Building A Real Estate Empire
- Thread starter schockergd
- Start date
I'm bidding on one right now listed at $19k and offering $13k. Property needs $7k in repairs and will rent out for around $550/month.
Thus why we are doing this offering.
We *may* offer a new round of funding in the next month, right now we're trying to draw interest on a new 6% APY bond offering we're doing in order to leverage more properties. Otherwise we're returning 15.33% APY to investors now. I've been talking to a few VC/angel guys and they feel that we could get $2m-$3m in new investment if we wanted, but I don't want to give away any more equity if I don't have to.
Hard to say because real estate is extremely localized. Most of the midwest is open to investment. Most of the higher median value areas (New york, california, Massachusetts, and much of new england) are very hard to invest in.
Nice shit. I can say one thing you guys in US have very cheap property prices compared to India. I'm in to real estate as well and if someone remember I have posted a thread about it back then. I have bought 2 apartments.
First one is 1225 SQ ft (super area NOT carpet area) I have bought this in mid 2011 apartment house in Delhi NCR (Gurgaon) worth 100K (current market value 130K.
Second one is 1712 Sq ft (super area NOT carpet area) August 2012 again bought one more apartment house in Gurgaon worth 140K. (not much appreciation as both of these are under construction and not ready further market is tough these days here)
Both have car parking, club, gym, lush gardens, pool and many other features.
Beside these have a land as well in my town which gave 3 times return (capital gains).
Investing in real estate is good but you have to be very patience and goal to get results only after minimum of 5 years. For short term investors it could be cumbersome. Real estate market directly gets affected with economy slow down and other political conditions.
Although I have always a dream to create a real estate empire and now willing to invest in commercial space but comparing Indian prices with US it seems it would be more beneficial to invest in US than India as you guys get good rentals on cheap properties.
First one is 1225 SQ ft (super area NOT carpet area) I have bought this in mid 2011 apartment house in Delhi NCR (Gurgaon) worth 100K (current market value 130K.
Second one is 1712 Sq ft (super area NOT carpet area) August 2012 again bought one more apartment house in Gurgaon worth 140K. (not much appreciation as both of these are under construction and not ready further market is tough these days here)
Both have car parking, club, gym, lush gardens, pool and many other features.
Beside these have a land as well in my town which gave 3 times return (capital gains).
Investing in real estate is good but you have to be very patience and goal to get results only after minimum of 5 years. For short term investors it could be cumbersome. Real estate market directly gets affected with economy slow down and other political conditions.
Although I have always a dream to create a real estate empire and now willing to invest in commercial space but comparing Indian prices with US it seems it would be more beneficial to invest in US than India as you guys get good rentals on cheap properties.
I can get shit homes ALL OVER THE PLACE in TN for 30k and less. I actually worked for someone who did this for a while and I did maintenance and fixed up the ones he bought.
I personally thought it was ridiculous. The profit left over wasn't much compared to most anything else you can do and most of it went into surprise repairs. Horrible renters destroying everything from the kitchen sinks and piping to the walls and leaving the iron hot on the carpet and more. Busting holes through the floor even. Have fun trying to collect after they break the lease, when they have no money. They hate you automatically just because you are "the man" to them at that point. Many months went by with nobody renting. Had to hire more and more low-cost labor that did shit jobs as he tried to scale. It was a complete nightmare.
He eventually took his shit labor force and started doing that work for other people wanting to do this. His new gig was a go-to solution for maintenance and fixing up. I can't remember what it's called but he had to get licensed for this.
Obviously I don't know the ins-and-outs of being the boss of this type of situation. But seeing it from the inside and watching this guy pull his hair out... I'd never do it myself.
Shockergd, I'm sure I'm misunderstanding a lot of stuff because this guy was a complete clusterfuck and failure at everything he touched (he started this after ruining the previous business I was working for him on).
How is this not going to become a pull-your-hair-out operation for you? I mean, $90k to generate a $1150 cash flow sounds like a nightmare to me. How many properties are you managing at this point? Obviously once these are paid off, that # is going to go sky high. Is that the idea? A long-term play?
Teach us more!
I personally thought it was ridiculous. The profit left over wasn't much compared to most anything else you can do and most of it went into surprise repairs. Horrible renters destroying everything from the kitchen sinks and piping to the walls and leaving the iron hot on the carpet and more. Busting holes through the floor even. Have fun trying to collect after they break the lease, when they have no money. They hate you automatically just because you are "the man" to them at that point. Many months went by with nobody renting. Had to hire more and more low-cost labor that did shit jobs as he tried to scale. It was a complete nightmare.
He eventually took his shit labor force and started doing that work for other people wanting to do this. His new gig was a go-to solution for maintenance and fixing up. I can't remember what it's called but he had to get licensed for this.
Obviously I don't know the ins-and-outs of being the boss of this type of situation. But seeing it from the inside and watching this guy pull his hair out... I'd never do it myself.
Shockergd, I'm sure I'm misunderstanding a lot of stuff because this guy was a complete clusterfuck and failure at everything he touched (he started this after ruining the previous business I was working for him on).
How is this not going to become a pull-your-hair-out operation for you? I mean, $90k to generate a $1150 cash flow sounds like a nightmare to me. How many properties are you managing at this point? Obviously once these are paid off, that # is going to go sky high. Is that the idea? A long-term play?
Teach us more!
Slightly OT but that video method is good if you're ever on the lam. Go to a parking lot/garage. String up a handful of cars like that. Then wait for your getaway car! Kapooya!
The initial $90k investment into the properties is now worth $170k in market value if we liquidate the properties.
Once we leverage the properties via a bank, the monthly income will go down to say $400/mo, but we'll have our initial $90k + another $20k or so back to buy more properties. ROI on the initial $90k has now become roughly 120% APY. This doesn't factor in the fact that the same money can be used to buy 2 or 3 more homes in 2014, so the 120% then becomes 240% or 360% APY on the same original $90k amount. If we can access 75% LTV loans like I'm shooting for in Q1 2014, we should end the year with a total of a dozen properties, ~$450k with monthly free cashflow of $3,000 a month. This excludes the $1,500-$2,000 in equity increase per month as well (Putting us in the realm of nearly $5k/mo).
I have a rehab team that fixes the stuff, that $1150 a month figure includes the fact that we're putting back several hundred dollars a month for all the crap that breaks in the rentals. Granted, we rebuild our rentals and don't do spit-shines. So, the mechanical breakdowns are going to be over a much longer period than when someone buys a property and rents it out immediately.
So are you saying that you've improved these properties worth just by the internal improvements you've made? What is it that is double the market value?
Because I was talking to my brother about this. He wants to buy a $30k piece of property, pump a bunch of work into it, and make it worth $80k (he says). My problem with this type of thing is that even if he makes it the bomb diggity shiznizzle, the house is not an island. It still has past sale prices available, and the neighbors all around it still own houses worth $30k, which would also affect the value of the home. Is it possible to take a $30k home and make it worth $80k when it's still surrounded by $30k shitters?
It depends on the market. If it's a $30k house in a neighborhood of $30k houses, there's no reason to shoot for a $80k post-repair market value.
If I wanted a house in a $30k neighborhood (And I do sometimes) , I'll pay $10k for it, put $5k into it and have that $30k house for half the normal market value when it's said and done. I'll put section 8 tenants in there and remind them that there's 100 people behind them in line waiting for vouchers.
The first property we bought was in a neighborhood of $100k or so houses, we paid $26k for it and put $35k into it and it looks new. Market value is $115k or so. The second property is in a bad area, median value is $55k, I picked it up for $22k, put $8k into it and now it's worth $55k or so.
Additionally, technology is making it very, very easy to get good tenants, or at least find out if the one you're talking to is a crack smoking drama queen. Facebook is a good way to do someone's background checks.
Wow 90k turned 170K in six months?
It is rock solid ROI. I can't get this return even in 3 years.
What skills do you bring into the mix that no one else offers in your marketplace?
For this to work the house has to be in an 80k neighborhood that the Seller is willing to take 30k for it. Typically it would missing a kitchen (eliminating the possibility of any buyers with financing), a 600 sq ft house in neighborhood with mostly 1,200 sq ft houses, have mold, Sellers have a divorce, etc.
I bought a house for 45,000 and sold it for 250,000. 315,000 sold for 599,000.
With rentals it is even easier... after 6 months no one cares what you paid when determining value.
This is correct. You've gotta bring SOMETHING to the game that few else in your marketplace have.
I just passed up on a immense deal on a house due to lack of capital.
$30k-$35k purchase price. $15k-$20k in repairs, $180k market value.
Why so cheap? The foundation had caved in. No one wanted to deal with something with such a terrible stigma. For roughly $10k in cash, I could hire a structural engineer to come in and completely rebuild the foundation with state of the art technology.
It has no control of me or my skills on the properties I have invested in. These properties are in high rise apartments. Big time projects and are under construction. All I can do is wait and watch when the builder delivers. These are not individual plots where we can build house and sell rather than a big housing project.
Visit these link for the ideas:-
Layout Plan | Lavanya Apartments Gurgaon | Vipul Group
4 BHK Flats in Gurgaon | Integrated Townships in Gurgaon | High Rise Apartments in Gurgaon
If you do the same thing that everyone else does, you'll get the same return everyone else does. If you do something that no one else can do, or few can do, then you'll get a return that no one else can do.
What you said is right but I can't pour in my time and energy to build houses and make profits and lose my current business and profits as well.
I was more of looking like a passive income streams.