy it is, make money; most people who bought property in California in the last few years wish they had never watched "Flip This House". I guess I'm not being very positive, am I?:laugh:"

Kloewer said: "I just finished a renovation on my first rental house. Because I'm in the Midwest, there are a lot of relatively cheap homes to pick from. One thing I've learned is that I'm not betting on the house as much as I'm betting on the town--if the town prospers, my investment pays off. If the town withers away (which isn't that uncommon in rural Iowa), my investment tanks. My first real estate investment was an unimproved acreage in central Virginia. I paid about $6000 for 6 acres in the mid-90s, and sold it for about 3 times that last year. It wasn't a great annualized gain, but it served as a good Real Estate 101 for me. With unimproved property, the only expense I had was property tax, and it was almost completely maintenance and worry-free. Of course, it was also income-free, which would rightly turn off most investors. Here's some of the specs you asked about: Two-story brick home on 3 lots, built in the 1930s. Paid 70K (asking price was 95K). The nice thing about buying as an investor rather than buying your own home is that I was totally unemotional about it, and didn't compelled to offer "fair value." Used E-Loan for the mortgage. It went well, but I think I'll just stick to the local credit union next time so I don't have to worry about faxing all my documentation. I took out a 30 year loan, which is generally recommended for rental units because it increases the immediate anual return by keeping input costs low. Spent about 15K in renovations on top of the 20% I put down, including finishing the basement (bringing sq footage up to about 2500), rewiring, replumbing, refinishing hardwood floors, and stocking the house with new appliances. Also spent a lot of time painting, scraping, cleaning, etc. The work took about 2 months. Got it rented for $600 per month, which easily pays for the $510 I pay for the mortgage, taxes, and insurance. One of the nice things I've learned is that--aside from the tax breaks you'd expect for renovations, maintenance, etc.--you also get a write-off for depreciation (regardless of whether or not your house depreciates in market value). It's very important to find good vendors (mason, plumber, electrician, general contractor, carpet layer, etc.). The biggest stress through the process has been dealing with crooked/lazy contractors. Luckily I found a good general contractor, who has whipped the others into line when needed."

Aligator said: "Kloewer, has a good story. And he'll make money because he's patient. Look at how little he will make each month and then balance that against his labor and the money he has in it. That's pretty much where we started. We learned that as a rule you really don't get all your rent. Rentors will leave. Repairs will have to be made. But there will be a day, I hope, when Kloewer will pay off his real estate. Then, instead of him taking care of the property it will take care of him. Only thing is, I just hate 30 year notes. Hate 'em.:angry: There is so little difference in payment between a 30 and a 15 that it is not even worth discussing. IMHO. And 15 years from now you'll be saying, "Gee, If I'd'a......:)"

Kloewer said: "[QUOTE=Aligator]Only thing is, I just hate 30 year notes. Hate 'em.:angry: There is so little difference in payment between a 30 and a 15 that it is not even worth discussing. IMHO. And 15 years from now you'll be saying, "Gee, If I'd'a......:)[/QUOTE] You may be right, Al. I was following the advice of the real estate books I've been reading. They contend that you should go with long-term mortgages and apply extra cash to the principle when possible. The theory is, if money gets tight, you can always fall back on the smaller payment without having to worry about forclosure. It may also be prudent to mention my game plan....I'm not trying to get rich off the rental income. I just want to accumulate houses, let renters pay for them, and hope that in 20 years I'll be sitting on a nice chunk of wealth. So while choosing a 30 year loan for a single house may not be of too much benefit, it will make a difference as I apply for loans to buy future houses. For what it's worth, I carry a 15-year loan on my personal home. The whole 30-year thing is something I picked up while reading about the business."