All Forum Posts by: Scot Howat

Find an investor/realtor to start out, and go to a bunch of REI groups around the areas you'd like to invest in.

For long term rentals I'd stay out of Chicago, and cook county if you can.  Try DuPage.

I do NW suburban cook county, and DuPage county.  I don't hold anything in Chicago. 

I'd rather do a deal and lose money, than give my money to any real estate education company.  Doing a deal is going to teach you way more than any other way.

Find a mentor and do a deal.  

For conventional, no gifts on investments. Most banks will not do LLC's (if they sell to the secondary market)

I do it differently than everyone else.  I figure out the properties Debt Value first.  It's a new term I'm trying coin before @Brandon Turner does!

I take the RENT then minus the Insurance, taxes, HOA dues. That's your cashflow if you paid cash.

Now I want to see how much debt that can support.  Plug in your cashflow and divide that by whatever terms of financing you have.  For example:

Rent 1000

Ins 50

Tax 250

HOA 0

= cash flow of 700/m.

You'll take that 700/m "mortgage payment" and divide by 5% for 30 years (or whatever you pay your private lenders for long term debt).  So.....700 / 5% at 30 years = $139,711

That means that I could buy this property for 139,711 and get 100% financing at 5% for 30 year and my RENT minus the PITIA would = $0.  

This is really good when there's no other recent sales, and especially when you're using private money.  

Welcome to the site.  Congrats on the new place!

Now go buy a few more rentals :)

Welcome! Make sure to check out some local REI clubs and start networking. Real Estate is definitely the right vehicle

Marketing

My rentals are between 12-18% cash on cash returns (with 20% down and conventional financing).  And I only invest in the suburbs.  

Like anything, you just need to know your market.  The taxes suck here, but certainly within a reasonable drive you can find properties that'll work.