All Forum Posts by: Michael Henry

@Rory Galvin I will try to answer your question but first in terms of your example above the math doesn't work because it is not a good deal. What you have to understand is that buying real estate as an investment is subjective. On one end you have cash flow and on the other end (let us say) security. Most expensive single-family homes do not make sense as an investment unless you can find a deal. This is one of the reasons why people invest in real estate because of the opportunity that can be had if you know what you are doing. On the other hand, I person might purchase that some property as you described above because he/she might already have large savings and is heavily invested into stocks and is looking to diversify. 

Now to your questions, I will define cash flow as the money left over after all expenses. You might hear an investor say "I want to net (or cashflow) $200.00 per door". This means if they purchase a duplex they want to cashflow  $400.00 per month. Another investor might say I want a 12% cash on cash return. In this case, the investor cares more what his/her return on investment on the cash they have in the deal and not necessarily the purchase price. 

Lastly, remember investors' investment in different locations from where they live because the ROI is to low for their liking where they live. If you can't find a deal that you like in Canada you might want to look elsewhere.

I hope this helps and adds value.  

@Andrew Jefferson The point of House Hacking is to lower your monthly housing expense, with the savings, you can reinvest. If you want to reinvest in real estate you will need to save up for another down payment. Don't overspend on your first property.  Leave enough buying power for your next purchase so you can scale up.  

I hope this helps and adds value. 

@Manzell Blakeley I would not advise you to leave your job being a beginner real estate investor. The problem is everything takes longer then you think and is more expensive. I would tell you to double every expectation you have.   The second-biggest point is your W-2 income is an asset starting out in real estate. It is much easier to get a loan if you have a W-2 income. As sole proprietor (self-employed) it will take you two years to qualify for a loan. 

In terms of lead time, you need to start looking for a property, purchase it, and complete whatever strategy you are doing while you are working. 

I hope this helps and adds value. 

@Account Closed where are you getting your gross rents numbers from? The vacancy rate seems low. Something during the Summer the students don't rent rooms. A 5% management fee is not realistic. If you are planning on using a third-party management company you will be north of 8% for rental collection and additional fees and cost that might eat into your downline. Last snow removal cost will be expensive Minnestosa gets a lot of snow. 

In Milwaukee, WI all the property around the UWM campus is mainly used for student housing, and because a lot of parents purchases these houses to lower the child cost for housing there are a lot of sales in this area. Check the comps to make sure you are not overpaying. 

Lastly, with covid-19 you might not have any students to rent to. If the numbers work after rerun then I would move with caution. Check with the University to see if they are doing in-person classes. 

I hope this helps. 

@Julian McClean Real estate investors buy properties every day that has tenants in them. It is very subjective if one might request to have the property vacant prior to closing. It is customary for the Seller to deliver the tenant information e.g. lease, application, and/or tenant ledger after acceptance of the Offer. With this information, you can proceed with your own due diligence and background check on the tenant. If you are worried that the tenant might be a bad tenant you will need to make the offer contingent upon a review of documents; usually 5 days. If it is a desirable property with multiple offers this type of contingency will hurt your chances of getting an accepted offer on a single-family or duplex. 

I hope this helps. 

@Xavier Martin I would suggest a normal 30 fixed-rate mortgage at the best interest rate you can get. Build up your saving with the money you used to spend on rent and then purchase another one. 

What I found in Milwaukee, WI is that 3-family are hard to come by and they are usually priced like a 4-family without the income. If you can find one where the numbers work go for it. 

@Jeremiah Purifoy you will be for sure have to put down a down payment. If a US bank is located in your state, they will finance the loan. If you can not find a lender at that price point. Look into financing them with multiple credit cards by doing cash advances. 

@Jared Schofield From from understand you can purchase individually but those purchases will be based on each of your income. If the income is not there you will be capped at a lesser amount than 10 loans. Commercial loans on the other hand have no cap but they are somewhat harder to get. They look at the asset more than than the person. They will want to see a track record of performance with cash flowing global financial statements. 

@Jeffery Still kudos to you for thinking outside the box. I would try to find a duplex where I could lease out the whole duplex( top and bottom) at a discount and then sublet the rooms to other students.  There are a few pros and cons to this strategy.  First, you will be responsible for the whole rent amount regardless if your rooms mate pay you or not. When I was in school we paid for the whole semester upfront so this might not an issue. Second, finding a location where it can be done. The best locations will for student housing in the first place so the landlord will be looking to maximize what he charges for rent. 

The pros should be obvious which is the increased cash flow from the difference in what you pay for the whole duplex and what your charge per room. It would be a success even if you could end up living rent-free. 

I hope this helps.