Passive Investor w Home equity needs advice

5 Replies

Hey folks....

I'll put bullet points to spare your brain...

I'll be coming into some nice equity soon - prob 1-200 K when I close on my fixer.  I am living there now and still need a few touches to bring the house up to par.

1. still needs a new roof, exterior paint, and kitchen upgrades. Want to build out attic which would triple value of the house

2. Would like to take a HELOC at some point to put 100-150K in cashflowing investments

3. I live in L.A. so considering out of state

4. Have done some mobile home investing  - takes lots of work but has cheap buy in

5. Binging on education  - Turnkey, Multifamily, Mobile Homes, modular

6. What to do?  My plan is to generate 15-20K in passive cashflow a month as my target to leave the rat race  What's the fastest way there without having to be super active?.  Willing to do some traveling, but mostly as checking in on properties

Whaddya think?  

thanks for reading,

Miles

@Miles Presha ,

I'd say mobile home parks based on what you say you are after and willing to do. If you have already invested in some mobile homes you at least have a toe in the water already.

Thanks Edward. My wife says the same.  Been doinG some research and the numbers are looking good.  Curious to what other pros think. 

15-20K income from passive investing is a huge amount that will require either a great deal of work, turn around park, or very deep pockets.

Biggest issue with parks is getting financing.

With 150K you will be a very long way from your income goal. It is going to take some time. With conventional brick and mortar, $200 per door you will need 75 doors. With a MHC you will need 150 lots with rents in the range of $300/month in a nice community.

I can not see easily reaching your goal without having to work very hard and put in a lot of long hours. Not going to happen.

Real estate investing is not passive and the fact is the rat race is probably the essayist money you can make. Most jobes only require exchanging time for money. 

Originally posted by @Miles Presha :

Hey folks....

I'll put bullet points to spare your brain...

I'll be coming into some nice equity soon - prob 1-200 K when I close on my fixer.  I am living there now and still need a few touches to bring the house up to par.

1. still needs a new roof, exterior paint, and kitchen upgrades. Want to build out attic which would triple value of the house

2. Would like to take a HELOC at some point to put 100-150K in cashflowing investments

3. I live in L.A. so considering out of state

4. Have done some mobile home investing  - takes lots of work but has cheap buy in

5. Binging on education  - Turnkey, Multifamily, Mobile Homes, modular

6. What to do?  My plan is to generate 15-20K in passive cashflow a month as my target to leave the rat race  What's the fastest way there without having to be super active?.  Willing to do some traveling, but mostly as checking in on properties

Whaddya think?  

thanks for reading,

Miles

 Thank you for the bullet points! Very smart move. I can't handle brain drain from long paragraphs. Everyone else looking for advice take notice!

1st thing to note is it's gonna take a lot of time to get to $15k-$20k. Your amount of cash $100k-$150k is nowhere near enough to get you to that level, especially passively. So my advice to you would be to keep grinding it out at the day job & keep pumping additional funds into your investment vehicle. Remember rental properties aren't the idea vehicle for quitting your job. You need that income now! They are the ideal vehicle to park the funds from your job.

As for specially investing that $100k-$150k out of state It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

Thanks for the input. I don’t expect that 150!K to be magic. I do think I can use it as a good down payment in something that will at least get me started on some good cash flow. Enough to get me another property - prob multi family that will eventually get me to my number. 

I know this will take time. But that’s why I have the goal!

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