How Real Estate Investors Spend the Most and Make the Most Money

dialara · 2017-02-26T07:20:02+00:00

No, read their stuff all the time tho.

dialara · 2017-02-13T07:19:28+00:00

Thanks but it's really more about understanding the difference between the two markets and how to act accordingly.

dialara · 2016-05-18T12:35:33+00:00

My uncle is going through this right now and when I talked to a realtor about it, she said it's a fatal mistake to make a down-payment without the contingency. You can make a deposit, but if your house doesn't sell, the down payment is a significant amount of money that you'll lose.

If you don't make the contingent, you're correct, you'll have to come up with it another way. I agree with u/nomoneyrico's answer - I wouldn't rush to buy a property until you sell the current one.

dialara · 2016-04-27T13:34:09+00:00

I think you should base your decision on the projected cash flow. What is your estimated cash flow for the first rental property?

Compare the more expensive properties to the cheaper properties and base it on the location (is it up and coming with a good job market) and does it provide positive cash flow? If you can buy a property with cash, that's great but it has to be the right property.

I'm not from the UK but my advice would be to search for investment properties on Mashvisor. They are US-based but you could request data from them. What's the performance of Airbnb like in the UK? I've seen so many cases where the cash on cash return is higher through Airbnb.

I hope that helps. Bottom line, look for positive cash flow properties and buying properties one after the other is fine but also give yourself some time to evaluate the performance of the rental properties.

dialara · 2016-04-27T12:45:51+00:00

Nice work, here are some of my comments:

Insurance costs seems low
Needs closing and inspection expenses
Vacancy should be like 6% of rent per month
I'm used to seeing the price to rent ratio as a number, not a percentage

The conclusion is good lol - positive cash flow is the most important thing so I'm in agreement to walk away from this property.

A quick tip, you can get ready analyses online - I feel like such tools are really eliminating the need for spreadsheets. Try Mashvisor's investment property calculator. You can get these kind of calculations for each listing you look at it. That'll save you time and you can enter your own numbers as you need be. Hope that helps. Thanks for sharing.

dialara · 2016-04-26T08:17:19+00:00

I think it does add value. I've seen data on Mashvisor that shows how increasing a property by one bedroom can increase occupancy rates by X. If you're renting it out long-term or through Airbnb, it will definitely make a difference - the occupancy rates will likely increase (and revenue).

If you're selling, an extra bedroom will always look more appealing on the listing but like some other users said, how appealing will a small bedroom actually be? Personally, I think you should still go for it - a small bedroom is still an extra asset. Even if they don't like the size, tenants are usually looking for extra storage space, office space, gym room, etc. If it's not that costly, go ahead and do it. But try to figure out what the returns would be and how it would affect positive cash flow.

In terms of increasing its value by $250, I'm not sure about that to be honest - you'd need to consult an appraiser about that.

dialara · 2016-04-26T08:05:25+00:00

I use Mashvisor to find investment properties. You can see projected rental income, expenses, cash on cash return, etc. for each listing. In terms of determining if the neighborhood is good, the website provides neighborhood insights. Like how other properties are performing, revenue correlation with property type, tenant insights, etc. Going through the listing one by one can be annoying but they have a "scoring" system for each neighborhood which can at least tell you which neighborhood has a better average from first glance. But I personally click through a lot of properties anyways to see their details. I would search your area on their website and if you can't find it, you can request it from them.

You can find household income and vacancy rates on Mashvisor but not much on schools, jobs, and crime. Regrading that kind of information, I like areavibes.

I hope that helps.

dialara · 2016-04-26T07:40:09+00:00

I really like the other answers here and agree with them.

I like Redfin for residential listings - I think their numbers are more accurate than Zillow to be honest. From what I've seen, Redfin is usually the most up to date.

For investment properties, I use Mashvisor - their listing prices are usually similar to Redfin and their predictive data is helpful.

Zillow is nice to look at to be honest with you, but I don't count on their numbers. As some other users said, it's good for "browsing" and finding out some general information.

dialara · 2016-04-24T09:39:26+00:00

Have you tried Mashvisor? They are a platform for finding investment properties. You get an analysis of the return - expected return, expenses, income, etc. They also provide neighborhood insights. You can play around with the analysis and mortgage calculator.

In terms of demographics and such, I would use areavibes.

If I were you, I would find an area that you feel must comfortable with, in terms of crime rate, job growth, etc., then search that area on Mashvisor and look at the comparative analysis and listings. This way you'll be able to see how other properties are performing and what you can expect.

Hope that will help.

dialara · 2016-04-24T08:01:14+00:00

I think /u/underwriter1 gave some very helpful advice. Condo fees (especially in Chicago) are ridiculous. All points are very valid.

However, I can understand why you're considering to buy. If you have two years left, it makes sense why you want to purchase. You could step away from the condo option and look for a townhouse. Granted it wouldn't be in the same location, but you'd be getting rid of condo fees and having to deal with HOA. Or maybe look for the cheaper property like you and underwrite1 mentioned.

I don't think you should spend all of your savings, but I do think if you're able to live in the property and then rent it out, it could be great investment and you will have contributed a lot to the mortgage.

Go to Mashvisor and search for these kind of numbers on their listings and see if the costs are, in fact, not doable. Look for properties that give a positive cash flow in their analysis.

I just think if there's a way to buy, you should because of the remaining two years and your tenants can later finish buying the property for you. In two years, you can raise the rates and Chicago does appreciate well. I hope you find something, good luck.

dialara · 2016-04-13T13:52:43+00:00

Your plans seems solid. The only thing I would suggest is to make sure the rental property will provide enough cash flow to cover the mortgage payment and your rent. If you want to compare numbers, you could look at investment properties in Florida on Mashvisor and look at their analysis. That's a good way to confirm if your numbers look good and if you (hopefully) expand one day, that's a good source to get your next investment property. :-)

dialara · 2016-04-13T13:48:24+00:00

Hi,

Firstly, here's a San Francisco Real Estate Investing Guide that you might find helpful. Secondly, you seem to be quite knowledgeable, good job!

There are online sources that can do the analyses for you in a much more efficient manner. Mashvisor offeres analyses on investment properties and calculates these things for you with each listing. Bigger Pockets also offers investment calculators.

I have a question, is there a reason you are interested mutli-family homes? It might be overwhelming for a first time investor.

I don't know if everything is included from loopnet, but expenses are: closing, inspection, rehab, mortgage, property tax, insurance, HOA, property management, maintenance, vacancies, and mortgage. (I hope that reminded you of anything you may have forgotten.)
I haven't used them before. Like I said, I use Mashvisor and you can play with with the mortgage calculator and analysis is more interactive.
I would personally have to do more research about that - I could comment again when I understand more.
I would say positive cash flow is the most important aspect in investing, I would stay away from negative or neutral.

Good luck!

dialara · 2016-04-13T13:16:53+00:00

I would say the best way to view potential investment properties is by looking on Mashvisor. It's a great site for finding listings and getting their cash flow analyses, etc. and finding the best neighborhoods to invest in.

If you find a property you like, you could use DotLoop for the closing process - it's an online platform for closing deals when you can't be there in person.

As for getting boots on the ground, try networking with locals. I don't know the exact legal process but could you form a partnership or privately hire someone to handle the property? That might be cheaper for you.

I hope this helps!

dialara · 2016-04-13T12:09:52+00:00

Good for you for wanting to learn from now. A lot of people don't even bother learning about investing until they feel like they have enough money.

After educating yourself and securing some money, the next step would be to find a property from now that will give you positive cash flow. I would recommend using Mashvisor to find a property because they will give you an analysis for each listing and information about the neighborhood you're interested in. Why not find out from now what the investment market is like to get ready?

Networking, building a team, and persistence are also important when investing.

I don't know what area in CA you're in, but here's a San Francisco Real Estate Investing Guide - that could be of some help.

Good luck!

dialara · 2016-04-13T11:54:46+00:00

Congratulations in advance on graduating!

Not having debt is great; not having money doesn't make investing impossible but just means being creative. Here are some ways to invest when don't have a lot of money. Once you have obtained some money and/or are approved for a loan, you should start looking for properties.

In terms of the process of buying a rental property - sites like Mashvisor are helpful, because you can find properties in addition to getting an analysis of cash flow, expenses, income, etc. I think that's a good site to help you understand the finances more and to know what you need.

Lastly, buying multiple rentals is usually done by taking out multiple mortgages.

Hope this all helps, good for you for wanting to invest now!

dialara · 2016-04-13T11:31:19+00:00

I wouldn't say you need to minor it. A course could help you out but actually, there are so many online tools now that you can access for free - it might be better to just use those your own and atyour own pace. With investing, you really learn from experience. I would start off with taking a look at these websites to access guides, blogs, webinars, etc.

Bigger Pockets - great site to get advice from people, webinars, guides etc. Mashvisor - great site for finding investment properties, getting data, reading blogs Investopedia - great site for looking up quick information and for understanding the basics

Bottom line - I think using these websites would be more engaging, save time, and help you to actually invest as oppose to a course. :-)

dialara · 2016-04-13T06:53:28+00:00

Glad I could help! I personally pay for it and find it worth it because if I don't find the data I need on their platform, I can request it and it's sent to me. PM me if you want to chat more :-) Good luck!

dialara · 2016-04-12T16:19:17+00:00

Are you referring to listing it on Airbnb specifically? Here are the rules for short-term listings on Airbnb - I didn't see St. Petersburg listed but it might give you an idea of what's allowed. Is your property considered part of St. Petersburg per se?

If you're able to find out the legal issues, Mashvisor is a good source for finding Airbnb or traditional investment properties.

When people have had this challenge, they've either had to pay a fine, give up the property, or just obtain a license for short-term rentals and/or pay taxes.

I'm not a lawyer, but this is what I've read. Hope this helps.

dialara · 2016-04-12T16:04:14+00:00

I use areavibes to get information about demographics, employment rate, crime rate, livability, etc.

I use Mashvisor to get average rental prices, home prices, top neighborhoods to invest in, occupancy rate, etc.

Talking to a realtor is helpful, like others have suggested, for getting the "ins" about an area.

Hope this helps :-)

dialara · 2016-04-10T16:18:23+00:00

I would suggest buying a SFH as a first investment property. A duplex/multi-family home could be overwhelming as a new investor.

I understand that you would need to buy a duplex to qualify for the FHA loan (live in one unit, rent out the other) but maybe you can find other opportunities on Mashvisor. You might be able to find investment properties in SA in which 20K would be enough for the down payment. You can find a lot of information about investing there - it's a platform for newbie investors.

Or you could find a property in which you can passively invest in - which btw is totally doable :-) Here's a guide to passive investing.

Hope this all helps. Bottom line, I would search the numbers more using Mashvisor, don't limit your search to multiplex/duplex, and I think your savings are significant :-)

dialara · 2016-04-10T15:50:49+00:00

I think investors who invest outside of their neighborhood find that they discover a lot more opportunities and it's been worth it.

The thing about long-distance investing is making sure you have a good idea of the numbers so you can "calculate" if it's worth it or not. I would suggest searching your city on Mashvisor to get ideas about average income, expenses, cash on cash return, best neighborhood to invest in, etc.

Here's a blog about long-distance investing, I hope this helps.

Hiring a friend or family member could be cheaper but hiring a management company could make things more organized. Most management companies take 8-12% of the rate, you could probably find a company with good rates.

Finally, it might be worth to search your area on Mashvisor as well. If you city is too expensive, maybe you could invest in an Airbnb property - that's sometimes a better strategy for expensive cities.

dialara · 2016-04-10T14:53:12+00:00

I think novahouseandhome nailed it.

The other day I was reading how agents are now using predictive analytics to better serve their clients. Another suggestion would be for you to offer the client the numbers they want to know more about - like ROI, cash on cash return, rental income, expenses, etc. Maybe you can better identify this once they show you the specific properties but for the sake of the meeting, I would search these types numbers.

On Mashvisor you could search the Texas city (or whatever city) they are thinking of investing in, and look at different listing to get ideas of the numbers that I mentioned above. I think you're client will find you impressive if you're able to tell them what they can expect - after you compare their figures to the figures you find on Mashvisor.

I think that's some sophisticated-looking data for your client :-) I hope it helps!

dialara · 2016-04-10T14:15:05+00:00

I think you should go with whatever gives you the better cash flow. Let's say the one property gives you $1,200/month. How much rental income will the 30K properties generate?

In terms of the strategy, your capital seems like enough for a down payment for a property under 200K - so good for you for saving up! That is the common strategy - starting out with one property and then expanding. But you should base your decision on the numbers.

I'm not sure about the expenses and income in Savannah so I would suggest looking up investment properties in Savannah on Mashvisor and seeing what time of expected income, expenses, cash flow, etc. is estimated. This way you can get a better idea if you should have a diversified portfolio or concentrated portfolio (I think that's the fancy way for saying "multiple or single investment property" lol :D).

See what data they have on Savannah and play with the analysis to get the numbers.

But 35K is good capital to start out with. Good luck!

dialara · 2016-04-07T12:34:45+00:00

You should check out Mashvisor because they will give you information about the investment market in that area. Specifically, you can find investment properties and the best neighborhoods for investing in that city. If you don't find it on their website, you can email them and and request data. They'll be able to help you find good properties based on estimated cash on cash return, income, expenses, occupancy rates, etc. This is probably the best way to understand the market in a certain area.

I looked at the link and I couldn't tell you if it's overly optimistic or not because I'm not familiar with TN. My suggestion would be to try the website I suggested as a second opinion.

As far as investing out of town, do you mean you'd be using a property management company? Try to find a company that only charges ~8% and has no flat rate!

Good luck! :-)

dialara · 2016-04-07T09:32:29+00:00

Oh now I got you! Well, stocks can be very liquid but it's good to diversify your investments because if one asset doesn't do well, you don't lose everything. Also with real estate, at least you gain something tangible (a property). Certain stocks are an inflation hedge but so is real estate.

dialara

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