New To This - How Much Earning Potential In It?
Hello - I'm fairly new to this type of investing, but seriously thinking of taking the plunge.
Just curious - what type of eanring potential is there for those that make this their full time "job"?
What are your experiences about doing L/O full time so far?
Any feedback is greatly appreciated.
You could make millions or billions or lose the same! When you creatively invest in real estate you are very much building a business. The learning curve is steep and you can't expect to get rich quick.
90% of small businesses fail within the first 5 years.
I recommend reading Rich Dad Poor Dad and Cashflow Quadrant both by Robert Kiyosaki. Those books should put you in the right mindset to start learning how to suceed in this business
GOOD LUCK AND WELCOME
Like in sales, real estate is pay for performance. You hone your skills, work the numbers, get lucky sometimes, the potential is unlimited.
You slack, procrastinate, treat people badly, get unlucky and you could be hurting bad, real bad.
GL
So what will be a good and low risk investment a beginner should start.
buy/rent Duplex, SFH then move to small multiunit, - or l/o or buy/sell notes?
jamesCA,
It will be easier if you can do SFHs and duplexes. From your posts I am guessing that you are in CA. It is a bit harder to find SFHs or duplexes where the cash flows work unless you can buy at a discount or get very soft seller assisted financing. This does not mean that you could not start with something bigger. My first was an 8 unit building which gave me much management experience and some good stories!
Good luck and success,
Ed
jamesCA,
You should always check out the rental market in any area no matter what type of units you are buying. I would talk to some investors in the area and also property management companies.
In general, as the number of units increases the expenses as a fraction of your gross rental income tends to go up. You might want to look at the books of the seller, as well as, his/her schedule E on form 1041 of tax return. The expenses may not be too bad if the building has been rehabbed or built recently. In CA I have not found very many multi-unit buildings constructed much after 1980.
Certainly a 4-plex will be more management intensive than an SFR or duplex. With an SFR you are more likely to have a tenant that some day may want to own their own home. You can explain to tenant that his/her tenancy is a "boot camp" to prepare for that event and make tenant responsible for doing some maintenance and having direct contact with some service people. For example, if there is a leaky faucet in the shower, I have tenant find someone who can do repair and give me an estimate. This is harder to do when you have more units.
You also need to be comfortable with the numbers. There is a program in the MYTools section of MyTCI called Proformanator that may help you evaluate your property. I strongly recommend that you get good with a spread sheet and do these on your own.
When starting out you might want to manage these yourself so that you learn the property management process. This way you will be able to manage property managers as you mature with REI. My 8-plex I mentioned in the previous post was professionally managed (thank God!). I maintained tight control over money in that I wrote all of the checks and did all of my own books. I also gave approval for repairs and maintenance.
I hope this is of some help to you.
Regards,
Ed[ Edited by edmeyer on Date 09/03/2004 ]
Thanks so much Ed! Very good information.
--James
***FORUM RULES #2 VIOLATION***[ Edited by rajwarrior on Date 09/04/2004 ]