01-05-2009, 11:16 AM | #23 | |
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Anyway, let me know if you have some questions as I'm "in the biz" if you will and could provide some insight. The first thing I would strongly suggest is to look for 4 units and under as financing is 150x easier than 5+. They aren't making units any more...and in California rentals will always be solid. PM me...
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01-05-2009, 05:50 PM | #24 | |
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This is turning into a really good thread. I would like to hear more from people that are investing in real estate. Big props to you younger guys that have started investing in Roth IRA's and real estate.
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01-05-2009, 05:51 PM | #25 |
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That is awesome! That investment is going to give you big returns in the future.
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01-06-2009, 06:09 PM | #26 |
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Has anyone tinckered with the idea of raising money privately?
After I own 3-4 properties and have at least one fully paid for I'd like to start raising funds privately, I think I can prduce a 8-10% ROR for the investors. If I can raise $100K, that's enough for a duplex which would generate roughly $18-20Ks/year. So if I can lock the investors for lets say 5 or 7 years I can have a property thats worth $115K's and about $120k's sitting in the bank (or reninvested in another property!!). I think it will be an easy sell for family, friends and acquaintances if I can grow my holdings in the next couple of years. A)The total cost of a $100,000 duplex with a 25 year 5.0% mortage would be $169,800. B)The total cost of a $100,000 duplex acquired through private funds with a projected ROR of 8%, 9% and 10% is $146,930, $153,862, and $161,051 respectively. In scenario A) the total cost for the purchase is on average $15,937 more then B). In scenario A) it takes 25 years pay the mortgage off, which greatly reduces my monthly rental income for 25 years. In scnario B) the cost of borowing is greatly reduced, and the house will be paid for from day 1, and my monthly rent income is much higher starting from day 1. After the investment matures (5-7 years), I would pay the investors back with the money the house generated. So in this scenario I would own 100% of the property in 5-7 years, and generated a decent return for investors. This of course wouldn't make my mortgage broker happy, but screw him!! lol How many of you folks would be open to this idea if a trusted friend, family member, or an acquaintance pitched to you. btw, to instill some confidance I would put the most money down, I am thinking in the range of 20-40%. I am not sure how investing and retirement saving work in the states, but here in Canada 9% return in RRSP (similar to 401K and IRA) is very common. (with the exception of last year of course). fwiw I would only do this inside a corporation and have specfic law binding agreements with the investors, I know it would cost a little more but it will protect everyone's interests!! Please give me your feedback if you would invest in such venture, if not then what dont you like? What would it take for you to invest?? Last edited by RonJon; 01-06-2009 at 06:11 PM.. Reason: added more details |
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01-06-2009, 06:22 PM | #27 |
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Go to the book store (or Amazon) and look for a book called "Buying Small Apartment Properties" by Brian K. Friedman. It has lots of good advice and explains how the business model works.
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01-09-2009, 11:17 PM | #28 | |
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01-10-2009, 01:20 PM | #29 | |
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01-11-2009, 09:50 PM | #30 |
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01-11-2009, 10:37 PM | #31 | |
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01-11-2009, 11:02 PM | #32 |
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make sure that you have 51% ownership and voting rights...a 50/50 split is makes things very difficult if you don't agree...also make sure that you have CLEAR buy-out provisions when one of you gets pissed and wants out...
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01-12-2009, 12:55 AM | #33 |
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i highly doubt you have three to six month's worth of income seeing how the market has been so low. on the bright side you didn't loose anything and made way more than what you would have if that cash sat in a regular savings account.
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01-12-2009, 12:57 AM | #34 |
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+1 i've known a few situations that have gotten uglier than they would have had this been set forth clearly.
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