Best Property For Investment By Beginners

Best Property For Investment By Beginners


Vance: This is the Real Estate Guide to Success
video series. This is Vance Poindexter and I’m here again with Ronnie Adams.
Ronnie: One more time. Vance: This week we’re going to be talking
about the best type of property for beginning investors. Tell us what you think about that,
Ronnie. Ronnie: The best kind of property for the
beginning investor would be a property that doesn’t need a whole lot of work. For a more
seasoned investor like myself, I might be looking for the great deal. So that particular
property is going to need a lot of work. Vance: And the price will be lower on that.
Ronnie: Exactly, so I’m going to get that property at rock bottom price because it needs
a lot of work. Now, for the beginning investor, he’s looking or she’s looking for a property
that needs minimum work, I’m going to pay extra for that property but by fix-up costs
or my rehab costs are going to be minimal. I’m looking for paint, carpet, cosmetic things.
I might have to change some stoves. I don’t want to be ripping out kitchens. I might have
to change toilets, I might have to fix some minor plumbing, stuff like that. I might have
to do some stuff outside with the landscaping, I don’t want to be changing windows. I’m not
looking to change roofs — no heavy duty stuff. I want stuff that’s going to be minimum, minimal
cost so I get it done, get a mortgage on it and get a renter in there.
So that’s what, for the beginning person, don’t bite off more than you can chew for
the first time. Vance: You also wouldn’t have as many contacts,
you wouldn’t know how to get a general contractor or someone who can repair…
Ronnie: These fix-ups that this person is looking at, you could do yourself. I can paint,
it might take me longer, but I can paint. I may be able to do some minor, minor plumbing
things — I’m talking fix faucets or things like that. Even if I try it, then if it doesn’t
work, then call somebody in. So that’s not a big deal. I don’t need a permit for that.
I don’t really want to get into stuff that I need permits for. Cosmetic things you don’t
need permits for. So that’s really what you’re looking at.
Now on that type of property it’s going to increase the person’s confidence so that he
or she can move on to the next level. They may do that type of property once or twice
and then move on to the bigger prize. They’re going to get cheaper, higher profit margin
but at least I don’t do that off the back and then I’m like, “Oh my goodness.”
Vance: And you get scared. Ronnie: And you get scared and next thing
I know I’m like, “I don’t want to do this no more.” I’m already into a property though.
Vance: So they’re getting their feet wet and they’ll have a little experience under their
belt before they go to a more… Ronnie: Exactly, let them get their feet wet,
gain some confidence and little stuff they can try and then you move on to a bigger house
that needs some more work. You could try that and then say, “Okay, well this is my level.
I already tried changing a faucet — I flooded out the kitchen. I’m not going to do that
anymore.” So that’s really what that person would need
to look at. Vance: So minimum work if possible. Where
do they find these kinds of properties? Are we talking about foreclosures in particular?
Ronnie: Yeah, pretty much foreclosures. I always say shy away from the person who owns
the house and they’re living in it, an owner-occupant because they’re going to want to keep that
price high. They have a personal interest in that house. So you’re looking at foreclosed
properties, there are foreclosed properties out there that need minimum work but they’re
going to be costly. So don’t worry about the cost as long as — again
I can purchase the property. I can fix it up. I can get a mortgage that gives me my
money back or that covers that cost. And I can rent it for couple hundred dollars on
top of what my payment is. It’s a good property. Again I could do two, three, four of them
and then move on to the bigger and better things as they say.
Vance: And the source of foreclosures, where do they go to find a foreclosed property?
Ronnie: You’re going to go to your realtor. You’re going to tell your realtor, “Okay,
I’m looking for some bank foreclosures in this particular area.” I’m going to look at
what the comps are, what the comparable prices are in the area for that particular home so
that I’m going to already know what that house is going to be valued at once I get it finished.
I would know if I need to get out and sell it, if I could or not.
So these are some of the places you’d want to go, just the realtor. You don’t really
want to go to like the Sheriff’s sales. If you go to a Sheriff’s sale, that property
once it’s sold at the Sheriff’s sale, you have to do all the footwork. So that property
could have leans on it, that property probably has tax [05:11] on it that you would have
to pay after you purchased the property. And once you purchase the property it could be
for… Quick little story. I purchased a property
at a Sheriff’s sale – I did it one time, I learned my lesson. I purchased the property
for $18,000.,Tthe property was worth about 60 or 70 during that time so I was like, “Oh,
this is great!” I never even got inside that house because
I’m looking through the window. You know at the Sheriff’ sale they have the lock and key
so it was as is. So I never got into the property, I said, “At 18,000, how much work can it be?
I can really rip everything out and it would be good.”
So I go down to the Sheriff’s sale and I’m looking at the property. I’m ready to bid.
I go to bid and no one bids against me. So I’m a little nervous now but of course I’m
thinking in my head, “I did it!” So I go down to the city to put the taxes
in my name and the lady says, “Oh, there’s $20,000 of taxes that are owed on this property.”
I said, “Wait a minute, the Sheriff’s Department didn’t tell me that. They said that it was
good.” So I called back to the Sheriff’s Department
and go, “Look, I bought this property, you said that…” and they say, “That’s not our
problem. It was your responsibility.” I said, “Oh, okay.” So no wonder nobody bid against
me! Anyway I ended up paying 20,000 more than
what I expected but it was still a good deal. I was able to fix the property up, which was
lucky, get a mortgage to get all my money back. And I still rented it for the profit
margin I wanted. And I still have the house. So that was ten years later, it’s made up
for. But, a beginning investor, don’t do that.
So those are some of the things that, you want to stay with a realtor. And again, they
can help you out a little bit being a beginning person, but keep the fix up to the minimum.
Vance: Alright, I just want to follow up on that. You mentioned that you want the fix
up to be at the minimum. What if I don’t have enough money to afford that higher priced
property that you’re suggesting? Ronnie: Well, yeah remember this The beginning
person most like doesn’t have a $100,000, $50,000 sitting around, so they’re going to
need a mortgage. If you qualify for, let’s just say a $30,000 mortgage you probably qualify
for a $50,000 mortgage. So you can find a property that’s going to
be in your price range for what you can afford. Just don’t find the one that is the great
deal, and the realtor’s pushing you. It’s great until it’s not great no more. So that
person still should be able to find something in their price range.
Vance: Once again, if you enjoyed the videos please comment or rate on YouTube and we’ll
be back next time.

33 thoughts on “Best Property For Investment By Beginners

  1. @meenameenable I'm glad to hear your moving and shaking. Yes, putting a mortgage on the property simply means to refinance it. If you own the property out right you can place a mortgage on the property to get your original investment back plus a bit more and the tenant will pay the mortgage back. The money you get from the mortgage can help with the next property.

  2. Somehow my answer did not post. Sorry for my delayed response. If you paid cash for the property you own it free and clear. Now you can put a mortgage or refinance the property to recoup your investment. The term refinance general means to payoff an existing loan with a new loan. Since you have no loan your refinance is the first mortgage.

  3. If you choose to use a company to start your business I would use a LLC. This type of entity will make it very easy to take money in and out the bank account.

    The profits and losses of the LLC will funnel down to your personal tax returns. But remember the loans will most likely have to be in your name so this could cause a problem with your balance sheet. Talk to your account before you make a move.

  4. Thank you for the videos. I'm renting my house in LA and found out, when the insurance was up to be renewed, the house, is now a business. Is this good are bad? I do make a small profit but can I get a business license or become a LLC?

  5. Not sure how your insurance company deems the rental property to need business insurance opposed to a regular homeowners policy if thats what you are saying. You may want to check to see if your state requires this.

  6. Hi, enjoy your videos. My wife and I are contemplating buying our first rental unit, there's a few in our locality. One we are considering already has long term tenants in it, I suspect that will work in our favor applying for a loan, Our credit is very good, we have enough cash to buy it outright, but want to leverage our money, we just want to ensure a positive cash flow , and get our feet wet…

  7. That video clip is actually fairly good. Congratulations. It's rather like Lazy Loot Loophole, but Lazy Loot Loophole (google it) is much less complicated. My mother earns over $6,000 each and every month with it.

  8. 6 units and a 4 units for sale in dayton oh and also some nice cheap properties in florida call sam 561 856 02 70

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  11. Im a buy and hold investor, and it IS nice when you get a house that house little repairs, however, those prices rise dramatically and tend to have bidding wars, which  can wipe out your cash flow. Caution, of course. Thanks for the info!

  12. Theses videos are so funny!!!! These guys are not serious are they? The big mouth on the left is so repetitive "you know" that it's bloody annoying, I can't even believe that I'm watching the immaturity and stupidity of these weird characters "you know"

  13. I just bought a rental, is a single family ,my new tenants are in love with that house and they suggested if I wanted to sell that they would be willing to do a rent to own  deal . I want to do that as well, however, I have a mortgage on the house, how those that work ,, and do I ask them for a larger deposit , for how long do I make the contract and so forth ,,,,,,,,,,,please help.
    thanks .

    N07

  14. I thought your video was interesting. I am a successful real estate investor. I am financially independent and have been at this game for many years. I love it. Let me offer another strategy to you. I noticed you mentioned "getting a mortgage" multiple times as if it is a requirement. What about that beginning investor saving their money and when they have enough saved, they make that first investment purchase? During the time they are saving they educate themselves to this profession and figure out exactly what niche they would like to pursue in this profession. Would you agree building a debt free business would be better in the long run?

    By the way, you do not have to pay more for a property if it is not distressed if you have cash. I've bought a lot of properties in great condition and for a great price, but I pay cash. When you finance you pay a lot more. It is best to save and wait. When you have enough, you offer low but cash. A debt free business can easily thrive and sustain even when market conditions change. A leveraged business is at great risk and many times they get washed away.

  15. He mentions in the video about obtaining a mortgage and "getting all his money back" as a result… ?? I'm not getting it.. so he purchases the property in his name.. obtains a mortgage that pays him back all his money?

  16. where or how   do u know where to find these foreclosure homes, seem like lots of scam sties out there etc.   ,       what do u suggest.  thanks for the tips.

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  18. question?? if i want to change all the sheet rock in the house is that considered cosmetic or you need a permit for that?

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