All Forum Posts by: James Ma

Having cash allows you to make a subject free offer which in hot markets, that is typically what sellers look for. If you want to do financing, they often expect a higher offer since there is a chance that the offer will fall through and the market may shift.

Having cash on hand in general investment terms allows you to easily take advantage of good investment opportunities when they arise. 

@Stevie Delacruz getting money is not easy for most people at all. I know plenty of people who make 6 figure salaries and don't have any money to invest. You're young so you have time, the hardest part is always the beginning

If you're cash flow positive after paying off all expenses (insurance, property tax, include 5% vacancy, etc.), it's never a bad deal. There may be better opportunities potentially, I don't know your area so can't comment but the fact is that you'll be paying down your mortgage by simply managing the property while enjoying rent & property appreciation with equity being built at no cost to you.

Assuming 20% down, your returns will far outweigh putting the cash into the stock market.

ie. for simple numbers 100K property that you downpay 20K on. Assuming $0 cashflow, a property appreciates an average of about 4% historically per year. So you've made 4K in appreciation on your 20K investment for a 20% ROI not even taking into the equity that was built up through your mortgage payments that are totally covered by rent.

Sounds like a pretty good opportunity, have you checked how much a developer would buy something like that for? Check if there's any regulations and permits you'd need to get as well.

Then you can evaluate whether its worth it to buy and sell today for a profit or how much it can go down before you hit your break even point to sell off. I wouldn't buy if you couldnt turn a profit today.

The younger you start investing, the better as you have the ability to leverage time.  Great on you for thinking about this so young.

In the right situation, you could do well in a no money down scenario, but typically to invest without any of your own dollars involved, you're going to borrow from a private lender at a higher rate than normal, and they would only lend to you with a high income / collateral so you already have to have money or high net worth.

I"m guessing like most students, you don't have a high paying job or a large amount of cash saved so that would be your first challenge to overcome in your journey. Personally I've never been a fan of borrowing money from friends or relatives unless I'm positive its a winner and it sounds like you're very inexperienced so you're better off reading more books before investing to save yourself from actually losing money by buying the wrong property and mismanaging your strategy.

Try to find additional ways to make money whether its starting your own business or just working another job - Once you have enough for a deposit and high enough earnings the banks will give you a mortgage to get in the game and by then hopefully you'll have put effort into studying real estate strategy so you'll do great.

Sounds like a pretty good property from the sounds of it, if I knew you better I'd definitely go in on it.

Congrats Aliz on the LA property that is cashflowing and doing well! Doing real estate investments isn't for everybody and unless your husband can change his mindset, I don't think he's going to enjoy the process. There are plenty of other ways to make money out there.

Since you're kind of stuck with the guy lol I'd suggest to try to explain to him that the past doesn't matter. What does is the now and what will happen next. If he knew that he would make a million dollars on the property in the next 5 years would he do it? Of course! If it's a good deal now, it'll make sense to move on it. It almost sounds like he is making up excuses because he is scared of making an investment. You can never be perfect, but you can be extremely successful by taking risks.

A refinance will allow you to know exactly how much money you'll be getting for the mortgage (traditional mortgage may have a lender decide the property you want to buy is not worth it and they will not give you as much as you had been preapproved for), and it gives you a much stronger offer in a sellers market.

Being able to make an offer subject free can usually beat out any other offer with subjects and can also give you leverage in negotiations during a hot market. With buyers offers falling through a decent amount of time, being able to make a strong subject free offer makes it very attractive to sellers.

Costs with a traditional mortgage vs refinance are typically the same. Bank will still charge appraisal fees etc. mortgage rates have been the same for me on both and was told there's no different either way

The refinance can give you the HELOC as well. (ie. if the bank deems your property worth a refinance worth 500K, you can get 400K on a fixed rate mortgage and 100K HELOC. Most banks seem to finance up to 80% of the equity and there are rules of course around how much LTV you can carry). Additionally the equity built up from the mortgage payment each month can automatically go into the HELOC for you to access !

Not enough interest = wrong price point, try dropping by $50 every couple of weeks until you get enough interest that you have good tenants to pick from.

Lots of viewings but no applicants wanting to rent = problem with the property. While price is good, they didnt like the look of it and you may need to freshen it up with paint, renovation, adding new appliances etc.

Hi Jesse,

As others have said, it's great to have a mix of equities and real estate to balance out your investment portfolio and diversify risk.

Real estate returns tend to be better due to leverage. Being able to put in 20% downpayment and the bank covering the other 80%. While you can trade on margin in stocks and still use the bank's money for the investment, the interest rates are typically higher from what I've seen and there is the ability for the bank to call in the margin when you owe. I also don't believe they typically offer 4x the amount you put in whereas real estate allows the 20% downpayment.

Real estate also is a safer bet. Land and area value are a lot less likely to change drastically in value compared to a business. Think how Blackberry used to dominate the phone market and seemed like a great bet and now are a thing of the past in the smart phone world. 

Can someone make more money from stocks than real estate? Definitely possible, but limited to very few people who day trade for a living successfully or making the right stock pick like putting a bunch of money into Amazon before it boomed. 

Running the numbers on my REI, I'd expect around an average of 50%+/year ROI over the next 5 years assuming 4.4% appreciation per year which is a historical average. That is impossible to have that kind of return consistently in the stock market.

The hardest part to deal with problems is finding a good team of contractors t so that you can make a phone call and get work completed. If you know other investors in the area or property managers, you can always ask them for who they would use and if they have any referrals otherwise you'll have to just go through trial and error to find people you trust to do the work.

Sounds like a bit of bad luck, did you do an inspection on the places before buying? Sometimes issues just do happen, I've had to get some work done on places I've bought as well due to unfortunate circumstances - diverter valve replacement, laundry machine replacement, toilet piping recall that sent parts but had to hire a plumber, etc. and you can either keep on going, hire someone else to manage the property, or sell the place.

You say you're willing to put in the work and aren't afraid to put in the effort and that mindset will definitely help you. I've been reading a book called the 10X rule and that's definitely helped me have the right mindset to deal with stuff like this. You should be prepared to put in 10X the work that you anticipate having to do and you'll accomplish your goals. If you thought you had to make one phone call to get someone to fix something, you should be prepared to have to make 10. With that mindset, it doesn't bug you as much when the first few contractors don't show and you'll be able to weather the storms. Ask yourself if you're willing to put in that kind of effort to make things work or else consider the alternative options where you won't have to.