Newbie with a little cash - Posted by Aundre Dudley

Posted by Aundre Dudley on May 25, 2008 at 22:37:12:

Well I really don’t know that much about real estate so I may be wrong about this. I went on about a year ago and found houses in the 44137 zip code going for just a little under 50K. Now… those some homes are priced under 40K, some even under 34K. I figure that I can buy 2 or 3 of these homes, rent them out, and about this time next year, buy 3 more. I am from the Maple Heights, Ohio area (44137) so I want to rent homes close to that area.

Newbie with a little cash - Posted by Aundre Dudley

Posted by Aundre Dudley on May 23, 2008 at 18:39:23:

Hello all,
I am a newbie looking to become a real estate investor. I am in the Marine Corps and I have managed to save $60,000 while on active duty. I have a 738 credit score and I have a line of credit (Master Card) for $14,000. I don’t want to flip properties, rather, I would like to start purchasing houses as rental properties. I want to become a long term investor and have a positive cash flow each month from my rental properties. Next month, I am starting a new job as an IT contractor in Africa making a little over $6,000 a month after taxes. I don’t have to pay any bills, so all of this money is pretty much mine to save or invest. The money that I make from my rental properties I want to use to purchase additional properties. Any ideas of a strategy that I can use to get started. Any advice would be greatly appreciated.

Re: Newbie with a little cash - Posted by Edwin

Posted by Edwin on May 25, 2008 at 12:22:36:

Since you’re going to be working in Africa-and I assume you don’t want to invest there, but elsewhere, perhaps the U.S.?–I would recommend you check out International Capital Group and Adiel Gorel: His company specializes in finding single family home investments in growth areas of the country, and these investments are ideally suited for someone like you who us trying to invest from a remote location. In fact, Adiel has written a very interesting book called “Remote Controlled Real Estate Riches: The Busy Person’s Guide to Real Estate Investing.” Perhaps most importantly of all, Adiel seems honest and a straight shooter. I have never heard or read anything negative about him or his company. You’re on the right track to pursue long term investing. I have lost lots of money by selling some properties too soon. You might want to read the book by David Schumacher, “Buy and Hold,” which reinforces the wisdom of investing and holding for the long term.

Re: Newbie with a little cash - Posted by camgere

Posted by camgere on May 24, 2008 at 09:08:28:

Top four concerns: Location, Location, Location and property management. I’m more into Buy and Hold Single Family Residences, so I will leave Apartment advice to someone else. In my neck of the woods $1 million houses rent for $3,500/month. They have $5,000 a month mortgages. There are areas where $35,000 houses rent for $600/month. Oddly the repair expenses on a million dollar home may not be that much different from a $35,000 home. A bathroom sink is a bathroom sink. CAP rate (Net Operating Income/Price) is the most important metric here. Higher CAP rate than the cost of borrowing is very nice. Of course there are a hundred considerations in house buying. I would find the best area and then stick with it. There are going to be dis-advantages where ever you go. The grass is always greener etc.

You are going to need great social skills to pull this off. You really need to have property management experience. Be a property manager yourself for a year if at all possible. Or else you will be jerked around by “experts” who will tell you everything is sooo difficult and you just are too stupid to understand that. People who fail a lot need lot’s of excuses. Filling rental vacancies is the hardest thing in property management. Have a plan for this. Experience is even better. You could always luck into a good property manager. You could win the lottery. You need property WORKERS. You can phone in property management as easily as a property manager. Maybe one of those anywhere in the world internet phones. An independent contractor handyman and cleaning person who will do more or less anything for reasonable dollars per hour is indispensable. They can collect rents, lightly polish rentals during vacancies and show the place. Pretty easy duty compared to scrubbing grout or replacing ceiling fans. You have to convince repair people they will get paid. If you can’t get the mythical “references for good employees” keep a log book of all repairs. Collect business cards. Good workers will become apparent. It’s funny how people will do very good work the first or second time and then become totally unstable. Some people like being “out of state” landlords. Good Luck and thanks for your service.

Re: Newbie with a little cash - Posted by Sailor

Posted by Sailor on May 24, 2008 at 08:36:50:

First, I would be cautious about giving out too much info on the internet. There are a lot of folks out there who’d like to tap into your credit & bank account.

Second, I’d order Lonnie Scruggs’ books (available on this site). He is one of the moderators on the MH forum, & his works are classic. His latest, “Taking the Mystery Out of Money” should be required reading in public schools. That’s the one I sent to my grandson-in-law when he was in Iraq last year because I want him to be able to always care for my granddaughter & her children. The other books, even though dealing w/MHs, have wonderful advice applicable to all of REI. All of Lonnie’s books should be read & re-read many times.

While waiting fot the books to arrive, I’d read the Archives on all the forums on this site. There’s a very long string of pearls there.

Consider doing small deals, & a good place to start is MHs. The MH forum has some really knowledgeable participants, & there is a love Chat every Wed night @ 9 pm ET every Wed. These are folks who do this every day & are willing to help newbies. If you can handle a MH deal & tenant, you can handle any REI.

Networking is important to establish & maintain. You can do a certain amount online, but I’d plan any R & R around investor events like Tony & Scott’s August Boot Camp in Asheville. I’ve done deals right there in the classroom & during after-class festivities. It would be a rare day for me to not be in contact w/the fellow investors I’ve met there. REI is best as a team sport, complete w/cheerleaders. Boot Camp details are on the MH Forum on this site.

One of the fundamentals for the RE investor is good working relationships w/several small local banks. Make certain your bankers (who should be decision-makers) know you on sight. They should get some of your biz & be on your Christmas list (booze or chocolates). Maintain several banker relationships to make certain you have one available when you need it because policies & personnel change.

Find your purpose (be it becoming a gazillionaire or saving the world through housing) & niche. You don’t have to limit yourself, but you do need direction to get where you are going. For example, I have always invested in bread & butter housing. With changing times I now focus on lower-end units, where the need for decent affordable housing is greatest. To keep life simpler @ this stage in life I now invest in a single neighborhood that I know well.

When I started investing a few decades ago I got advice I’ve never forgotten–don’t put all your eggs in one basket. Do not confuse focus w/lack of diversification. I love REI, but it is important to keep stocks, bonds, maybe some doomsday metals & enough CA$H for emergencies. For example, I had a middle-of-2-closings emergency last year & had to come up w/17k the following day. A low-interest CD in a local bank allowed me to complete my deals. (Note that I was able to turn the situation to my advantage by getting the seller, sitting @ the closing table expecting to take home $$$ to agree to lower the price if I came up w/the fund$. I made a nice little profit on that CD money.)

My best wishes to you in your endeavors. Remember, we are only a keyboard away–


P.S. For those folks who would like to assist our men & women in uniform, I recommend, where you can “adopt” someone serving overseas. Letters & parcels go a long way in keeping morale high. I also have a list of other organizations helping service members on my website

Re: Newbie with a little cash - Posted by CS_HI

Posted by CS_HI on May 23, 2008 at 21:40:18:

I would recommend looking for a partner in the states if you are going to be working in Africa.

Re: Newbie with a little cash - Posted by cork horner

Posted by cork horner on May 25, 2008 at 19:31:27:

Do you have contacts in your home town? Do you know any particular city well enough to use a realtor there?

It’s possible to train a realtor for what you want.

What cities do you like?

cork horner
san diego