Rookie investor
I am a new investor and I would like some helpful tips from seasonal investors. I am 23 years old, just getting out doing 4 years in the military. Iv'e saved up about 40K, and im debt free. I'm currently living in South Florida. I have college paid for and living expenses pretty much taken care of for the next 3 years as I have a job. I'm trying to be smart with what I do with the money I have. My goal is to use it to produce passive income. I understand I can buy a cheap 70Kish property and receive roughly 1k a month in rent. With rent, less expenses, I can make roughly 200 dollars a month in positive cash flow. Is this a smart thing to do to begin with? Once I do that I can repeat the process and slowly start to make more and more cash flow while paying off the equity in the properties.
I also have a question regarding online auction sites, like Auction.com in particular. I understand doing due diligence on the property before hand. I know I can check public records for liens against the property. When I check for liens, does that include every lien like utility liens, or code violations? Also, I would like to understand what the Judgement amount means in terms of what me the buyer of the foreclosed property is forced to pay? I have heard that the Judgement amount doesn't matter to me the buyer unless it is less than the bidding amount. Is this correct? I appreciate any feedback. Thank you for reading.
-Jason
@Account Closed
Liens:
How the liens are listed and recorded vary drastically from municipality to municipality. Some will have them listed online, others will require you and a clerk to dig through mounds of paper looking for the right items. The best thing I've found is to call the town/city/county clerk and ask them what the process is.
Alternatively you can run a title search, this will cost you something.
Buying a place:
You are in a great position to buy a property. The VA loan is probably the single greatest loan available in the US. Your downpayment options start at 0%, your closing costs can be borrowed/gifted (not an issue for you) and your co-signer is the US government which leads to awesome interest rates.
I don't recommend that you get tricky with your first purchase. I'd buy a 2-4 unit property that will allow you to live at least free but hopefully put some serious cash in your pocket each month. This will teach you whether or not you want to be a landlord.
Happy House Hunting!!
-
Real Estate Agent Massachusetts (#009532321)
- M and A Investing
Thank you Aaron for the advice. That does make a lot of sense to buy a 2-4 unit property. I'm currently living with my dad since Iv'e just returned home. I was hoping to get a property in which I could rent out to tenants without physically living in the property, at least for 3 more years. The GI bill requires me to live in the property and the property has to pass inspection from a VA representative. This is not a huge issue but I was considering buying a fixer upper.
Nice to meet you!
We are buy and hold investors. My husband is active duty military. We had done well by leveraging debt. You have a nice savings account. When we bought our first house as a personal we had a nice savings account but we didn't touch it. We bought a 0 down VA loan. It was a foreclosure. We fixed it up while we were living. We had alot of friends who rented out all their rooms. They got passive income with 0 down or their living expenses covered, depending on how you look at it :)
We than used our savings as the down payments for two pure rentals. These were also class a properties that were short sales. Short sales are not short but can produce some great houses if you have the time and patience.
This is an amazing place because the only thing everyone agree with is real estate. Other than that everyone has their own niche. So look around the blogs, forums and listen to the podcasts. If you see a post you enjoy check out the persons signature. Many of us including myself talk about our strategies, styles, niches and business model on our website. So definitely check that out as it is an amazing additional resource. For example, my blog is about while working full time, buy and hold investing, 0% Down Rentals, Personal Properties turned rentals, Long distancing investing, self-managing 3,000+ miles away. Definitely list your blog or website in your signature, if you have one. Its a great additional networking source.
Look forward to seeing you around! Let me know if I can help!
Thank you Elizabeth. I do listen to the podcast from time to time, and do browse the forums occasionally. I do want to get into fix and flip. I figured the best way to start off would be to use leverage to have purely investment properties. So for now i'm assuming I would have to get a conventional loan which i would put the 20 percent down payment on and rent it out. The properties i'm looking at are 80k market value, and 1200 a month for rent. I'm going to look for cheaper properties, foreclosure or short sales, fix them up and rent them. The scariest part is getting started, i'm gonna dive in and learn from my screw ups.
honestly you just have to dive in and get started! If your willing to make it a primary you can buy it with 0 down. Fix it up and than rent it to your buddies/strangers. Still living free but now making money. Than you could take your down payment and buy a second property pure rental. Slowly you can baby step it to buying. A 3rd etc. that is how we did it! The va loan lets you split it. So if you buy right you can buy again later!
@Account Closed that buying a 2-4 unit with a VA loan is an awesome way to get started. You'll learn about the buying process, the fixing process, and the landlording process all in one deal. I'm going to be moving to another base soon, and that is the strategy I plan on going with when I get there. Best of luck and let me know if there is anything I can do to help.