Real Estate Community Forum

I own property that has been in my family for several years. The only reason I have become an investor is because I was surrounded by it all my life. My father owned 4 apartment buildings when I was growing up. He often said that investing was one of the best decisions he has ever made because he was able to create a good retirement fund for himself. Now that he is older, I have taken over his four pieces of property and I enjoy the revenue they generate. Although there is a lot of work to maintain the buildings and screen for good tenants, I still like the security of owning property. So how did everyone else get started with their investment? Are you happy being the owner of property? Any personal experiences you'd like to share?

I got my start in real estate investment after I began working for a mortgage company. I was a mortgage processor and closer so I became very familiar with the way residential real estate investment works. The only motivation I needed was a peek into the financial records of the investors whose loans we were funding. It was obvious to me (I was 23 at the time) that buying and holding for the long term is a very efficient and simple way to become wealthy. Buy right so that you break even or have positive cash flow then rent the home out for the next 30 years while the tenants pay off the mortgage. Hello??? Needless to say, I was hooked. I plan to post stories with photos and look forward to hearing other investors share their experiences.

I grew up in a somewhat rural part of Indiana in a middle class family. As fate would have it we lived in the path of new growth, so almost overnight our area became the cool new place to build exotic wealthy homes. With the increased property tax revenue, my high school went from a modest rural farm school into a sprawling campus. Rich kids were alien to me: I remember being blown away that one classmate received a brand-new black shiny Porsche for his 16th birthday. I drove my mom's Ford Escort!

So I used to love driving around looking at all the "mansions" and daydream about living there. One rich friend of mine had a father who was a neurosurgeon that built a particularly impressive estate, and the first time I went inside I had an epiphany! It was AWESOME! The seed was planted. At that moment I decided to study all things real estate so that one day I could become an investor. One day I would build my own estate home!

It seemed like everyone at the business school dreamed of becoming the next great CEO. Though in the real estate program I had learned that over 90% of America's millionaires became so through owning real estate, and 80% of them are first-generation. More wealth is created through real estate than all other asset classes combined. It seemed to me that if someone wanted to become a millionaire, the smart bet would be to invest in real estate as opposed to pinning hopes on becoming a CEO.

After college I managed to save about $10,000 and used that as a 3% down payment on my first house. In a few years the equity grew to over 100k, so we slapped a home equity line of credit on that and started buying! My primary strategy is to buy and hold. I increase equity lines every so often to purchase more property, no money down.

I never purchase unless the rent exceeds the mortgage. There are numerous ways for this to happen besides making huge down payments. Sometimes the worst home in a neighborhood can fetch the same rent as the nicest just because of the neighborhood's location within the city. Rentals can be rehabilitated and made very nice for super cheap, without going overboard and putting in granite counters and jet spa tubs, etc (classic newbie mistake). A lot of times it's better to spend $3k upgrading a house than to spend $15-20k buying down the mortgage to lower the payment. In general I try to do things to raise the rent rather than lower the mortgage payment. This also makes for more stable tenants.

Once you have a portfolio of 10-20 properties each with 50-100k in equity, you can cross collateralize them with a blanket mortgage for a super line of credit (one million or more). Most local banks offer this loan product. At this point I would diversify the holdings away from single family residential and move into multi-family and commercial.

Leverage - Acquire - Amortize - Repeat ... it's a thing of beauty. Anyone who wants to become a real estate millionaire can do so if they choose.

How I Got Hooked On Real Estate

by Steph in Tex

Hi Gang,

Here is my first success story and my first deal ever. This is what got me hooked!

This was an abandoned property very close to my grandparents. I had been putting in offers all over the area. I couldn't get anything accepted, because at the time I was only pre-qualified for 75K. I live in Austin, Texas--you guys know what that means--YEAH RIGHT! Good luck finding anything in that price range! Good luck getting sellers to carry a second when the market is as hot as it is here.

This little house was in the heart of central Austin---PRIME LOCATION! Anyway, I went down to the tax office, and of course the taxes were still being sent to this house. GRRRR. We did a search of the name and came up with another address. I sent the letter off there and didn't really think anything would happen. (Remember, this was my first deal.)

I got a letter back from a widow who's husband had handled everything. This must have been a rental at some point. She spoke to her attorney who gave her the all clear. She wrote and told me to make her an offer. COOL!! The house was in pretty bad shape. The structure was sound and the house had a lot of character. It just needed an overhaul.

We offered her -- get ready -- $39,000. I felt so brave! Like I knew she'd never go for it, but I wanted to try my hand at a lowball offer! Needless to say, she wanted to counter. Her exact words: "Well, Stephanie, would you accept a counter offer?" HECK YEAH!! She countered at $39,500!!! I bought the place 30 days later and moved right in.

We painted inside and out, added the upstairs loft and dormers, replaced the roof, updated the electric, refinished the hardwoods, new tile in the kitchen and bath. There was no grass in the front so we put down seed. I built my first deck (ok-so it was only 12X12), and WA-LA!

We did everything ourselves except the electric and the loft addition. They added a cute spiral staircase too. We had invested 16K in repairs. We were ready to sell 9 months after purchase. But we loved the place! We stayed until we had been there 2 yrs for the tax benefit, paying our whooping 400.00 a month (cheap cheap - I was renting for 800 a month before).

We sold for 105K. CHA CHING!!! TAX FREE!!

The rest is history. I have been buying property ever since. Since that time, I have bought nine houses. I currently have two that are lease options, and the rest I have rehabbed or flipped.

This article is reprinted here with permission from Creative Real Estate Online at http://www.creonline.com/

Does any membership discount is given to the members of the REI website?

There are lot more discount features given to the members. Say discounts on advertising in the newsletter, discounts from local and national vendors on goods and services, discounts on real estate transactions and services and real estate settlements, just visit the website http://www.baltimorereia.com/.

It’s very rare for someone to go to a real estate agent with a suitcase full of savings and ask to buy an investment property.
If you plan on starting to do some property investing you don't have to start by investing in a place where you also live in.
You can for example buy an apartment that you can then rent out. Furthermore, property investment that's done in a place which you are not going to occupy takes some of the stress and emotion of what and where to buy.
Investing in rental property, compared to other investments, it’s relatively easy to get bank finance. And by needing to invest less of your own money into each deal, you’re able to receive greater Cash on Cash Return.
Most people see it as a dull, dry, boring subject – but a savvy investor who is able to fully utilize the tax benefits they are entitled to can access additional advantages from investing in property.
These tax benefits for real estate investors are made available by governments to encourage you to invest now so that you don’t become a burden to them when you retire.
Banks love to lend money to people Investing In Rental Property because they feel it is safer than other types of lending (such as margin loans for stock market investing, or business lending).
This is because the banks usually take the ‘underlying asset’ (the shares or the property) as security for a loan – so just in case you don’t make your loan payments, they have the ability to take back the underlying asset and sell it for you to recoup the money you owe them.


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Los Cabos Mexico