I am truely amazed at the number of agents that do not own Investment Properties. Those of you that do not own investment properties why do you not invest in your own industry?

I woud love to get involved in the investment side of Real Estate. I have been looking at purchasing some properties and fixing them up & selling or renting them out long term.

im doing buy and hold via sub2 using land trusts and owner financing. been studying SDIRA(roth) for half a year and lately ive been talking to investors to use their SDIRA's to purchase partial beneficial interest of the trust at a discount which is similar to buying mortgage notes.

looking to buy my first apartment next year non-conventionally via sub2/option and do a refi cash out after increasing the NOI and cashing out the owner. also been talking to a few investors by setting up a TIC/1031 company.

btw: brokers wont teach you any of these.

Oh don't get me started on investing!

My husband is crazy! Everytime I take him with me to look at houses (for out of area investor clients) he ends up talking me into writing an offer on something!

I am always amazed at the number of Realtors who don't even own a house period. Sooo many of them rent! Crazy! That's like a car salesman that rides a horse to work!

Alvin, What state are you in?? And I am a broker and I am not 100% familiar with any of the things you discussed. Can you share more with me.

emory3whitt@cs.com

I own one, I'm having issues with my tennants right now though. They are 5 days late and had agreed to pay me on the 8th. Now she tells me they will be short. I'm too nice. I could use some advice on how to deal with rent payments because I have a feeling this will be a constant issue. Our lease says rent is due on the 1st, and after the 5th they owe $100 late fee.

What do you do when they are late or short one month to keep it from becoming a habit?

Check your local eviction proceedings. I do not own any investment properties but I was in property management before getting a sales license.

Ours was due on the first, late after the 5th, with 10%late fee. On the 6th they get a warning letter that they have 5 days to pay or eviction will be filed. Once the eviction is filed they have another 10 days before we could file a Sit Out. They have 2 days from the Sit Out filing to leave or pay. AFter 2 days we go in with the Sheriff's office and set everything in the street. Most would figure out a way to pay once the eviction was served to them. Also all filing fees to the magistrate's office were added to their account balance as well.

Running investment property is a business. Charge your late fee without exception unless something catastrophic happened. I have accepted partial payment and the remaining balance in a week but that included my late fee.
As RachaelatOptions stated become familiar with your local eviction proceedings and Always file when the rent is past the cutoff date.

TIC's are great. I had a class on that and 1031 exchange today. The great thing about a TIC, you can 1031 into it and there is no headace in managing the property. A great Investmet to look at.

My former broker owned investement properties and lost his shirt when the market tanked up in New England. He lost everything, including his home, and had to move in with his daughter. This was a guy who owned a large multi-office franchised company.

If the market turns some people may be in for some trouble.

Sounds like your old broker was a speculator instead of an investor. Sound investment properties do not just tank when the market takes a down turn. Sounds like he made the ultimate error and had all of his properties linked and failed to protect his assets!

Every area of the country is different. Sound investment properties do tank if the market gets bad enough... which it did. He did have some chained together and others he didn't.

The problem with many investors is that are short-sighted. We just had the California Wave move through here. They drove up the values. The ones that got in late are losing their shirts and belts.

If you plan for the worst when making your investments you shouldn't get hurt when the market shifts. A lot of it has to do with timing.

Do your homework and buy based on the worst case scenario. I still have 2 propeties I will close on this year no matter what the market does.

Paul is dead on. Big difference between investor and speculator.

I own a few hundred investment properties and split my time between managing those and serving my clients as an agent.

Doesn't work for everyone, but I wouldn't have it any other way. And the money's great!

I don't own any investment properties, but am contemplating purchasing some lakeshore this winter as an investment if the price is right. I think as far as investing goes, you cannot go wrong with lakeshore. I am a little biased because I own a lake home and have a website for lakefront owners, but it has historically increased in value every year even in down years. Prices in our area have gone up considerably in the last five years, but since the market has slowed down a bit, pricing is becoming more reasonable because properties are not moving as fast. I think give the market some more time to sit and in January would be a good time to buy.

Maria
LakefrontOwner.Com

One thing most people miss or don't think about.The economy is and has always been going through a constant cycle and that will never change the only difference back in the 90's into 2000 we an unusually long upcycle before dipping again.

Business,and investors have a game plan where you have a plan in place for each phase of the cycle.

Example:I used to be in the restaurant business.When the economy is good sound businesses would coupon less and then put the excess profit in each account for each store so that when the economy cycled and they had to offer huge discounts they could retain market share but not have to profit all that much until it upturned again.

Smart people plan for the downturns and are proactive instead of reactive.Reactive people hop things will stay they same,take no action,and when the bottom falls out go what happened?

California,massachussets,florida will go down but eventually go back up the question is when.

Sounds like the broker bought to much at the top of the market.

Great topic. Often the cobbler's children have no shoes. I believe in real estate. My office is located in a commercial property we bought in the late 90's. We also have some sfh's that we rent out. In my area they do not cash flow much but they have appreciated quite a bit. Nothing overnight but slowly plugging away. I am considering buying a commercial property for future use in an area about 20 miles away, right in the path of progress. My favorite property is our little cottage (shack) that shares a lakefront area and pier (by deed), that is now considered fashionable as of late.

I currently have what I would classify as one investment property in Hawaii. Totally hands off for me and was as much for the family to have a place to go for vacation as for investment purposes.

We used to own the land via lease (long story, if your interested, just do a search on Hawaii real estate and you will see that much land is leased for 99 year chunks.)

Anyway, we just got the opportunity to buy the land our place sits on - deal just went through about 6 months ago and basically tripled the property value in 24 hours.

We have always been into positive cash flow on the place - but just barely since we are very picky about who we rent to. Biggest problem we face is that the Hawaii salt air is murder on just about every kind of appliance you can think of, cutting their expected life by about 50%.

My home in california is currently rented, but I don't count that as an investment since it is the home we will be living in when we return to the states. But we have done fairly well there, not positive cash flow because of the huge drop in rental rates, but pretty darn close to breaking even. If you factor in the appreciation of the property, we are actually into positive cash flow. But I do that math just to make me feel better!

R

I hope you'all don't experience a 50%-60% drop in property values like we did in some areas of New England.

When you can't find tenants for your property, or are forced to drastically reduce rents to get them in, and you can't sell anything, that's when real estate doesn't look too good.

I own 19 homes with 27 units and let me tell you, the more you have the eisier it gets. Its like a well diversified stock portfolio. Here in michigan our market is terrible so I just keep buying and buying, the rookie investors are waiting for the market to straighten out before buying. Evidently they missed the by low and sell high lesson in wealth school. Oh well good for me, becuase when the market straightens rookie investors will be calling me to buy my properties that they could have gotten cheap except the market was slow. I think far too many complicate the real estate investing process, its not rocket science. If a dumb 30yr old kid like me can do it anybody can.

I'm a loan officer for the past year and dont' own any real estate yet. The reason for that is that i'm only 18 and haven't made much money yet but in the next couple months I will make my first investment. I am planning on investing in many types of real estate start out with tax liens buy maybe 1 or 2 of those also buy condo's etc. I think i will focus more on investing in land and maybe building on some since theres no tenants involved. But it will all be cash on land.

Broker, since this is your 2nd post about the market in New England, and your address is North Carolina, I feel I have to comment.

Your 1st post stated that the market in New England "tanked" and your broker went bust. This last post refers to a market decrease of 50-60%. What area in NE are you referring?

We all know the market is slow here and have certainly seen values drop in the past year. I believe you are drastically overstating the situation and am curious as to where you are getting your information.

If it's all due from your broker's situation, I believe there may be more there than meets the eye.

And to keep it on topic...

Our goal is to buy 2 investment properties (3 or more units each) over the winter and keep adding 1 or 2 a year. We owned one 15 years ago, held it for 5 years and made a nice profit. These we will keep till retirement.

Why haven't we done it yet? Silly reason, but lack of time, procrastinating...but I do believe that it is a very wise move and am determined to get moving on it soon.

How the heck does someone have the time to be an agent when they own a few hundred properties? Just curious!

To answer the original question: no, I don't own any investment properties although i do own my own home as opposed to renting.

Why? I choose to invest more aggresively in other businesses and of course in my own realty practice. as I get older and the time horizon for returement looms closer I may shift towards real estate investment/development but for now I do better elsewhere.

The area I am referring to is Southern New Hampshire/Northern Mass. which is where I used to live and work in real estate.

We went through a cycle much like we have gone through recently where property values climbed and then decreased dramatically.

The increase in values was due to a few factors including tax-law changes and Regan pouring billions into defense and gov. programs which created jobs and demand for housing. When spending dried up the buyers went away and eventually it became a reverse market where instead of buyers bidding up values... sellers were bidding them down because they had to sell. The bank defaults also played a major role.

The point I was trying to make in my post is that though some investors think their properties are golden and good investments now... it might not always be the case. A friend of mine owned a shopping center with a couple of other investors and they bought it right before the value increases. When people started reining in their spending and businesses couldn't support themselves and closed their shops... they couldn't fill spaces at the rents they needed and eventually they lost the place.

I firmly believe that we are in for a major down cycle in values because the govt. has poured billions if not trillions into the economy and that is slowing down dramatically, and with rates climbing, energy prices, adjustables adjusting, foriegn T-Bill debt. and the cost of everyday goods growing... it's envevitble. Also.. if they kick the 11+ million illegal immigrants out of the country (which they should IMHO) we are in for some major value drops in some areas. We may also see a stock market crash very soon.

I was taught that land generally increases in value and buildings decrease in value over time. If you look at the values of homes today with that in mind, they don't make sense. Alot of people have blinders on and sooner or later they'll get a wake up call.

Ah, you're talking about the late 70's, early 80's? NOT the current market here then?

Actually that just reinforces my desire to invest in the real estate market. We bought a 3 family back then, held it for 5 years, and netted $60,000. Not a bad profit 20 years ago, huh?

Then again, we held it for 5 years and didn't expect to see a big profit by flipping (hence the key word "investment").

I won't reply to your doom and gloom forecast. I just can't imagine how you can sell any real estate with that attitude.

I owned a bunch of investment properties that I aquired during the bust of the late 80's and early 90's. I was able to buy porperties and leverage them pretty well with a mortgage and gain incredible returns,,,,those days are over. I sold the last of them in '05 as the capital gains realized in the market more than outweighed any possible future proforma returns from renting them. IMO, I will be able to aguire properties again for 4-6 times the annual rent roll within 6-8 years.

What we have experienced is a blow off in RE values that will make the late 80's bust look like a picknick, and anyone who is looking to buy now may take as long as 10-15 years to get a capitol gain. Now, that said, if you can make a cashflow on any investment you find today then take the deal. In my market such an opportunity does not exist. Remember that owning RE is work and no one wants to work for free, so buying a property to "break even" is as good as doing volunteer work and more than likely a money losing situation.

It was the mid to late 80's.

It's easy to make a gain when values are increasing... not so when they are going the other way.

Smart investors will be buying properties when the values fall. You can still make money with a property that is losing value. I have seen many properties that have lost value but still cashflow just fine and they also show a loss that can be used to shelter other profits. You have to look at the big picture.

Investors buy properties all the time and it matters not the current state of the market.
Speculators buy when things are good and panic when that market makes corrections.

I have a total of 3 properties and a condo being built, which we will probably move into. I am planning on selling one of our properties to be able to acquire my mother in laws house which has much more equity. I have gotten lucky in my investments because we have purchased low & have held on to them for sometime. I am in the Miami area so I have seen our prices skyrocket! Lucky for me that I purchased before the boom. I am a new realtor and would like to learn the ins & outs of investing. I am looking into joining an investment group.