All Forum Posts by: Jason Barnett

I agree with this post. Another thing I would add: if you only plan on staying for a 9 month period then ask the landlord about a month-to-month lease. Many landlords won't go for this, but you'll never know unless you ask.

This talk is just plain silly. Of course you can do this!

Think about it... really a landlord's biggest expense is vacancy. As a landlord I know when my units are going to become vacant and if you are telling me that you want it as soon as it becomes vacant... well of course I'd like to hear from you!

If you play your cards right you should be able to find a landlord that will hold the unit for no more than the normal deposit. Assuming you are a good tenant risk of course!

This is a fascinating topic. Still, I haven't seen anyone on here talk about his or her actual experiences. Has anyone tried this? I really like the concept.

Don't get me wrong, interest rates are important and all but... Cash is king.

In commercial real estate the transactions involve larger dollar amounts than most residential properties. Not only that, but lenders for commercial units generally want to see LARGER down payments than lenders for residential properties. Just do a rough calculation (your cash X 4) to determine if you can even consider getting into commercial properties.

Evaluate your cash, do a market analysis for your chosen niche in commerical real estate (gotta have tenants), and then go search interest rates. Definitely more efficient to do it that way.

Re: using a HELOC to start investing in real estate

There is always a trade off of risk vs. reward and any decision you make is fine so long as you are willing to take the risk for the potential reward.

Reward: get cash for down payment on an investment property.
Reward: get cash for repairs on an investment property.
Reward: get cash for holding costs of a fix & flip property
Reward: you avoid PMI.
Reward: you can avoid a second mortgage on the investment property.

Risk: your monthly debt payments are higher.
Risk: business failure could mean you will not be able to pay for your home.
Risk: in the case of bankruptcy you might lose 100% of the value of your home. This is because HELOC is not used as purchase money and (in some states) the lender will be able to sue you for deficiency.
Risk: HELOC rates are usually variable rather than fixed.
Risk: HELOC will go on your personal credit report, whereas investment property mortgage could be on a business credit report. Even if you personally guarantee the loan the HELOC still hits your credit report harder.

There might be others, but these cover the major points that I think about. Personally I would rather have a second / larger mortgage for the investment property than get a HELOC on my residence. That's just my risk tolerance. I especially would hate to lose my home in the worst case scenario of bankruptcy and bankruptcy is something that I will fear until my passive income exceeds my monthly expenses.

If you can't afford large commercial properties then consider rehabbing residential properties.

If you can't afford to rehab residential properties then you might try buying a small house and rent it out.

If you can't afford any house in your area then consider investing in another area (CA prices are ridiculous in my opinion).

If you can't invest in another area then consider hard-money loans.

Lastly, if you have absolutely no cash at all then consider flipping.

There are many ways to get into this game. Take a serious look at what kind of cash, time, and experience you have with real estate and decide what route(s) you can go. Many new people start out by flipping (assigning contracts to other investors... e.g. you are a "realtor" for investors).

If you have an interest only mortgage then you're just renting from the bank.

I am 90% sure that anything over 4 units is going to be considered a commercial. If you are the kind of person that has enough money to buy a 6 unit residential building then you probably don't want to LIVE there.

Do you already have the prints for the designs you are considering? If so then you should talk with your local authorities to find out if they will be up to code. If the plans get the OK then you should be able to present the drawings to some builders and get some price quotes. Also you will want to check if the land you want to buy is zoned for the type of building you want to build (typically 1-4 units fall into the same residential grouping). If the land is NOT properly zoned then find out if / how you can change the zoning for the property.

You will also want to observe the target market and determine what the people in the area expect. There is no sense in creating $300K townhomes in an area that expects to pay $500 rents. As a rule of thumb you might try looking at the income for your target market and figure yearly rent / mortgage payments that are about 25% of their income.

If I was looking at an area that was mostly SFR I would probably try to build the duplexes. If the area is mostly apartments (especially larger apartments) then I would go with townhouses or maybe even multi-units and try to rent as many properties as I could.

Note: I am not a developer, but I'm just thinking about how I would approach this. Sorry, but I can't warn you of any pitfalls.

City data for Dayton, OH

Appreciation rates for Dayton, OH

In Dayton, OH there are literally thousands of properties that you could purchase. Wages / cost of living are lower here, but the main issue keeping prices down at the moment is the number of foreclosures in the area. There are some parts of town where house prices are over $100K, but most of those areas are in the burbs.

I have occasionally seen houses selling for as low as $1K. Sometimes when people say dirt cheap they mean you're just paying for the dirt. From what I've seen on the boards Dayton appears to be one of the cheapest cities in the US (min. population of 100,000).

If you need help with analysis, please see my link below.