All Forum Posts by: William Anderson

Rates have been staying above 6% for a while now on a traditional commercial real estate loan. As others have mentioned this is the time when the hybrid loans are pulled out of the drawer filed back in 2008. SFR stepped mortgage loans are back to help with lower starting rates.

Look around, lenders are getting very creative 

Sounds like you could raise the rents to market and hand this property over to a property manager.  After paying the management fees you would still be ahead.  The best part, your marriage would be better off.  I almost always recommend against self-management.  Leave the headaches to the professionals.  Your situation is a perfect example of why not to self-manage.  

Unless you are in the charity business which is ok, your property is a real business based on dollars and cents.  

Steve, 

I just finished analyzing a duplex for my residential real estate investment course.  The asking price is $178,000 it's a 2/1 on each floor with a separate entrance.  The property is located on the Mississippi Gulf Coast.  Current rents are $550, market is $1,100 for LTR.  The property is also located in a rare area zoned for Short-term rentals.  I ran the numbers for both and they came out very good.  

Multi-family homes in my area don't come to the market very often. I work with a great property manager that manages both LTR and STR properties. There may be others, I have been focused on this one for a few days as an example of a winner to add to my course.

Also, I am selling a duplex, it's a big one, 4/2 on each side.  That one is going for $222,000 with rental rates at $1,200 on each side.  It's under contract now but things can happen.  Check out my real estate website LoganAndersonllc.com you can look for multi-family properties.  Register and the system will send leads to you when they come up.  

Bruce, 

Great point.  I tell my clients to start to create a real business with tax Id and to run all income and expenses through their accounting program.  I refer them to waveapps.com which is a free online program.  It allows the to create invoices as well.  The point is that many just starting to keep their income under the table.  This is why they pay cash to contractors.  Doing this hurts their opportunities down the road. 

No serious lender will take someone seriously without tax returns showing real income and expenses.  It usually takes at least two years of solid profits to obtain business loans but when you can start getting them, the world opens up.  All you have to do is participate in the system.  Pay income taxes and stop running your side hustle as if it was the same as selling candy bars in school.

I have a great client that I have been helping for almost two years.  He has been running his business as a real business.  A couple of banks have already told him they would lend when he can close out two years' tax returns with profits.  He is almost there and loving it.

Rosann, 

Contact Tim Allen, 833-705-5626, he is a broker Simplemortgageonline.com he has done some interesting things over the years for me. 

It works for multi-family as well, I use it for up to four units.  Just add the rents together and use that number against the purchase price.  Same concept.  I just ran numbers on a duplex and the 1% rule worked well as an initial screening tool.  I only use the 1% rule when I am looking at a large number of potential properties.  Unfortunately in my market, there may not be more than five or six multi-family on the market at one time.

When I am looking at SFRs where there could be dozens, it works better visually just by scanning down the list of asking prices when I know the basic rent rates in an area.  The real work comes in when the property passes and you need to get deep into the numbers.

Julien, 

Nice to see young people develop goals. Don't give up that day job.  The reason is this; successful investing in real estate takes excellent credit and cash in the long run.  Starting you can try some of the "deals" that do not require great credit or cash but in the long run, having access to the income from your real job will greatly help you move ahead. 

Eventually, you will be financing with experienced people and banks, etc. look at assets and great credit before they lay out the big dollars.  So keep working a w2 job and saving towards more investments.  When you have established a business running profits through it and filing tax returns, you can start to move away from the w2 job and use your profits to live on.

Regarding retiring at 40-50, probably not going to happen.  Shock.  The problem is that you have decided to get into a business that gets under your skin.  It will become as much a hobby as a vocation.  Passive income is addictive and while you may not be drawing a regular paycheck at 40-50 you will need something to keep your mind busy and trust me, sipping umbrella drinks on the beach is not the answer.  Fortunately or unfortunately, most of us entrepreneurs find that our property investing activities are part of our DNA.  

If you can really walk away when you are 40-50 great for you.  At the very least, you have a plan.  Good luck

There are always deals but fewer now.  According to the FED St. Louis analysis, from 1965 through the beginning of 2022, the highest price acceleration in housing has taken place in the past couple of years.  Even the period from 2005 through 2009 was not even close regarding price growth.

Having said that, what is very interesting is that rents are still going up.  Rates are in the double-digit range.  I have two friends who have received $1k per month increases in their rent.  Since investors must consider rental income as a key factor, inflation is helping in this process.

Buy right and keep moving those rents up.  Consider that states such as CA have been pushing higher minimum wage increases making higher rents a bit more affordable.  Wages are on the increase.  I was looking at a property today and found rents at $525 per month for a 2/1.  The current market rate for that property is $1,100.  Many owners are not keeping up with rates so buying their properties priced at lower rates creates opportunities.

Aaron, 

It sounds like you need knowledge about real estate investing. You have the funds which are good and you have the start of a direction, also good. You need to learn about the business side of investing before you leap. This means considering the options as well e.g. single family, multi-family, STR, Notes, Tax liens, and other ways to make money investing in residential real estate.

Start with creating a business plan that includes your goals.  Keep in mind that most investment opportunities e.g. buying a house and renting it will generate good % returns if done right but deliver low $ returns.  For example, you may hit a 10% Cash on cash return which is good for a rental but only earn $300 per month.  I say only because often new investors think they can live on or greatly supplement their income with rental income.

It takes time to build a portfolio that will begin to replace your income if that's what you want or do you want passive income? There are lots of terms thrown around on this and other sites such as ROI, COC, STR, etc. Learning these terms is just one part of gaining the knowledge you will need to be successful in the long term.

My course on residential real estate investment covers everything you need.  Contact me if you are interested, I am reluctant to list it in this form.