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Newbie 8 posts by 7 users

Tony S.

Posted: 03/24/2008 at 07:09PM

Hello,

I wanted to introduce myself. My name is Tony and I live in San Diego and am in my mid twenties. I am currently work with computers but I am considering dabbling in real estate investing (with the plan of eventually doing it full time).

I live with my fiance and we make a combined 160K/year from our day jobs. We have about 30K in low-interest (2%) student loan debt and 5k or so in credit card debt. We both have credit scores over 800. We live comfortably... currently rent a big four bedroom house. We take a couple vacations a year and generally do the things we want to do without regards to money.

I am considering Real Estate for the long haul (and started reading books), but am hesitant to get started for a couple reasons:

-The prices of homes in San Diego deem it nearly impossible to have positive cashflow from rent anytime soon!

-The prices of homes in San Diego deem it nearly impossible to own more than one decent property at a time (since I would be financing 400K in the very first property)

-The prices of homes in general seem to be heading down at the moment

My vision is to own 10-20 properties down the road. Maybe flip a couple to get an initial nest egg and then go strictly for long-term cash flow properties. I have been considering investing in other cities... but have read horror stories about remote management.

Any suggestions for my situation? I am more than willing to learn what I need to.

I have many more questions and am so glad I found this forum. Thank you in advance! Tony

Sponsors:

Tim W.

Real Estate Investor
Indiana

BP Donor

1179 posts

Posted: 03/24/2008 at 09:13PM

The only thing I've heard that works rental-wise in areas like yours is short-term furnished housing for corporate or grad student rental. Look for Ryan MacIntyre on the forum. He's got a good business going on that.

Rob W.

8 posts

Posted: 03/25/2008 at 02:42AM

I think long term is always something to look at. I look at net 15/20 years as long term. Some people still seem to think long term is 5 years down the line. :)

P N.

456 posts

Posted: 03/25/2008 at 03:30PM

Here's how I invest in an expensive area that won't cash flow:

Hunt until you find a good bargin with a lot of instant equity. Fix it up, rent it out for a year and you'll have tyo carry the first one because it won't pay it's own expenses (but you've got income from other sources, so you should be able to do it).

After a year, you can 1031. So you sell your property for retail and go and find another with a huge amount of instant equity. All of the equity that you have in the first place (and it will be a lot if you bought right) gets rolled over into the next.

The next place has all the instant equity AND all the big equity from the first place. Now you have a lot of equity and a relatively small mortgage for the value of the property. If you have enough equity in it, it will pay it's own expenses.

You can now hold this new property and do it again with 2 others, or you can wait a year and sell the new one and roll all that equity into another one. If you have enough equity, you can 1031 into 2 properties, each with a good down payment on them.

You have to roll your profits into the next property until you have enough profits (cash) to buy with enough of a down payment that the property can then make it's own expenses.

Ryan S.

Real Estate Investor
Chicago, Illinois

1057 posts

Posted: 03/25/2008 at 05:44PM

I am going to see if I can find it, but I saw a video on YouTube that took home prices since 1890 until now adjusted them for inflation and plotted them into one of those Roller Coaster game makers.

It has its usual ups and downs but then from 1999 to now it just went way up. The track turns back so you can see where you came from, it is amazing how high it is.

Here is the link: http://www.youtube.com/watch?v=kUldGc06S3U
Remember wait until the end and try to look for the track way down low after it makes the final turn.

I would be cautious if investing for equity right now. That would be a massive long term play. Here is the thing. I live in an expensive area in Chicago. There is no way I can cashflow near here. So I normally invest about an hour or two away ( depending on traffic).

You might have to do the same.

Tony S.

6 posts

Posted: 03/25/2008 at 06:03PM

Thank you so much for the information. It is truly invaluable to have a resource like this forum... much more interactive than a book! haha

Well, I am interested in PM'ing both TimWieneke and 4rmgt. I tried but i have to be a " buddy" or something. Haha

I think both of you live in Chicago and invest 1-2 hours away?

Rajendra M.

Commercial Real Estate Agent
San francisco, CA

50 posts

Posted: 03/26/2008 at 01:35AM

hello there!I am also new to this business and just wanted to have more ideas regarding a real estate.well I'm also planning to invest somehow.

Bob M.

Developer
Hoboken, NJ

174 posts

Posted: 03/26/2008 at 05:52AM

I live in the NYC metro area, and I have the same issue, though i do like PNW's idea. It would take quite a bit of work in these expensive places to keep that going but it would be a great way to break into it. That is of course if you can find a property that has a cash flow situation that you can handle.

The only other thing that I can suggest is to be vigilant. Get a Realtor who will really " pound the pavement" if you will. There are deals out there, you just have to look for them. I would recommend you look for the places that need to be rehabbed, they offer you the best dollar per square foot, and you can generally have the work done and profit from the markup you can make once the place has been rehabbed. If you get into some creative financing, like using a combo of seller financing and a hard money loan while you are rehabbing you can refinance once its done with some decent equity which may help your cash flow situation.