All Forum Posts by: Olatunbosun Idowu

Everyone has at some point said they can't do something because of the mindset they have towards actually doing that thing. They say this because of lack of insight on that thing, lack of knowledge, fear of failure or simply because someone they look up to say its difficult, complex and complicated. 

I never liked my first contact with real estate investing because I can't get involve in anything  that does not look organized, planned, structured in a way that you can easily see what you are doing and what efforts or action plan you are making to accomplish your goals and objectives. All I see around me were people just doing transactions with no idea of where they are heading to and that kind of discouraged me to go into real estate. 

However, all this changed when I decided to help by developing a business plan and feasibility study on how best anyone can invest in real estate, I carried out series of research, carefully study the facts on the advantages, opportunities and possibilities real estate investing offers,  I came up with a business plan coupled with some inspirational quotes that I converted to pictures which can be viewed like your normal picnic pictures we enjoy glancing at every day. 

If you take your time to research, study, educate and train yourself to acquire knowledge and the essential skill-set required to to succeed in real estate and of course understand the benefits you enjoy as an investor which includes leverages of ownership, appreciation of equity and tax deductions and depreciation. 

My friend if you master how to make the most of these benefits and advantages you will not only have confidence investing in real estate but also help you to build wealth and financial stability  as an ideal investor and not a desperate investor who is only out to make money and not grow it. The process of developing your real estate business plan, feasibility study, reading, studying, researching, writing, blogging about real estate investing is vital to real estate investing success, it  opens your eyes and mind to useful ideas, new concepts, areas of identified growth opportunities and possibilities in real estate investing. 

Many investors fail in real estate investing because they don't seek knowledge before seeking real estate investing experience. I urge you not to make the same mistake. 

I wish all the best of success in your real estate investing adventures. 

Thanks 

Olatunbosun. 

Hello Zackery, 

I find this interesting with all other factors constant I think this might be a good partnership but what if on the long run due to circumstances that reveals holding the property is a more favourable choice to go with and  you now decide to hold on to the property as a rental will you both continue to share the cashflow until it is sold. 

I can also see that you guys have negotiated how the profit will be shared but I must also let you know that for any partnership to be successful hugely depends on how concrete the partnership agreement is and must include  your rights as partners,  how you guys will resolve dispute if any arises and of  course how to terminate the partnership in case of any mishap or uncertainties. 

Since you are in the United State, although I don't know which part of United State you are but I think there are ways you can invest in real estate or finance a purchase with little or no money down why not explore any of these loan facility. If you must go with your friend you need to put a lot into making this a success through effective and efficient management, eliminating unnecessary expenses and wastage in order to increase your income, cash flow and asset value. 

Hi Patrick, 

I have not taking time to check the pictures or the state of the property in question but i think dealing with how much to expend on rehab or improvement after purchase of the property is a wrong move and a big mistake. I don't know what the property is intended for either for personal use or hold for rentals. 

If its for rentals you should already have a strategy in place that will handle or take care of your real estate purchases and all cost associated with acquiring, rehabbing, holding, reselling, escrow, contingency, management, issurance, mortgage expenses,  tax and your profit margin if you are reselling  must have been factored in prior to purchase of the property. 

This is why a financial plan forecasting is essential to successful real estate investing because it gives an idea of how to carry out your transactions in an organize manner. It is ideal to have your plans ahead of time before searching for property that fits into that plan, that way it takes away your stress and simplify your investment decisions. 

I don't know what you have done already on this and I don't know if this is going to work for you. All this cost and expenses  must be a percentage of the cost price of the property before you arrive at the maximum purchase price of the property,simply put what you pay to the owner or seller  to own the property. I am not saying this is perfect for you but you can work with it and also do your due diligence. 

Your profit margin should be between 9% - 10% of the cost price 

Escrow cost to purchase should be between 1.8% - 2.2 % of the cost price 

Rehab cost should be between 1% - 1. 15% of the cost price 

Holding cost depending on the number of months lets work with 2months must be between 0.9% - 1%

Contigency can be between 0.05% 0.1%of the cost price 

Your resale cost can be between 3.3% - 3.5% of the cost price 

These are what you need to  determine and deduct them from the estimated cost price to arrive at what you give or pay for the property which becomes your maximum purchase price come rain come sunshine. 

It is wise to do this before making any investment on any real property asset of any kind, trend wisely friend. Don’t depend solely on this seek more advice but am sure you can start from this simple investing ideas. 

Thanks 

Olatunbosun Idowu 

Hello Zach, 

I know that good property management company or managers do so much more in ensuring they constantly increase owners earnings, property asset value and also make effort to minimize operating expenses by eliminating unnecessary expenses and wastage. 

They achieve all of these by rendering quality services to effectively and efficiently manage  your property asset and some of these services include but not limited to 

Timely Collection and Disbursement Of Rent 

Keep accurate financial records 

Inspect property regularly to ensure property is in good and habitable condition 

Handle mortgage and utility payments 

Assist in leasing out vacancy apartment 

Apply stingent maintenance and repairs method to increase asset value 

Market and advertise vacancy on different platforms 

Handles tenants screening and selection process 

They are also responsible for managing your tax and issurance issues 

They must also disclose the condition of the property asset to the owner regularly. 

They must also take care of tenants concerns and dispute resolution by providing swift emergency response service. 

Review tenants employment status and much more which i may not be able to discuss with you now because of time. 

What property management service companies and managers get for rendering these services are :

They get commission for helping lease out your property. 

Deduct 10% as management fee for managing property on owners behalf. 

Charge 10% of contractors cost as maintenance oversight for engaging and supervising repairs and maintenance contractors. 

Charge 5% commission on property sales for representing owner in the sale. 

Often time offer free supervision of minor repairs and maintenance that cost less than $100 

I hope  this piece of information should help. 

Thanks 

Many investors always want to cash out of an investment asset whenever the opportunity presents itself i would say there is nothing bad in that at all but professional investors always have their road map to every investment made, they have their strategies which they are always willing to stick to no matter what the noice in the market place is. 

Looking at the data you have presented it shows you have a good asset that could either be hold as rental or sell to make huge profit now but before you take that decision to sell i would like you to consider how you are going to reinvest your proceeds from the sales, will that proceed get you superior or equivalent property asset at a better or same location for i know you definitely will not get that asset or something similar at the same purchase price when you first bought it. 

I also think you need a little research on the real estate market, know the trend and analyze the market to find out if waiting till the prices of properties go down before making another investment really worth it. I will suggest you stick with your investing strategies as long as it is good, give great result, works and still conforms and fit into current market and economic realities. 

You can't feel guilty of anything or accused of discrimination if you choose the best applicant that fits into your standard requirements or qualification for an apartment especially if your choice is based on the ability to pay rent and utilities timely. If you have told to the second applicant that another applicant has been shown the apartment but he/she is still going through the process of screening and selection, i think the second guy wont be offended if he didn't get the apartment at the end of the day. 

Besides long tenure you see as an advantage have considered the disadvantages especially when it involves a senior citizen please don't get me wrong i am not saying you should discriminate against senior citizens. If they meet your standard requirements and have the ability to pay rent for as long as they want to be in the apartment and can are beneficial to your investment that is fine but if your operate on a first come first serve basis then you need to stick to that and go with the first applicant and if you are not in the position to decide this you can introduce them both to the property owner to use his discretion in selecting the best applicant for the apartment. 

If this is an issue you can add more requirements in qualifying applicants that favour applicant willing to stay for longer term, may with this in place you wont feel guilty, no applicant will feel cheated and there wont be any form of discrimination allegation against you. 

It interest me to see that investors in the United State can actually purchase a property with 3.5% downpayment of the property value but this can only happen in my country when hell freezes over. Both approach that is 3.5% and 20% downpayment has its advantages and disadvantages but if you ask me i would advice you to go for 20% downpayment if you have enough fund to finance the mortgage because the essence of having a successful real estate investing is to earn more, gain financial stability and build wealth through generation of consistent  positive cashflow and equity. This two can easily be negatively affected by an economic recession or downturn or real estate market free fall that makes mortgage repayment difficult because of reduction in cashflow and property value. 

Although, the United State has a stable economic in contrast to what we have in my country which gives investors the opportunity to take some investing risk. If you don't have any other investment you want to embark on with your excess fund that would be generating some sought of income for you on the side, I am sure your best bet is to go for 20% downpayment on your real estate purchase because it helps you build equity really fast and if due diligence is properly followed in the purchase strategy then you can be rest assured of stable and steady cashflow. 

They have said it all, they have told you where to get good properties  and how to invest in buy and hold properties for rental purposes but i would like to add that you also need to consider other factors like what provisions and criteria are used in determining rent where you intend to invest in. Also find out if rent is controlled or regulated in the state, understand rights and obligation of property owners and tenants if you are going to be managing the property by yourself. 

More importantly you must endeavour to know what the state law says about lease, lease renewal, termination of contract, evictions, assigning and subletting because these are the issues you might have to contend with every now and then in rental properties. 

In addition, you may want to consider investing in a pro owners state where tenancy law is strongly regulated in favour of the property owners, in contrast with a pro tenants state with rent strongly regulated in favour of the tenants because rent are strictly controlled by laws set far below reasonable returns on investment. 

I wish you a successful real estate investing adventures. 

I know am not in the best position to advice you on because am from a completely different region, west africa to be precise but i do know each state in the United State has its real estate guidelines and requirements and of course you need to sit and pass the real estate exams for agents of the state you choose to practice before a real estate agent license can be issued to you.

If it were to be about how it is done where i come from i would have given you a detailed and comprehensive information that will show you step by step on how to get a license

As for where to start from, i think BiggerPockets is a very good place to get the necessary novice information and skill-set to start a successful real estate investing career. 

Thanks 

if you decide to sell instead of using agents to execute the sale you can sell yourself,to save the cost associated with selling through agent as in FSBO, For Sale By Owner and as rightly mentioned you can also reduce taxes or avoid it completely using 1031 Exchange by reinvesting profit into similar investment.

However i would like to stress it here that  paying down on mortgage loan is good because it often time serves as a buffer to your investment in times of unexpected  market free fall and uncertainties which may lead to reduction in cashflow and income which of course can make mortgage payment difficult. If you ask me i think it is reasonable to pay down on rental property mortgage  while you can to give you some leverages in times of economic downturns.