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Thread: How do I finance a real estate business?

  1. #11
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    4-5 houses? Set for what? You won't be making money month to month.. UNLESS you actually put down all the cash to buy the houses outright. You will have to wait 10 - 20 years to make some cash when you sell it. That's if there is no damage. You need to have a good sum of money in reserve if there is every any floods, cracks, damages etc.

    I own a condo, I rented it out to 3 different families. ALL 3 years I have operated the business at a loss for various reasons (one year I had to lower rent because vacancies were high, one year my tenant didn't pay me and skipped town, one year my tenant painted terrible colours on the walls and I had to re-paint, another year the carpeting had wear and tear on it so I had to replace it at my own cost.).. on-top of that I also had to claim taxes as the rent being my income.

    ... to add to that.. I have owned the place for 8 years.. If I were to sell it, after taxes and agent costs.. I would be walking away with 30k.. This is located in TORONTO by the way... a big growing city. I purchased it SUPER dirt cheap after building was finished 4 months after.. the owner just wanted to get rid of it quick for whatever reason and I grabbed it. I got it for $25,000 cheaper than it went on sale for. It's a 1 bedroom + den by the way.. 600sft, just to give you an idea of what you're working with. Good luck with multiple houses trying to scrape a profit short term.

    I originally bought it because I was 21, just finished college and I had some extra money that I wanted to put to some use.. I wanted to buy a place where I would hopefully move into, and I did eventually. I have a place that I own, but I will have to hold onto this place for many many many more years to make any money on it.
    Last edited by Wozcreative; 10-19-2014 at 11:51 PM.
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  2. #12
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    I can rent the place out for more than PITI in most cases. I know people personally that do this. As far as floods, etc., that is covered by the homeowner's insurance. I will do my own repairs and will save money that way. But yes, I will need a reserve fund for eventual roof repairs, etc.

    How did you get it for $25,000 under the list price, btw?

    Set for what? Set for LIFE! Retirement.

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    You do realize that in most states/countries a flood that comes from an "act of god" is not covered by insurance, right? You will have to fork over the man power and money to do it yourself.
    Initially when my friend bought the house there was issues with the electrical which he had to hire someone to re-wire things. I doubt you would know how to fix major things like that unless you were a licensed electrician.

    Luckily my friend had also a sewer backup (which is covered and they only gave him $10,000)... his neighbours and many people in toronto were not that lucky though as they had water come in only through their balcony doors (6 ft of water outside).

    The $25,000 under list price was just a lucky draw. I saw 11 locations, picked this one, made an offer and they accepted it without any issues.
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    If my property were in a flood zone, I would get flood insurance. Or, I would just buy a property not in a flood zone.

    Wiring is easy. That is not major at all.

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    Ok but you don't understand... flood insurance only works if it's coming from pipes.. not if your backyard gets flooded from rain. (obviously check your state laws).. here in ontario it's not covered. If there is earth quake, you're not covered.
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    In Florida, flood insurance covers natural floods and is required by banks for mortgages of properties in flood zones. There are no earth quakes here.

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    Woz, here in the states, Congress has created a way to reasonably buy flood insurance for floods coming from outside your home. In Florida, you have hurricane riders on your insurance where your deductible is higher if that's what caused the flood, but eventually the insurance company will pay off. I say "eventually", because when a hurricane hits, a large number of people are affected all at the same time, so insurance companies are slow to pay for stuff.
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  8. #18

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    Sorry to say, Richard, but you are completely unrealistic. Based on what you have posted, you are setting yourself up for a rude awakening about the REAL costs of rental properties. Having done it, I don't even know where to start. But it likely wouldn't matter, because judging by your having an "answer" to each problem others have shown, you are probably going to do what you want regardless of any warnings.

    How do I know? I was the same way.

    Back up, do some learning, and start slowly with whatever money you can save on your own. WHATEVER you do, DO NOT buy anything with borrowed money. That's the best I can offer you.

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    I made this post a few weeks ago and will agree it was a bit speculative. Do not buy with borrowed money? Are you including mortgages in that? Because I know people personally who have done just that and now rent 10-12 houses that I assume they will sell for $1,000,000 when the mortgages are paid off.

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    Quote Originally Posted by RichardtheFrog View Post
    Because I know people personally who have done just that and now rent 10-12 houses that I assume they will sell for $1,000,000 when the mortgages are paid off.
    You seem to know a lot of people personally that are doing things that you want to do. You should really talk to them and learn something and stop walking around assuming things, which really means you have no idea you're just guessing.

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