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  1. #1
    Registered User Sal29's Avatar
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    Anyone have experience with investment properties/being a landlord?

    I've never done this before so I'm thinking of starting really small to get my feet wet with a $160, 000 Condo in the Los Angeles Metro Area. Unfortunately I'd have to buy something in a higher crime are such as a Studio in Long Beach, a studio in Ontario, 2 Bedroom, 2 Bathroom Condo in Fontana, or I could buy a small 1,200 square foot plot in Long Beach and build a Tiny Home there to rent out.
    The tiny home option could be the most profitable in theory but the fact that there's a tremendous amount of red tape to building in California really scares me and I would not have any rental income coming in at all till the tiny home was built and rented out.
    What do you think is the best option for a rental/income property for $160,000 or less within 5 hour driving distance from my home in Calabasas. I really don't want to purchase out of state. I want to be able to check up on the property on the weekends and get maintenance and work done without having to hand it over to someone out of state to deal with it on an out of state property. Anyone have any ideas about good zip codes I may have missed or if the housing market is about to crash?
    Should I wait a year or buy right now?
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  2. #2
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    Why not house hack as they call it? Live in one room, rent out the others. Or get a duplex and rent out the other side. Thats what I do now in my place.
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    I rent out furnished houses by the week with all bills paid. Refinery contractors with a per diem are my tenants. A motel room with 2 beds is $400/week. I charge $600/week for a 3 bedroom. The main selling points are the washer/dryer and kitchen. Cable/wifi and being decorated like Hugh Hefner's mansion are just icing on the cake.
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    Originally Posted by paulinkansas View Post
    I rent out furnished houses by the week with all bills paid. Refinery contractors with a per diem are my tenants. A motel room with 2 beds is $400/week. I charge $600/week for a 3 bedroom. The main selling points are the washer/dryer and kitchen. Cable/wifi and being decorated like Hugh Hefner's mansion are just icing on the cake.
    $800 per bedroom per month? Not terrible I guess, I have a place for $500/month right now while working on a major pipeline project
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    Originally Posted by Sal29 View Post
    I've never done this before so I'm thinking of starting really small to get my feet wet with a $160, 000 Condo in the Los Angeles Metro Area. Unfortunately I'd have to buy something in a higher crime are such as a Studio in Long Beach, a studio in Ontario, 2 Bedroom, 2 Bathroom Condo in Fontana, or I could buy a small 1,200 square foot plot in Long Beach and build a Tiny Home there to rent out.
    The tiny home option could be the most profitable in theory but the fact that there's a tremendous amount of red tape to building in California really scares me and I would not have any rental income coming in at all till the tiny home was built and rented out.
    What do you think is the best option for a rental/income property for $160,000 or less within 5 hour driving distance from my home in Calabasas. I really don't want to purchase out of state. I want to be able to check up on the property on the weekends and get maintenance and work done without having to hand it over to someone out of state to deal with it on an out of state property. Anyone have any ideas about good zip codes I may have missed or if the housing market is about to crash?
    Should I wait a year or buy right now?
    Any of those could work. At the end of the day, you want to make sure your monthly rental income covers your costs so you break even with mortgage, property tax etc. You probably won't make an actual profit for a while, but might clear a little. For $160k a studio in Long Beach sounds about right. I know 1/2BR in my area in LA are going for about $500k (West LA).
    You may want to look at Riverside. Decent area with UC Riverside so lots of students and much more affordable than OC/LA.

    I definitely recommend getting a place you can easily visit. With only 1 unit hopefully you won't need to put too much maintenance/repair into it, but renters love complaining about every little thing so you want to be able to get there easily if you're managing the property yourself. A lot of 'basic necessity' repairs need to be fixed within 24 hours, e.g. no hot water, unsafe conditions etc.

    If I were looking to buy right now, honestly - I would wait. We are in uncharted water with the corona virus and who knows what will happen to the market over the next several months/year. We still haven't started dealing with the aftermath from all this, and many people are expecting another recession or even depression.
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  6. #6
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    Bump. Would love to learn more about how people got started in real estate investing.
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  7. #7
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    Originally Posted by Hoop_Dreams View Post
    Bump. Would love to learn more about how people got started in real estate investing.
    Really, the hardest part is saving up the initial investment because real estate usually requires a big chunk of seed money (down payment) to get started. There are ways to get started easier, like FHA loans which I believe you can use for multi-unit dwelling as long as you live in one of the units, and can also only use once on your first purchase. This is probably what I would do buying my first property if eligible.

    Whatever property you are looking at - do the math early before you get too serious based on the listed price. Aim is to break even with rental income to expenses. Many people won't make a profit the first few years as they wait for rental rates to increase, which will over time lead to more money in your pocket.

    Rental real estate is usually a long game. You're not going to make money right away. Usually you will make your money by selling the property for a profit, or keeping the property long enough to pay down the mortgage, so at that point years later you will actually be making decent $ because you'll be keeping the rent as opposed to using it to pay off the overhead. My family did this with a property that I manage now. They bought it for $1 million back in the 80s, today it is paid off so the rental income brings in 6 figures every year, on top of which the value of the property has quadrupled.

    That's the great thing about rental properties - after the initial investment they pay for themselves while your investment is growing.

    Because of all of the above (profit relies on the real estate market) I would not buy right now. Prices are super high (been going up steadily since 2008) and the covid situation has the future more uncertain than ever. Would devastate me to pay top dollar for a property right now only for the value to drop later this year or early 2021.
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  8. #8
    Registered User paulinkansas's Avatar
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    Originally Posted by Hoop_Dreams View Post
    Bump. Would love to learn more about how people got started in real estate investing.
    My wife and I got married. She had a 4 bedroom house that she tried to sell when she moved in with me. It didn't sell for a year. She saw a realtor to have it listed. Realtor said I needed to come in and sign some papers. Asked them how much they rent houses out to refinery contractors. She said up to $1000 a week. I had a little 2 bedroom house that was vacant. My wife and I filled that 2 story house with furniture and appliances from her house. We put 4 beds in there. We thought $210 a week per bed was reasonable amount. It took a few days and I got 4 contractors in there that didn't speak English. I would knock on the door and a hand would come out it $840. I'd put a receipt in the hand and it would go back in. Next week, same story. This went on for 2 months on a house that would sell for about $9500 in my market. Within 30 minutes of them moving out, some of their friends called me and wanted it. $840 a week for 2 months, they moved out, and 3 of their friends called me within 60 minutes. $630 a week for another month. She had a rental house too. We furnished it and did the same thing. Then we bought our first house together, a 3 story house with 4 bathrooms and a jacuzzi. I put 8 beds in there. Last month it was bringing in $250/week for each bed. All the renters in that house worked for the same company. We paid $15900 for that house.

    The market I'm in is not your average market. There have been a lot of bank foreclosures since Amazon moved their distribution facility from here. The refinery is always bringing in contractors to do specialty construction and maintenance projects. This sort of arrangement can be done with other industries, universities and military bases.
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  9. #9
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    Originally Posted by sunsean View Post
    Really, the hardest part is saving up the initial investment because real estate usually requires a big chunk of seed money (down payment) to get started. There are ways to get started easier, like FHA loans which I believe you can use for multi-unit dwelling as long as you live in one of the units, and can also only use once on your first purchase. This is probably what I would do buying my first property if eligible.

    Whatever property you are looking at - do the math early before you get too serious based on the listed price. Aim is to break even with rental income to expenses. Many people won't make a profit the first few years as they wait for rental rates to increase, which will over time lead to more money in your pocket.

    Rental real estate is usually a long game. You're not going to make money right away. Usually you will make your money by selling the property for a profit, or keeping the property long enough to pay down the mortgage, so at that point years later you will actually be making decent $ because you'll be keeping the rent as opposed to using it to pay off the overhead. My family did this with a property that I manage now. They bought it for $1 million back in the 80s, today it is paid off so the rental income brings in 6 figures every year, on top of which the value of the property has quadrupled.

    That's the great thing about rental properties - after the initial investment they pay for themselves while your investment is growing.

    Because of all of the above (profit relies on the real estate market) I would not buy right now. Prices are super high (been going up steadily since 2008) and the covid situation has the future more uncertain than ever. Would devastate me to pay top dollar for a property right now only for the value to drop later this year or early 2021.
    Thanks for the reply man.

    I've been reading up on BRRRR and was wondering how realistic that is for someone who is just starting off.

    My plan is to use the FHA loan for a duplex/multi-family property and live in one unit and rent out the other. Renovate during my time there with some elbow grease or find a reputable contractor. Then after a year or two, get it appraised for higher, refinance and use that money to do it all over again. My goal is to then just keep the first property to have cash flow coming in, even if I'm only breaking even to start. Is that a sound approach?

    And damn, so real estate investing runs in the family. That's awesome man. Is that the only property your family is renting out?

    I know right now isn't an ideal time to buy, but I'm thinking with COVID there may be some opportunities in a year or two.
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  10. #10
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    Originally Posted by paulinkansas View Post
    My wife and I got married. She had a 4 bedroom house that she tried to sell when she moved in with me. It didn't sell for a year. She saw a realtor to have it listed. Realtor said I needed to come in and sign some papers. Asked them how much they rent houses out to refinery contractors. She said up to $1000 a week. I had a little 2 bedroom house that was vacant. My wife and I filled that 2 story house with furniture and appliances from her house. We put 4 beds in there. We thought $210 a week per bed was reasonable amount. It took a few days and I got 4 contractors in there that didn't speak English. I would knock on the door and a hand would come out it $840. I'd put a receipt in the hand and it would go back in. Next week, same story. This went on for 2 months on a house that would sell for about $9500 in my market. Within 30 minutes of them moving out, some of their friends called me and wanted it. $840 a week for 2 months, they moved out, and 3 of their friends called me within 60 minutes. $630 a week for another month. She had a rental house too. We furnished it and did the same thing. Then we bought our first house together, a 3 story house with 4 bathrooms and a jacuzzi. I put 8 beds in there. Last month it was bringing in $250/week for each bed. All the renters in that house worked for the same company. We paid $15900 for that house.

    The market I'm in is not your average market. There have been a lot of bank foreclosures since Amazon moved their distribution facility from here. The refinery is always bringing in contractors to do specialty construction and maintenance projects. This sort of arrangement can be done with other industries, universities and military bases.
    That's amazing. Does each room have it's own bed or are you putting two beds in some rooms? Do you experience long periods of vacancy or are you always filled with refinery contractors?

    Are you guys looking to expand beyond this? Location seems to be key. Thanks for the post!
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  11. #11
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    Originally Posted by Hoop_Dreams View Post
    That's amazing. Does each room have it's own bed or are you putting two beds in some rooms? Do you experience long periods of vacancy or are you always filled with refinery contractors?

    Are you guys looking to expand beyond this? Location seems to be key. Thanks for the post!
    Each regular room has its own bed and a common bathroom is in the hallway. Some of the bedrooms are master bedrooms. They have their own full bath accessable through the bedroom. I always put 2 beds in there along with a Smart HDTV. A day shift and a night shift guy can share it, they'll never see each other, and they have their own bathroom. I'm ether 50% full or 100% full with my 23 houses. 85% of the time it's half full. The other 15% of the time everything is full. That's for the last 8 years, excluding the last 3 months.
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    Originally Posted by Hoop_Dreams View Post
    Bump. Would love to learn more about how people got started in real estate investing.
    Keep reading, listen to bigger pockets podcasts. If you can get a multifamily in your price range, live in a side and rent out the others
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  13. #13
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    Originally Posted by paulinkansas View Post
    Each regular room has its own bed and a common bathroom is in the hallway. Some of the bedrooms are master bedrooms. They have their own full bath accessable through the bedroom. I always put 2 beds in there along with a Smart HDTV. A day shift and a night shift guy can share it, they'll never see each other, and they have their own bathroom. I'm ether 50% full or 100% full with my 23 houses. 85% of the time it's half full. The other 15% of the time everything is full. That's for the last 8 years, excluding the last 3 months.
    23?! You must have an enormous cash flow. That's incredible. Is it draining keeping track of the 23 houses or do you outsource work to property managers?

    Originally Posted by tunafish01 View Post
    Keep reading, listen to bigger pockets podcasts. If you can get a multifamily in your price range, live in a side and rent out the others
    Yeah the IG algorithm lead me to BiggerPockets yesterday lol. Thanks bro, definitely want to house hack to start.
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  14. #14
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    Originally Posted by Hoop_Dreams View Post
    23?! You must have an enormous cash flow. That's incredible. Is it draining keeping track of the 23 houses or do you outsource work to property managers?

    .
    My wife and I do all the work ourselves. My official day job is doing pre-access drug screens at a clinic. The clinic calls me when someone shows up, I'm there in a few minutes. I'm normally doing something at a rental house or screwing around in my garage or lifting. The majority of the people that pee in a cup are coming to my town to work in the refinery. They need a place to stay. Some have a camper. The rest have to pick a motel or pick me.

    My wife quit her job as an office manager of a law firm to help manage the houses. She cleans and restocks, and lets me know what needs fixing. I fix what needs fixing and show them to potential renters.

    Is it draining? I'm basically on call 24/7 365, but the cash flow is worth it.
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    Originally Posted by Hoop_Dreams View Post
    Yeah the IG algorithm lead me to BiggerPockets yesterday lol. Thanks bro, definitely want to house hack to start.
    I'm also one of the top posters in BiggerPockets in the short term rental forum. Same screen name, different picture. I really should use the bigger pockets picture in this forum. What do you think?
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