All Forum Posts by: Steve Smith

Nick,

Good thoughts, and to each his own. I'm just a SFH guy and has worked well for me. I use seller financing for some 95% of my deals and have never had an issue, and have put down anywhere from zero to 100%, and often get financing at zero percent interest or comparable to banks. I do take title subject to, often and that works. I prefer terms over cash, but either works. And I like to get a house that will double in about 10 years with positive cash flow, and most of mine have done that or better.

The thing I like about houses is that it just doesn't take many, and they are dirt simple to have.

Now, I've drifted into other RE items, like notes, options, and other rights, and they have done very well, too. Also, I like joint ventures where I don't do any work (for the most part).

For now, I'm semi retired and just dabble with a few houses a year. Time if far more valuable than a dollar and I'm out to play. But love to do deals.

My duplex and apartment deals are over. I could tell you horror stories, but won't bore you.

Going for a bike ride......

Good points about talking to the RIGHT people. Other investors, and preferably experienced. Join a group, a local reia, go to classes for investing and buy house.

Your first rental house should be a step above the typical entry level house in your neighborhood. Good location, with good houses and people that work... higher end blue collar to white collar, but not professional.

You want a simple, easy to rent and easy to maintain for your first. And after a short while managing, buy your second.

Sounds like you're young and you only need 10 free and clear houses like this to retire on, so one per year will get the job done.

STAY with houses like the above, which might be a 1500 to 2000 sq ft, 2 to 3 br, 2 ba, CHA, CB, garage with nice yard. YOUR MOST IMPORTANT GOAL IS TO ATTRACT A GOOD TENANT, who will take care of your house, help you pay off the note, and help you toward retirement.

BUT you need to learn some basics, google some books on SHF investing, and managing your rental.

Without a doubt, either the TValue (PC only) or 10bii for mac or pc. I use the 10bii because I'm a Mac guy. With either, you can do all kinds of performance problems, uneven cash flows, rate of return, amort, etc. Use them often.

Back in the day, we use do use a number of the HP calculators, mine has been in the drawer for years... not even sure of the model. But WAY back when, I used an HP41CV, quite the calculator of its time. 

Question... how is the deed titled now? Why don't you talk your partner to put in a trust and divide up via beneficial interests and an agreement (all of which is private and can't be disclosed other than court order in most states. And NO reporting, annual reports for a trust. I don't know CA law, so just food for thought.

Try to stay close to where you live, and close to the city, where the more expensive homes and/or the working commuters live and where you'll attract a better tenant. You might have to bite the bullet, but shop carefully, look for a low priced home in a higher priced neighborhood. 

Your lender is wrong. Get another, there's plenty that have it figured out. Real estate income is not in your personal debt/income ratio, and the rent from your GF is "income" (not taxable), that offsets the the rent so only half should show up in your ratio.

No, don't need an attorney for an LLC, but I could argue to hold your properties in a trust, not an LLC, and use some form of a business (LLC, SubS, Business Trust) to run your management through. However, could argue that you just don't need an LLC.

Whatever you decide, do some research, get some books, take a course and learn about them.

Nick,

True a duplex is not commercial by definition (usually city or county), but it acts like one.
It's hard to buy, harder to finance, harder to manage, harder to get good tenants, has much more maintenance, and harder to sell than a SFH.
Now, there's always someone that will come up with an exception. And, yes, they produce more cash flow... BUT you work much harder for it.

The only money I lost was with a bunch of duplexes and quads. Just a PITA, and they were new, good neighborhoods, and "looked good". That was back when I was young and stupid. My houses of the SAME value, make more over time, appreciate better and are MUCH easier to manage.

But, I have an aversion to work. Just don't like it. A hammer doesn't belong in my hand. And I don't want to re rent every year or two. I don't like tenants that talk to each other, or worse, want to talk to me.

And, when time to sell, I'm selling to a retail end user... a homeowner, not an investor. He's going to buy on emotion, not numbers, and that works for me.

BUT, to each his own. I've got friends that like their duplexes and apartments. They tell me all about them when I'm out boating and they are working on them.

Dieudonne,

If you're new, the absolute FIRST thing you need is to get educated. You need a course on real estate investing.

A duplex is NOT the best investment overall, however, it does produce better cash flow than a house. There's MANY reasons I don't like duplexes:

Generally, lower class tenants (and that's a deal killer)

You're dealing with a commerical property... harder to buy, sell, manage.

Your management and maintenance will TRIPLE over a SFH of the same value.

SFHs hold value better and you sell them to an end user, NOT and investor..... except typically new investor that are not skilled yet, try to buy duplexes.

Also, tenants talk to each other... last thing you want. But apartments are MUCH worse.

And, I've been there and made the mistakes. Still made a few buck but just not worth it.

My SFHs have out performed the duplexes over the years by 50% to double, and attract MUCH better tenants.

Just food for thought.

ABSOLUTELY roll it over to a Roth IRA, and you want a self directed Roth. Especially if your ordinary income is low this year. And spend a few more dollars on tax deductible stuff for your properties now if you're going to do it in the future anyway.

Clearly the self directed Roth is the way to preserve and grow your wealth tax free. If the wrong president gets in expect your taxes and expenses to significantly go up. Now, self employment helps.

Do a search for Self directed custodians. Most of them have a TON of info on their web site, and often webinars to help. They can help you roll it over. Not hard.

Here's a start:

http://selfdirectedira.nuwireinvestor.com/list-of-self-directed-ira-custodians/

Choose from the mid sized group, NOT the big ones, as a few of them are really bad.

Do your do diligence, and learn about this. Almost ALL of the successful investors I know have a self directed Roth.


Excellent choices:
questtrustcompany.com/quincy-long-of-quest-ira/
advantaira.com