Real Estate = Ferrari

read "Think and grow rich" by Napoleon Hill
Also a great RE book is: "Walk like a Giant sell like a Madman" by Ralph Roberts.
I personally also like Richard Bransons Autobiography.

You are on the right track, just make sure you make INCOME not APPRECHIATION! A high CAP rate is your true friend!

Just came back from South Beach looking at a 4-plex for $500,000 making maybe $ 35.000 annual Gross. At that rate I am broke by 2007!

 

Visit this site, www.creonline.com. It deals with creative real estate and is a tremendous resource.

 

The cap rate is the percentage of income from rent you should receive on an income producing property based on purchase price. A $500,000 property with $35,000 in revenue has a cap rate of 35k/500k = 7%. With this market, I would say to look for at least 10%, and you also have to factor in expenses and rental vacancies. Good luck.

 

Good luck with your future decisions.. You must figure, you are a step ahead of the game..
I wasn't thinking of anything like this at 21..

The best to you Future Ferrari owner.
Ron

 

Anything below 14% is not worth the hassle. Just my opinion.

 

Fil, I agree with Ron, at 21 i was most certainly not thinking about real estate. REal estate can be a great vehicle to personal wealth and is a lot of fun too.Your early start can/will be a good thing,however, I would encourage you to examine your priorities often during this work/life process. I know a lot of well off guys who worked and worked through their prime and now are rich, out of shape and out of synch with some of the best things life has to offer.
When you have a family, try and put them ahead of work whenever possible. Take time to travel a lot when you are young and willing to put up with things that might now work when you are older. Enjoy your life and your time and don't get too deep into the money thing too soon. You can travel and learn so much that will further you all your life. Your personal investment in learning, and achieving good lasting health and positive outlook will actually further you more than that extra cash or second or third home. All the material trappings are great but take the time to have a full perspective that allows you to be generous and knowledgeable about more than economics.
As far as selling real estate, as a buyer I would offer you this advice; be diligent and honest in all your dealings. Follow up without being pushy and do your homework-know your property well. Nothing will get you a loyal following faster than great and knowedgeable service. Good luck.

 

Its really hard to make a significant amount of money investing in property.. one or 2 units is not going to cut it.. you need atleast 10-15 units to get some ferrari cash flow money.. Also you are better off buying real estate at auction and then "flipping it" and make a quick buck. .I have had countless flips over the past years and Im only 24. I have how ever found that the best money maker in this economy is to develop and sell quick. I started a Real estate development company and I think this is the way to go with mortgage rates low.. someone always needs a new home. In short dont bank on investment property to yield a huge amount of income rite away.. a few thousand a month in rent income is usually cut by 75% after everything is paid. However I do not discourage buying real estate.. if you can find a deal then grab it

 

There is a lot of money to be made by buying property that needs some repairs and selling it to a homeowner or another investor. It can also be a lot safer than developing property. Investment property can always be sold to another investor. New homes have a discrimating buyer as your only customer. Believe me when I say that they can always look somewhere else if they have the financing.

Martin, how long are you financing your commercial properties. I am looking at some 4-plexes right now and trying to figure if I should look at 30 years. I plan on keeping these for the cash flow.

 

I am a Realtor/Investor/Developer and the proud owner of a beautiful red 1990 TR! Substantial wealth can be achieved through real estate. There is however a lot to learn. I would suggest taking several courses that will prepare you to invest in real estate. The first one is the GRI course on investment property and the second and best course is CRS204-Creating wealth through residential real estate investing. Also get the Robert Kiyosaki series and read them all ( Rich Dad-Poor Dad,Cash Flow Quadrant,etc.). The above mentioned courses and books will help you realize your dream. Success does not happen by accident. Good Luck!!!!!!!!!!!!!
TRTodd

 

Both courses are available through the National association of realtors. Contact your local real estate board.
Todd

 

todd, do you have to join you local association in order to take the courses, or are they open to the public?

Rob

 

The value a property gains is what I consider icing on the cake. When you buy an income property you should always look for just that: INCOME. The reason I was writing this was that at the current market there is barely properties out there that do produce reasonable income. The South beach 4-plex being a perfect example.

CAP is the return on investment. Your net income divided by the purchase price.

 

I need some at 10% CAP We just closed one of our commercial deals and need to do the 1031. The money is already sitting with the attorney doing it. I am so desperate that I am flying to San Antonio and Austin tomorrow to look at property. 1000 Miles away from home....

 

Somewhat agree with you there is you are looking for fast money. The long term benefit in holding investment properties is great though. At 21 you are not yet thinking about the future too much and really don't have to till you are 30. You can still take a risk and lose it all and start again and not be behind the ball. At 30 you want to start holding some key properties. Like your own home should be close to be paid off, your office should be in your name.
Flipping is what everybody does today. I have rarely seen good properties at auctions that not at least 100 people were bidding on. They can get into frenzies and buy for more that the property next door sells from a realtor.

 

hey martin, no intension of hijacking this very informative thread, but can you pm me about why your website doesnt work... thx

rob

 

I like to keep properties on long term financing because it gives you flexibility. I also like to pay them off quicker by adding equity into them. Usually I have the profits flow into the principle and pay-off in less than 10 years. Just my personal strategy. I know there are different schools out there on how to re-invest your equity, just not my thing.
I have been broke before and if I need to I can live of my rental income and not pay the bank for money owed. My personal as I said.

4-plex is good since it is a residential property not a commercial. Makes a better loan. Get a fixed rate though if you want to keep it!

 

Just checked and it works.

Are you using AOL?

 

www.4ferrari.com no using mozilla on w2k

i will try with IE. sorry to mess the thread up.... works in IE. odd though.

 

Rob,
excellent book choice as well. Read that in November and actually ended up writing the author because he said in his book what I have been preaching the last 10 years. I could not believe how similar his and my views were.

As for the courses you don't have to be a member to take the course for real estate sales man license. That is what you should do. It gives you insights into legalities as well as the opportunity to get the first hand look into how properties are being aquired and sold and offered and marketed.
My wife runs the brokerage side. She is excellent. Has a great grasp on the market and can sell. She is specialized in listings. Others prefer selling. We have an agent that in March sold $25,000,000 in pre-construction. Make that at 6% commission! There is your Enzo!

I suggest to make your license and look into development and rehab since you are having family ties. Rehabs can make cash flow while some income proeprties are good for long term investing.

You have to understand RE is not a get rich quick thing. In fact there are no get-rich-quicks anymore unless you fly in drugs from Columbia and you know where that will land you eventually!

Understand markets and understand your buyers/sellers. You will be alright.

Where are you located anyway. There is nothing in your profile.

 

You can buy different properties. Does not have to be one.