Income properties. Does anyone own some?
 

We just hooked up with a guy to refinance our house a while ago, and he planted a seed in our heads.

He mentioned "income properties". Earlier this evening we went to our old neighborhood to take Baby RedShoe on her first Halloween tour. It was nice seening the old crowd. I mentioned "income properties" to one of our old neighbors and he says that's all he does, and he's moving to Oahu next year.

He says there are no taxes, and the mortgage pays its self by the rentor.


We didn't get into specifics, but this is what I assume, am I on the right track?

You buy the property, the rentor pays your mortgage (and a small % more for maintainence and yourself) then at the end of the year, you get to write off the interest. Is that right? Mortgage pays its self, I get to write of interest, and I collect the tax return (could be in excess of 16K for the first 2 years.)

Ok, so if I do the numbers, and get like say 5 or 6 of these. I could be making 16K x 5 = 80K a year? Just for calling a plumber every once in a while? Or hiring a bunch of mexicans from the front of Home depot to clean and fix the place up?

Do any of you do this? Does it really work?

Alot of people do that in norway. The realastate rent out marked is huge.

I know people who do - the only problem is being a landlord. Either you spend a lot of time fixing shit, you're a slum lord, or you spend a lot of money on renovations on "high end" properties..

Of course, you can always get a management company to handle that stuff for you if you have enough, but I imagine they take a healthy chunk.

It's something that I will probably do myself, although I am probably going to try commercial space myself.

Cheers,
Backov

Yeah, I am involved in Income Property... actually looking to add some now. Normally i fix stuff myself... sinc ei've had alot of experience, but the best i`ve seen from rental 'houses' is that they make their payment when_they_are_rented_out... They never actually give you extra cash, depending on what they are. I'd suggest an apartment building of 15-30 units or more. Houses are best for equity... but apartment buildings will turn an annual profit.

Yes, my family my mothers side has tons of properties in Trondheim. They basically buy either a new project, or something older, then renovate it completely, and rent it out.
There is alot of crap with it though, tenants can be a pain in the ass, so you should get someone to take care of that for you.

Hmm, I am just looking into this myself.

The problem I am running into is this - I am only allowed to claim half the rental income on my mortgage application. So, I have to have a high enough income to justify the mortgage... which is pretty lame.

yeah, this guy mentioned something about a management company. When we used to live next to him I always thought he worked for one. Hmmmm, maybe he meant that they worked for him.

Damn either way, he said he's moving to Oahu and will be running things from there. So maybe he does hire a management company.

I think it's pretty interesting.


Porn is cool, but whatever helps pay the bills, know what I mean. :) I'd get a few properties (he says you can do it in a way where you put ZERO down) and still push porn onto the masses. :)

It might be better to do it through a corporation.

My uncle has been doing this for many years now, from what I have seen just make damn sure you get good solid houses. He ended up with one that damn near took him back to square one.
Everytime he turned around something was broke or needed replacing because it wasn't up to the latest building code standards, the wiring started having probs and when the electritians went in to fix it they ended up replacing it due to it's age and not up to current codes.
He ended up just about giving the house away and now is doing very well, just built a new place for himself, a huge 2 story place with a pool and 6 bay shop.

I already told you I wasnt looking for another job so FUCK OFF :boid




Mike..............

Dude, no one knows that you and I are mexicans so shut up.

Yo quiero Taco Bell?

Zero down? lemme know the secret!

Oops... Was i thinking out loud again :eek7



Mike...............

This thread is beginning to read like a TOM VU infomercial.

"I make YOU winner!" -- Tom Vu [prior to going to prison for fraud]

my ex-girlfriend's dad was into it bigtime.

he tried to talk me into buying some stuff - but the more i looked at it, the more it seemed like a large pain in the ass. just not my thing.

my grandpa does this. it can be a pain in the ass with people not paying on time but its good $.

"I'm Tom Vu. I make lotta money. You can too. This my boat. I make lotta money. This my plane. I get happy pretty girls. I make you lotta money. Call me know."


I know... it does sound to good to be true. And I'm not sure which research I can trust. I don't want to read biased material. I figure if I knew some people here that may have some advice. I could trust them over. Some Tom Vu wannabe that has a "research site" that will just sucker me in. Trust me... I'm a very easy sell.

I once sold myself a recurring membership to my own AVS. Hey, what can I say, I was a newbie.

compared to all the work that goes into a single deal the return is shit its all ego bullcrap unless you can buy buildings or else you will enjoty your money in 30 years from now

Despite its recent crappy performance, stocks have always been the HISTORICALLY better investment. One thing you can say about real estate is that it is STEADY and TAX DEDUCTIBLE [to an extent]. The problem, as always, is LOCATION LOCATION LOCATION. Plus, timing, some analysts say we may be close to a Real Estate crash soon.

Good, this is what I'm looking for. Ok, so how do you know the return is crap? Have you done it before? Teach me.

If my wife and I sold right now, we could get about 30K more than we paid for it. Prices have gone up in this area since April when we bought.

But the pain of moving, the pain of finding another place, it's just too much. Plus we really like this house.

30K in 6 is only about 5K a month, but still, I don't think that's a bad investment. Once we build up equity it'll go for more. A friend of mine a few miles away, built his home up and was able to increase his equity. His home is worth 100K more than what he paid for it. But he's a jackass, and won't sell.


I'm interested in doing this, so please tell me more of your experiences. Was it a bad deal? What should we look out for?

I got involved in 2 housed in NY and trust me real estate goes up here quick (yes its down a bit now but its never a loss long term)

I am not saying there is no money in it because that would be stupid to say what I am saying is there is so much bullshit to deal with.

within 6 months of buying the 2 houses one in Queens NY and one in Bay Ridge brooklyn I got rid of them, no I did not lose and did not gain but I could not take the bullshit.

I would start making real profit after the homes where paid off thats about 12 years on one and 20 on another (760K home normal in Bay Ridge)

I took that money and invested some of it in vending routes and also purchased a small but profitable laundrymat service (found it on BizBuySell.com)

The returns are quicker and no deeds and closing and bullshit back and forth.

Millions of people earn money in real estate but its not as easy as many make it.

Kinda like porn for people who are not in the business they all say the same thing "All you do is get a site designed place a few ads and the cash rolls in"

Real esate for me coming for more of a cash background it was a big pain and I don't like the fact that it takes forever to see real cash that you own not the bank and shit.

I am looking into buying a local motel here 40 rooms small but the cash is there daily and if a toilet is broken its no emergency they can change rooms, most come there to fuck anyway.

Regardless do your homework that is something I did not do and not all people are crated equal.

And stay away from the stock market why put money in something you have ZERO control over.

anyway im off to bed it almost 5AM est

In MA where I grew up it was popular for families to gather some cash together and buy 2- and 3-family homes. They'd stick the kids or one member of the family in one floor and let the other 1-2 pay the mortgage. It's a good idea if you're in a relatively low value area, but frankly those areas are being bought up more and more by bigger investors.

From my limited knowledge, the key is knowing houses before you buy, you have to be able to walk through and take pictures and ask the right questions; a bad choice can land you in some serious fiscal trouble. Zoning laws, broken appliances and bad foundations are only the tip of the iceberg. For example something small like redoing one side of the house's windows can be a multi-thousand dollar expenditure.

Beyond that it's smart to get 3+ family homes, since a 2 family may not cover your mortgage if you intend on living there. Management companies cut into the minimal profit you may turn with a multi-family. I wouldn't invest without a lot of capital to make a living in real estate, but having that equity and steady money certainly does help.

C.

Thanks for the tips. :)

I believe the key is to never make any money on paper or it would be taxable income right? Anyways I have a pile of property appraisal courses, mainly dealt with apartment buildings in the last few years right. Gross income multiplier and cap rates, blah blah blah. What these guys are doing are buying a property and paying down the mort. and then borrowing more money on the mort. to buy another property etc. That way they aren't making a shitload of taxable income. The payoff comes when they want to retire and get out of the business. Assuming the market has taken off and it usually does. They turn around and sell their properties for a shitload of money.

I live in a university town. Alot of people buy an old 5 bedroom house for next to nothing and then rent it out to students at say $500 bucks a month for each room. Makes a good little chunk of cash but you have to deal with the shit that goes along with renting to drunken college kids.

Burtman

I don't know how old you are, but acquiring properties for the purposes of renting the property out is, in my opinion, one of the best investments one can make for your future. My dad, when he died, had several million dollars in property value which he aquired over a span of about 45 years. He begain aquiring property in his mid twenties while he was still in the Army. I have been doing the same thing for a number of years. The formula that my dad used and I use is as follows.

Shop around for cheap fixer uppers.
If you don't want to do the work yourself, or don't really know what you are doing, then hire retired carpenters, plumbers, electricians, painters etc. They may be a little old and slow, but they work cheap (pay them under the table) and know what they are doing.
After the property is ready to rent, screen your renters as much as you can and it is best to lease. The property will pay for itself, mortage, property tax, insurance, maintenance etc.
You continue to do this every time you have disposable money to acquire amother property.
Over the years, after you have acquired a number of properties, you may want to hire a manager/jack-of-all-trades person to take care of the renting/leasing/rent collection/repairs etc.
Over the years you really won't begin to pocket the big money until the properties begin to be paid off, but you will be aquiring wealth in equity in your properties.
After fifteen to twenty years when the properties begin to be paid then it is pretty much gravy income and can be quite a large annual income depending on how many properties you have acquired over the years. In addition you have the value of your properties as well as the increased value from the time that you purchased the properties.
If you do it right in twenty years you will be a multi millionare in property value and will have a very healthy annual income.
Any one that has disposable income can accomplish this. In my opinion it beats mutual funds all to hell.

Buying Commercial Properties is what we do, the return is much
better ( 8% - 11% here in Australia) compared to residential (3%-5%) plus longer leases as people are not moving in and out every 6-12month add to that increase in property value anywhere from 10%-30% and it makes for some very nice $$$


you'll learn :winkwink:
( get property mangers to look after the place, sure they get
a small % cut, but it beats chasing ppl for money or calling in the plumber yourself)

It all sounds great until you actually to do it ...

I've owned five rental properties ... and I'll never do it again ...

Problem is, no matter how many good tenants you have ...

All it takes is one to create a real nightmare ...

Even people I know who have done well with rentals have had properties gutted by tenants ...

On top of the inevitable bad tenant problem, I also had to move because of a job change, so I had to hire someone to manage the properties ...

That turned out to be a nightmare as well ... major ripoff

Because real estate is doing well now ... the conventional wisdom is that it's a great investment ...

But be prepared for the down side ... because there can be plenty of that.

Especially if there is a real estate bubble ... which many people think there is ... where property values could easily decline as soon as interest rates go up again.

So if it doesn't work out, and you decide to sell ... it could be very difficult to do so ... unless you're willing to take a loss ...

Proper screening eliminates many of the renter problems and preferably the way to go is leasing and not month to month rental. Also as was stated above commercial properties are more problem free than individual housing so a little diversification helps. You will still have the occasional problem but if you are not financially on the edge it is no biggy. The value of Real Estate, if you select your properties well, may have temporary slumps, but will eventually go up and up, if for no other reason than inflation. So at the least you will be keeping up with inflation, but in the long run Real Estate will pay better than mutual funds. My :2 cents:

commercial or residential ?
if it's residential then i partly agree with you!

the bubble only affects you if you (have to) sell at that time,
most investments are longterm and you have the choice to
sell when the time is right!

anyway sorry to hear of your bad experience in the past.

Very true, and yes it was primarily residential properties, although ones with a high rental ratio ...

What I'm saying is that if he decides it's too much of a hassle, wants to sell quickly, and gets caught in the downside of the market at the time he wants to sell .... that can be a major problem too ...

If you change your mind and decide you don't want to be in it for the long term ...

Oh, I screened the tenants alright. And most of the them were very good. The problem is the inevitable bad one ... despite the best screening efforts ...

Sure, long term ... real estate is a good investment ...

But landlord hassles can change your mind once you do it ... and since real estate is not always the most liquid investment (especially in a down market) ...

You have to be very careful. That's all I'm saying ...

What you have said would apply to virtually all investments.

Not really ....

If you're in the stock market and it goes down ... you can either sell at a loss or wait it out ...

If you're a landlord ... you still have to worry about maintenance, calling the plumber if something breaks ... replacing appliances ... finding new tenants if someone moves out ....

The list goes on and on ...

And selling real estate isn't nearly as easy as selling stock ...

Having to show the property, advertise ... etc. etc. etc.

I agree that the occasional renter can be a headache, but it is really just the price of doing business. I don't know of any venture that is headache free. If you know of one please advise me? :)

Have you seen that porgram on TV for Carlton Sheets? I don't normally buy things off TV but I did buy that.

I've had a lot of sucess with realestate throughout the years. Nothing gives me a better return then that. It's all about equity gain. In some cases it's quicker and other slower.

I bought an old victorian in Upstate NY. I fixed it up and now it's rented. In three years I made 60K in equity after remodleing cost. I bought cheap, gave it a face lift, changed the bathrooms and kicthen and it jumped. The rent pays everything and I still have some left over.

I'm in South Florida now and rented a house. I haven't rented in years. I needed to be close to downtown and I hate writing that check knowing it could be a mortgage payment. I won't do this again.

It's also a good idea to partner with some friends and buy low income housing. Fix it up some, rent it out and just wait. It's a great retirement plan.

I'm renting a house on an ocean access canal and looking for a roommate. Anyone in South Florida and interested, email me for details.


Dianna Vesta


:321GFY

I have stock and for the past year the stock has provided me with more headaches than my renters have. :)

I'm not trying to argue that ventures should be headache free ...

I'm just trying to argue that the AMOUNT of headaches should be taken into consideration ...

And with real estate, the headaches can be greater than a more passive stock investment, just as an example ...

In my opinion it is the best retirement plan. My dad, who was a soldier for thirty years, began investing in fixer uppers when he was still in his twenties on his low Army pay and when he died he had several million dollars worth of property, paid for. Long before his death he enjoyed a very healthy annual income. It is a poor mans way of becoming a millionaire . I started acquiring property at a later age than my dad, but I am well into it and equity wise I am doing OK.

Well, I guess it's a matter of opinion ...

If a real estate bubble occurs ... property values could decline as much as the stock market ... I'm sure that could be a headache too ...

But at least stock doesn't require a lot of maintenance like getting the plumbing fixed, etc.

Not to mention, finding new tenants when they move out ... hopefully quick enough so there's no disruption in monthly revenue .... advertising, screening, etc. ...