All Forum Posts by: Konstantin Ginzburg

@Adam Berlinberg

Your analysis is likely more correct. Not at all real estate agents have your best interest in mind. As you have said, many are interested in getting to the closing table as quickly as possible since that is what determines when they get paid themselves. The other issue that may be occurring is that not all real estate agents are actually familiar with real estate investing so do not understand the principles that determine a good investment. This may be done out of a lack of understand as opposed to anything malicious but as the investor; it is still your responsibility to determine whether or not a specific property is a good investment or not. Factoring in items such as vacancy, maintenance, and capital expenditures is not "old school"; it is still a legitimate practice. At the same time; it does increase how much effort a real estate agent would need to do in finding adequate properties for you. Not all agents are up to this challenge. 

Quote from @Taya Shavers:

I'm in Japan studying American System Real Estate Investment. I will look if locals teach American ways

 This may help you with this goal. I have written a short book that is meant as an introductory guide to real estate acquisition within the United States. I had actually made this book free this week already as a collaboration with a local real estate agent who is holding a conference for new investors in our region. You are welcome to this book. It will continue to be free until midnight on Friday (local time). I hope this able to help you. There are many other books that provide a far more in depth coverage than mine; including many members of Bigger Pockets such as Brandon Turner (highly recommend reading his books) that have written great books over the years that can also be found on Amazon. As for the two terms that you had asked about: principle (this is the portion of your monthly payment that goes towards paying down the loan balance itself and can also be used to describe the total amount that the loan is actually for) Escrow (this is a portion of your monthly loan payment that is set aside in a 3rd party account (typically a title company) that is meat as capital that 3rd party uses to pay certain bills on your behalf; most often this is property tax and insurance. Escrow in general is a 3rd party account that holds money on your behalf. An escrow account is also used to to hold deposits and funds during the purchasing of a property). 

https://www.amazon.com/You-Wan...

This would really be a matter of you defining what are your personal goals. You started that your motivation is the love of real estate but from a financial standpoint; what are your current goals. You described a few routes you have and there is honestly no wrong answer at all but the answer will come down to what you want to currently accomplish. If you are in need of rapid cash infusion then selling the property would give you a quick influx of cash that you could use for personal needs or other investment opportunities (is there a current use you can put this cash towards? Another property with better returns? Another investment opportunity you really want to be involved?). If you do not need that quick cash infusion then holding onto the property will lead to higher longer term wealth accumulation. As you said, rents and value are likely to continue to rise so putting off the sale for several years does have the potential to increase your returns by a substantial amount. 

My personal preference would be to hold onto the property as long as I am cash flowing or at least breaking even. My current motivation still revolves around long term wealth accumulation and future cash flow growth. Congratulations on this property and I hope you are able to reach the goals you have set for yourself! The property itself is gorgeous! 

@Amy Lin

Have you considered meeting with other lenders and see what options they are able to provide you? Different lenders may offer you better terms and if that is the case, your original lender may also readjust their terms to retain your business. 

@Javon Wilson

You might not find the answer you are looking for on here since this is a personal question that relates more to your personal goals as opposed to a set blue metric that others here can provide. Others many be able to tell you what metrics they used or how long it took them as individuals but at the end of the day, it still comes down to what you want to achieve. Some people stop once their consistent net cash flow is able to meet their living expenses and they are content with a leisure life from that point. For some, this can be 100k; others can live off 40k. Still others are driven by consistently scaling and improving their own quality of life as well as leaving a legacy for their family to have an easier life as well. My suggestion would be to sit down and determine what your exact end goal would be and what you want to achieve with real estate. Be sure to include exact numbers within your goals. Once you have those numbers, then you can determine how long you would need to achieve those goals.  

@Taya Shavers

Are there any specific terms you are confused about. If you ask here on the forum, you will find many people that will be happy to clarify those for you. 

@Ashraf Eldabh

I am in the Louisiana market and dealing with the same issues that you are. Many of the same insurance under writers that have pulled out of the Florida market, have also pulled out of the Louisiana market in the same time period due to the hurricanes that have affected both regions in the last few years. Many colleagues have mentioned that they have seen their premiums triple in the total price of the last few years. It is an unfortunate situation there is no way to predict what the future of insurance in this region will be. A portion of the problem is increase replacement costs due to supply side issues driving up materials and labor cost. Part of the problem is insolvency of many former insurance under writers forcing them out of the region. And part of the problem is rising interest rates leading to higher re-insurance costs for these under writers. The best you could do at the moment, is run your numbers with these high premiums and continue on if the numbers makes sense. Real estate carries with it risk, and this is another aspect of the risk we need to accept. 

Quote from @Eugene Chin:

Quote from @Konstantin Ginzburg:

@Eugene Chin

The vast majority of non-owner occupied financing packages will require you putting down at least 20% for a down payment, with 25% being a fairly common expectation as well. If you are willing to live in the property for at least 1 year though, you would be able to qualify for owner occupancy financing which have much lower down payment requirements. For example, while the FHA loan you mentioned was intended for first time home buyers; it is actually available to all home buyers who plan on living in the home for at least 1 year. There are certain requirements though such as the new property needing to be at least 60 miles from your current primary residence. If your goal is to purchase a property with a low down payment in the immediate future, sacrificing your personal comfort for a 1 year might be a worthwhile trade off. You could rent out your current primary residency for 1 year in the mean time and move back after the terms of the financing have been met. There are other lenders and financing packages aside from FHA loans available for owner occupancy, those can typically be found in regional banks and local credit unions and will be something you may need to find in your region through referrals or personally visiting these institutions.

Appreciate the additional info on the FHA loans. I had not realized about the 60 mile requirement!

It's no problem. I am glad I could help. Be sure to double check with a loan specialist though. From my recollection, the requirement is either 60 miles or 100 miles. I am not sure if that is standardized nationally or if it is region specific. 

@Annette Barnett

Commercial agents don't need to know that you are talking with multiple agents in other cities so if they don't ask, there is no reason to tell them. The main thing they will focus on is whether or not you are able to close deals they bring  you and if the relationship is mutually beneficial. If they are able to bring you a deal of the caliber that you told them you were looking for; then they will be happy. If you repeatedly pass on the deals they provide you despite these deals meeting your requirements or you are unable to close on the deals you promised too; then this could sour the relationship since it would represent a loss of their time and effort. 

@Jay Williams

I am currently at ten units and the main thing "I wish I had known before I started" was to have started much sooner than I did. A secondary thing that I would have likely wanted to know is to enter into multifamily properties sooner than I had. When I first entered into real estate investing; my focus was on single family homes. Luckily, I had a great realtor who encouraged me to look into the multifamily space and that has proven to have a higher cashflow than single family homes. If one of your goals is to increase cashflow enough to retire early; then the obvious answer is that you need to prioritize cash flow in your acquisitions. There are two primary ways of accumulating wealth within real estate: cash flow and property appreciation (debt paydown and tax benefits are other factors as well). If your goal is cashflow, then be sure to target properties that do cash flow and allow time to do the rest. If the property cash flows to begin, this cash flow will likely grow over time. 

Your goal of tax protection is best discussed with your CPA. One more recent lesson I have learned from my CPA is the separation of active and passive income streams for taxation. While long term rentals are considered passive investments; and hence the depreciation cost for them can only be applied to rental revenue as opposed to your active job; an STR is considered an active investing so the depreciation from STR revenue can be used to offset W2 income if certain conditions are met. For full disclosure, I am not a CPA or professional accountant so while this may be information worth keeping in mind; I would highly advise reviewing this with a CPA to ensure everything is managed correctly.