All Forum Posts by: Michael Ran

just an FYI @Neal Patel

I was contacted by a friends broker. He is looking to sell a 2.5 million C class 97 unit near the hobby airport. I don't have the down payment at this time but it has some potential. 4 down units, 10 vacant, current NOI is reported to be 200k yearly.

I am meeting him Tuesday on other business but if you are interested message me your contact info And I can fill you in or just pass the contact info to the broker or broker info to you. I don't know the broker or property but he may be someone to know regardless of if this is a good deal or not.

I am still in mostly in SF (have a few passives) but am starting to search more into the MFs around town. Good luck to you and let me know when you move on something in town. I would love to hear about it.

@Adam Chudy haha! I worked hard for the first few years. Now I'm slowing down mostly because I won't invest more of other people's money and have run out of my own cash to buy more. Now it's time to get creative! Probably why I'm so long winded now a days!

sorry... I didn't mean to click post! Haha

Any and all of these types of REI can help you quit. It's just a question of risk, how much can you afford to take?

To the next part of your message.

There is a misunderstanding due to people watching the late night info-mercials and guru speeches. 

REI is still a job like anything else. But one guru says it best " it's not a job, it's a lifestyle"(Del-Lifestyles Unlimited). You will still be working and there will be things you have to do; you will have more free time and work odd hours. It's not easy and there will be problems and mistakes but instead of being yelled at by a boss it's costing you money.

What you need to do is test the waters. SF is the most known way to start finding what you enjoy doing in RE. You have to match your situation to the types of RE you like to do. 

How long do you want to work where you are? If you want to quit soon! You need to start working on the fast cash side of RE. Wholesalers or Flipping is what you need to look into.

10-40 years... Meaning you don't really want to quit you just want a retirement plan? Owner financing or buying notes can get you extra change!

Everything else falls in the middle! :o)

Yes, SFs will get you there but there are many others that can get you there; faster, slower, riskier, safer, hard work, or on a beach. 

Sorry long winded again.. I know.

@Robert Bartman I own 16 SF properties, 2 passive investments in MFs, I manage 60 properties(10 hours a month because I have a team) and am starting some flips for fun. It is never smart to buy/invest in one of any thing and hope it's all you need. 

Start with one SF and buy more over time, is how it's done. Then you move to MF as your portfolio grows along with your experience or as opportunities arise. 

You should make about $300-400 a month profit per property in Houston SFs. 

Over time rents go up as do values. 

1. You increase rents to stay near/at market rents and if you are looking to increase your risk and speed of growth, you refinance to get more money to buy more properties with the appreciation and paid down principle. Rinse and repeat!

Or

2. You increase rents to stay near/at market rents and pay down the loans to get properties paid off. Which in turn increases your networth, borrowing power, and income(no mortgage payment). This is far safer but slower. Then you can sell or refinance your properties if you want for more properties or to buy an apartment.

I followed #1 but due to the market, I am moving to #2. Atleast until this oil issue is over or the Economy really shows big signs of growth. Which is why I am starting flips to both pay down debt and buy more properties; plus for fun and learn this aspect of REI.

There are other ways to make money in RE.

I don't know them all but here are some examples:

Hard money leading, buying notes, buy and holds, passive investing, Flips, owner financing, wholesalers, tax auctions, and many more(I think).  I have done or do, over half of these things. You don't have to just do buy and hold to make money even long term money in RE.

@Robert Bartman is someone I have seen around in many of these post. 95% of the time I agree with and/or learn from what he has to say. If you want a great deal of information and how to do MF right! This is someone to talk to.

First... Welcome! I wish I had found biggerpockets before I started.

Now to your question:

Waiting for a better time is for short term investors. Are you going long term or just playing short term? Short term, buy around the plants like La Port, Baytown, Pasadena, etc. Long term- heights, med center, mid-town, Exxon, Grandparkway, there are tons of places.

I believe you can buy as many as 4 properties with conventional loans(cheap down payments).

The first step is go to your local bank(or 2 banks) and ask them to pre-approve you(ask for a pre-approval letter). They will ask for a lot of information. Tell them what you want to do. Find out what they will do and if you can even qualify for a second home loan. Find out how much you can get loaned to you. That's your max to start(don't buy a 400k house! At hard money rates!)

Next, you are only working with 20k or can you put in more for rehab(repairs/sweat equity/DIY)? If you don't have the time or extra money, you need to find turnkeys. You can look for wholesales but a lot of them are fixer uppers which need updates and repairs(cash heavy deals). There are tons of websites other then HAR. There can be more info on this once I look into it if you want me too.

*key point* You only make money in RE when you buy! So try to get a low price. 

Areas are personal opinion based for the most part. You can make money anywhere if you know what you are looking for. 

Best thing anyone told me on this subject starting out was: "Buy what you know!"

So I say buy in your area. You know what areas are not safe and what are, around you.

There are a many steps in the middle and much more research before you start but this should help get you started in the right direction. It is late and my mind has shutdown for the night but I can help if you want.

@Waylon Themer  is a banker. I don't think he does the loans you will need but can help through the bank stuff and knows much more then I do on creative financing.

Also, check out Lifestylesunlimited.com they can walk you through the process for a fee or just search the forums here for the steps and read the free books.

I guess I have been away to long. Time to start going again! Thx @Eric Tait  

But the logic still works why pay 15k when $500 would work for this person.

also @Mike Short  if your goal is only a few rentals for retirement (as your goals say) then Challenger membership will get the job done. 

@Doug McLeod  if you run the numbers you have to make a 15% increase in your investment just to break even with 1 $100k investment. With two $100k investments you have to get 7.5% just to cover your investment. But for $300k a 5% increase in value or return on it/them is more than probable with  most/all lifestyles deals(My opinion). That is why I said $300k. 

Where as a $100k investment in a few good C, SFs should get you about a 10-20% return, with income and appreciation. And it only cost you what? $500 dollars.

The net worth is a little overblown, I admit. But when I started, you had to be a preferred investor(Preferred Investor Group=PIG). Which by law is someone making 250k a year or 1 million net worth for passive investors. 

Most 'NEW' real estate investors don't even play with $100k. So for best bang for your buck starting out, the lower membership(Challenger I think it's called) is the best deal. When someone new understands the business better, they can move on to PIG membership. I never tell a newbie to jump into the bigger risks till they know enough to understand the risks. Plus, they will help you buy 4plexes as a lower member, you don't have to pay $15k.

I have posted a great deal on this as my investors are most oil execs. But please keep buying at the high prices you will be fine! ;) let me know when you are over extended, i would love to pay  60 cents on the dollar for your properties in August. Rents are going to fall some, i hope you run your numbers at high market rents. 

All jokes aside, if you are a flipper try to reduce the number of houses you are holding at any one time. Buy and holds will be fine as long as you can pay the expenses, even if rents fall below expenses. Hope oil prices don't stay this low for long. The longer it does the longer you have to cover costs.

The houston economy only has 50% of the employment in oil, not like the '80s when it was 83%.......

So it should be only 60% as bad as the 80s by that logic! I don't think it will be that bad but there will be harder times yet to come. Don't stress it! Just keep running the numbers and watch for rent drops. A great deal is a great deal, just avoid deals that are borderline for the near future.