MD student envies all of you

Real Estate Investing Triple Net Leases
#1

Hello all,
Long story short: I’m a 29 year old graduate student studying medicine, I will graduate in one year. I invest heavily in stocks, options, etc. but I decided I will have a better control of my financial future with real estate. Years ago, I read 3-4 real estate books about flipping, rehabbing, wholesaling, etc etc. However, I need to ask you all (experts in what you do) what TYPE of real estate would best suit my lifestyle. Unfortunately, I will be extremely busy at my full time job, and little time will be allocated for real estate.
I THINK commercial RE may be the best option for me, given my low time availability, for the following reasons.
-Longer lease terms (I will spend less time generally, searching for tenants because of evictions, 1 year leases, etc)
-Triple net lease
-Less maintenance/phone calls/problems (because tenants are responsible for lease payment, property taxes, and repairs/maintenance)

I know everything I’ve said, there will be exemptions to the rule. But in GENERAL, which type of RE investments are best for people that have full time jobs, and aren’t always available to attend to RE issues/problems.

I read alot of threads on this site over the past weeks, and it’s amazing how much you guys know, and I truly admire your knowledge, and I am thankful if you can provide any insight. I figured I can read 10 more books, but I feel your real life knowledge and experience is much more valuable than anything I will find in a book. Thanks in advance to everyone, or anyone.
Sincerely,

      Matt C
#2

MD REIs

MD investors (it’s legend ! ) are all too frequently suckers with a lot more money than good investment sense so good for you for learning what you have before leaping.

Ask around and locate some long time REI pros where you are and get acquainted with them and study what they’re doing but be extremely wary of those cons who’d happily take your money and deliver nothing.

Your current status as med student can stand you in good stead as you guys are notoriously money-thin and you can probably conceal your prosperity from those who’d take you.

#3

Know what you are doing

I am 3 years in active RE investing trying the model “buy-fix-sell” but I can see that my first deal in terms of return on investment was much more profitable then deals afterward. I have strong impression that too many people arrive in this business chasing blue bird and it resulting in fierce competition when they buy fixer-uppers for merely market price. I am tracking records of sales and I see that there is no much evidence of successful flipping properties; looks like people rather hold what they buy. If you have lots of cash you can go for landlording and be happy when you get 10% on your investment. But if you don’t have that much cash, you stuck cause in today’s economic reality there is no such a thing like bridge loan or loan against of investment property.

I can’t say how happy investors are using different techniques but I am pretty sure that no matter what you do investing in RE is a full time job or you are prone to failure exposing yourself to risk of getting result less then poor.

I don’t want to take your dream away; maybe your experience will turn differently. Just make sure that you know what you are doing.

#4

Hckyplyr, I guess I am the maverick in the bunch. I have been at this a long time and found years ago that investing in Tax Liens was the best for me.

Currently I invest in only one state, MS. I get 15 to 18 percent annual return on my investments.

I go to the tax sale once each year and spend up to a week there…LONG HARD days!

Then I collect monthly checks from the county as the properties are redeemed.

Unlike all sorts of other real estate investments, I have NO stopped up toilets, NO dead beat tenants, NO bum checks, etc…ONLY a good check each month.

At the end of the redemption period if I am fortunate enough I get a few properties…NO they are not by any stretch of the imagination…Mansions! If I deem them worth while I will initiate quiet title and work on them. If not I let them go to the next tax sale and write it off as part of the business.

DO NOT INVEST in tax liens for property…It is NOT going to happen like the late night TV Gurus say. If is were that easy they wpuld be doing it and NOT selling books and tapes.

You can start small, park the investment dollars in a savings account, reinvest every year.

It works.

John Merchant gave you some very useful information. Being an MD and having the opportunity to make $$$ you are also on a LOT of people’s list…INVESTIGATE before YOU INVEST.

Good Luck,
Bill H

#5

Hckplyr -
Heres some info you wont find in any books.
All the experts here have paid the usual tuition for their RE expertise.

A good financial whack per every step forward.
Plan on it !

then decide for yourself what you should invest in and own your decisions. Making up your own mind is really the only freedom a man has left, and its the only way to get what you want.
Good luck.

#6

[QUOTE=Lubasha;885099]I am 3 years in active RE investing trying the model “buy-fix-sell” but I can see that my first deal in terms of return on investment was much more profitable then deals afterward. I have strong impression that too many people arrive in this business chasing blue bird and it resulting in fierce competition when they buy fixer-uppers for merely market price. I am tracking records of sales and I see that there is no much evidence of successful flipping properties; looks like people rather hold what they buy. If you have lots of cash you can go for landlording and be happy when you get 10% on your investment. But if you don’t have that much cash, you stuck cause in today’s economic reality there is no such a thing like bridge loan or loan against of investment property.

I can’t say how happy investors are using different techniques but I am pretty sure that no matter what you do investing in RE is a full time job or you are prone to failure exposing yourself to risk of getting result less then poor.

I don’t want to take your dream away; maybe your experience will turn differently. Just make sure that you know what you are doing.[/QUOTE]

You dont need “lots of cash” to make landlording your niche. I tell the people who assume I have money because of the number of rentals I have that, “I buy real estate because I DONT have any money”. Creative financing is alive and doing well for us buy and hold guys :wink:

#7

Oh hell, Brandon,

I got one rental, hold it with tenants 5 months and sick of it! Before to rent out the house I made it like a toy, everything shines and sparks with brand new or almost new stuff in. This week I changed AC condenser, stove, (about 2k) but I did not change microwave over the range, which was brand new when tenants moved in. Everything stops work or leaking for them and I actually cannot wait them to leave. My friend just gave back to bank his rental after being tantalized with five one after another tenants in it.

Where do you get your financing TODAY? I cannot comprehend it. If you work with private lenders their points and percentage killing any deal. If you work on thin margin, renters like I know will bring you to jail sometimes.

Sorry for this outcry, it’s just like I feel.

#8

Brandon,

What sort of mix of rentals do you have? No need to share specific numbers. Just trying to gauge the type of properties you are renting out.

#9

Right now I have 13 units…all my tenants are in the decent to great range. I had to replace 3 out of the 9 I inherited in purchases last year. The mix is…

an old downtown-style storefront with 2 office tenants

2- remodeled 3 bed 2 bath single fams

a 3 unit apartment building

3- duplexes

Im working on a deal where I may end up with 7 duplexes on adjoining lots.

The 2 houses and the building are financed with a small local lender who is holding the notes for their portfolio. Ive stressed that these types of banks are paramount to success IMO. Here is a link to a post I wrote here a few years back that explains more about this.

https://www.creonline.com/index.php?option=com_jvb_bridge&Itemid=0#https://www.creonline.com/forums/showthread.php?t=10156

The 3 unit and the 3 duplexes were all purchased creatively on Land Contract last year. Both deals have 5 year balloons and Ive already talked to my local bank and they seem supportive in doing these refi’s in the future. Ill probably refi the 3 unit around the end of the year or next spring. The 3 duplexes ill wait until year 4 of the contract.

The 7 duplexes if it goes down will be a contract as well. Im shooting for a full 20-30 year ride with no balloon. Ill post the results once were done negotiating. Still very early stages…

#10

Matt C,

Back to your original question.

I would avoid RE for the time being. You have or should have a full schedule. RE is more like owning a business where you need to be hands on compared to buying shares from a stock broker.

In a year’s time you can dive into RE. Granted you might have other commitments if you are starting a medical career.

#11

Brandon,

Thanks for sharing.

For the seller financing deals where you are planning on refinancing with the local bank…

Two observations. The local bank is only as good as your contact there and how they are doing. I would suggest you find at least one more ‘local bank’ so you have a back up. As the credit crunch proved, banks can run out of money or they loose their appetite for new business.

Second suggestion. If the local bank is ready to finance the property at an attractive rate, speak with the seller who is holding the present contract/note. See if they will take a discount if you pay them off early. Even if it is only a small discount, it is worth it. If they do not want to discount and the bank rate is no better, you can wait. The note holder might approach you a bit later seeing if you can refinance early if they accept less. Their situation can change so they might need a lump sum.

#12

second bank in place! The guy that did my deals as I described in linked post (Why Small Banks Rock) is with another bank now and we’ve had some good communication. The lady im working with at my main bank seems like she has lots of confidence in me and is doing well for herself within the bank. I also have some experience dealing the head of commercial lending since she took over my last deal there when my guy left in the middle.

#13

Just emailed my letter of intent on the 7 duplexes last night…if this goes down ill be writing a “Success Story” for here!!!

#14

Also keep in mind that I work a 40 hr a week factory job and manage my rentals on the side. I dont use the income for my personal expenses but rather focus on growing my business into something that will secure my future.

#15

[QUOTE=Brandon (NE Indiana);885205]Just emailed my letter of intent on the 7 duplexes last night…if this goes down ill be writing a “Success Story” for here!!![/QUOTE]

Brandon,

What happened in the end?

#16

[QUOTE=John_Corey;886100]Brandon,

What happened in the end?[/QUOTE]

He just got back to me on Saturday…its taken his accountant a long time to get the numbers crunched since it is 7 different parcels bought over the years one at a time.

Bottom line…for him to sell them to me on contract his tax bill wouldve been close to $30k this year and roughly $20k a year afterwards. If he did a cash sale at the price we were talking about it would be $85k in taxes.

He is talking with property management companies now and his plan is to go that route and let his heirs deal with the taxes at some point.

Im completely ok with not doing this deal. It wouldve been a very stressful situation for at least the 1st 6 months with me kicking people around and refilling units and so on. Kind of a bad situation over there now.

The Cool Thing!! The fact that he and another guy with some rough stuff agreed to sell me big packages with no money down encouraged me to go after a complex I really want! I have a counter-offer from them now that I need to make a decision on by next monday. Its a no-down payment deal that 3 months ago I wouldve never thought would be possible.

Ill update and write a success story if we close it…and im pretty sure it will come together and close next month. This one has been on my “wish list” for close to a decade!

#17

As long as everything goes as planned ill close on the purchase of my 1st apartment complex in mid-September!

#18

[QUOTE=Brandon (NE Indiana);886183]As long as everything goes as planned ill close on the purchase of my 1st apartment complex in mid-September![/QUOTE]

How many units ?

#19

[QUOTE=Brandon (NE Indiana);886183]As long as everything goes as planned ill close on the purchase of my 1st apartment complex in mid-September![/QUOTE]

Rock and roll. Well done and good luck with getting this closed.

#20

[QUOTE=AmotoXracer;886184]How many units ?[/QUOTE]

Its a 12 unit townhouse complex consisting of two 6 unit buildings. All units are 2 bedroom 1 bath.

Ive had my eye on this one for years…