Comments on: Trade an Online Property For a “Real” Property?

By: J. Money

J. Money — Tue, 21 May 2013 02:37:45 +0000

In reply to katherine. Awesome!! Love hearing that :) Keep me updated on how things go - it all fascinates me.

By: katherine

katherine — Mon, 20 May 2013 02:16:25 +0000

In reply to Taylor. wow. great to have a perspective form someone actually doing it.

By: katherine

katherine — Mon, 20 May 2013 02:05:04 +0000

Great post. I am just doing this now with some inheritance money. I am an architect and worked for a nonprofit developer for 4 years so I feel like I have some experience doing it on someone else’s dime. It’s still pretty scary but I figure if I do’t like it at least I can sell the property in the future or get a property management company.

By: J. Money

J. Money — Mon, 03 Sep 2012 12:16:40 +0000

I ended up putting this on hold for now, but in a bout 6-10 months I’ll become a default landlord anyways once we move and rent out our house! So I’m def. looking forward to that :) Baby steps, right?

By: Smart Money Manager

Smart Money Manager — Sun, 02 Sep 2012 14:42:21 +0000

Owning a piece of real estate to be used as a source for passive income is one of my future plans. I guess, if you really want it you can try and go for it… You will never really know what in store for you if you don’t try it.

By: J. Money

J. Money — Wed, 15 Aug 2012 14:18:43 +0000

YOU ARE MY NEW HERO!!! :) I’m loving that plan of yours, jeez – well done over there. The idea of traveling and making an adventure of it all makes it even MORE exciting too! I totally agree that it’s all about having a great team in place and doing your homework. It makes me feel like I’m way off from ever doing this after reading all that, BUT it does give me hope and motivation that it’s def. possible. Thanks for all the tips! (Esp the Trulia Crime tab – hadn’t heard of that part before)

By: jen

jen — Tue, 14 Aug 2012 16:49:22 +0000

Remember, you make money when you buy – so get the best deal possible and you have a greater chance for success. In certain area’s of the country prices are still great right now and mortgages are really cheap. It’s the perfect storm!

I agree with the 1% rule, but personally try for 1.2% if possible. This helps to add a little cushion for any future repair costs.

By: jen

jen — Tue, 14 Aug 2012 16:45:27 +0000

My husband and I just purchased our first real estate investment property. Since we’re trying to retire early (in our 40’s) we needed to find cash flow investments that we can easily touch at a pre-retirement age. We purchased a 2/2 house 2 blocks to the sand in Daytona Beach, FL for $95,000. Our total upfront investment was about $37,000 (including 25% down, closing costs and all repairs). We just completed all renovations and have had 8-10 interested people already look at the home. We live in another state and will rent it out through a property manager so that it’s as passive as possible. We did, however take 3 full weeks to make repairs and improvements on the home.

We expect to make an 8-10% annual return (after all expenses including the property manager). This return, along with the amazing tax benefits sound great to us! In fact, as soon as we rent this house out, we will purchase another home asap. The mortgage is at 3.99% and is for about $70k. We can pay this off and make an extra $320/mo on this house if we choose to, as well. We plan to buy and hold for a long time to generate income to live.

We live in an expensive location, but with a property manager, we were able to buy in a good rental location (in another state) with low home costs where returns are quite good. However, the upfront research and travel is time consuming. Make sure to find a great mortgage lender (in the location that you plan to buy), a realtor and property manager. If you have a great team, they will help you decide on locations, homes and generally make the process much easier. Trulia has a “crime” tab to help with researching potential homes and area’s. I also research on Zillow, Realtor and google maps to get a view of the street. You can also search for bank owned properties specifically on separate sites like HomePath, Reo.Chase, HomeSteps, etc. Bank owned properties usually have a waiting period for investors allowing people that want to live in the home the first chance to do so.

I suggest that you read about all tax benefits! You can write off all repairs and expenses specifically for the rental (including travel expenses). Improvements (such as new appliances, and anything that adds value to the house instead of putting it back to its original value) have to be depreciated over years. I try to repair whenever possible to get the best tax benefit quickly.

Losses can be deducted from your other income (depending on your gross annual income).

By: J. Money

J. Money — Fri, 10 Aug 2012 21:21:27 +0000

Oh wow, never heard of that rule before! I do like it though – just cuz it’s so easy :) Not sure how common or researched that one is, but seems to be a nice rule of thumb from first glance… thanks man :) I should probably ping Paula now that I’m interested in this stuff so much!

By: Zach @ The True Generalist

Zach @ The True Generalist — Thu, 09 Aug 2012 20:57:41 +0000

I have a couple properties and it can be kind of nerve racking, especially when they don’t cashflow like you were hoping for. I just have to keep reminding myself that I’m getting free houses.
The best advice I could give you when buying a property is one I heard from Paula actually: “The One Percent Rule states that you should look for properties in which the gross monthly rent equals one percent of the purchase price or more.” So if you find a place for $100,000, you should be able to easily rent it out for $1,000/mo otherwise it isn’t worth it.
I don’t think I even knew this rule when I bought properties and although I ended up getting it about right, I cut it close both times so my cashflow is not as great as I’d like. Looking for a third property now for super cheap to do it right!