In this discussion, I share EXACTLY what I look for when investing in real estate. This comes as firsthand experience of my own investing strategies, both from what I’ve learned as a landlord of multiple rental-properties and as a high-end Realtor.
Since clickbait sucks…here’s the entire video summed up:
1:00 – Loan options. I generally recommend a residential loan and sticking with 1-4 units. After 4 units, the loan is considered commercial and carries a higher interest rate, higher down payment, and more qualifying restrictions.
2:12 – Single family residence vs multi family building. I generally prefer multi-family residences, but be wary of future rent control restrictions depending on your location and city regulations. I also explain how to live for free – live in one of the units and rent out the others. Generally this will cover almost all of your costs. Free housing!
4:40 – Conventional vs FHA loan. I prefer a conventional loan over FHA, as convention loans have lower fees, lower interest rates, and generally offer better terms than an FHA loan. FHA loans could work depending on your situation, but it ultimately comes down to the term and interest rate of the loan.
6:53 – How I search for properties. Everything I find is through the multiple listing service (MLS). I personally like to see everything as soon as it comes on the market, but I also look at properties that have been on the market awhile as they might be more flexible in price.
10:55 – What times of homes I look for. I personally go for homes that just need cosmetic remodeling. Kitchens, bathrooms, floors, landscape, and paint are very easy to do and doesn’t take a lot of time to do. It also adds a lot of instant value by remodeling these areas – plus, many buyers overlook homes that need minor remodeling.
12:57 – What areas I invest in. I invest in areas that are surrounding other high-priced areas, since development generally moves outwards with time. I do my best to predict the next “boom” areas where development and business money is moving in.
15:15 – How i calculate if a home is a good investment. I like a mix of cash on cash return and appreciation. In addition to this, I like a home where I can add value through cosmetic remodeling. This way I make an immediate return on equity, I can make some passive income from rent, and future appreciation on the home’s value.
20:30 – What area I like to buy in. I make sure the home isn’t on the same block as an apartment building, a business, a busy street, or a street with speed bumps.
21:40 – How to calculate your rents. I like to use craigslist to compare what other units are renting for.
22:30 – Out of state investments. Personally, I wouldn’t do it.
23:11 – Is a property manager worth it? Sometimes – I don’t really use one, but I would in the future.
24:50 – BUILD YOUR CREDIT SCORE. This is so important.
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