My life in RE. 2008-07-17 19:00:33

[jy101]

My life in RE. 2008-07-17 19:00:33

Story of my RE life...

I came back to indiana in 1993 after college, that is when I first start to investin RE, The area I am in is about 2 hours drive from chicago, also consider the orthopedic capital of the world, all the major orthopedic company are headquater here, this county has over 100 lakes, including the biggest natural lake in Indiana, growth in over all RE is about 4-5 percent per year while lake front property is 10-15 percent depending on the size of the lake. Indiana is secondary market in RE, property appreciation growth are slower than other prime markets.

The first RE investment I did was a 4-plex, with a borrowed 20% down, paid retail price and it did cash flow itself.

I am then begin to invest in SFH since SFH are lot easier to rent out. the first two SFH, I paid retail price for them, in 1995 I can buy a property in the 45k to 60k range, rents are from $450 to $600 range, about 1 percent of the purchases price, the rule of thumb was 1% of the purchase price it will flow itself. now entry level home are in the range of 70k to 110k, while new constructions are in 230k and on up.

As time goes, I began to rehab, I go to auctions, forecloser, sheriff sale, buying property under stress sale, establish a good relationship with local agents, buying property 50-60% of
market value. then spend 10 to 15k to rebab, then refinance out at 70% Loan to value and holding.

Over the years, I had established a good relationship with local agents, they know what I need, I can get the listing before it goes on to MLS system, I can buy them before anyone else knows. Also, maintain a good relationship with Hardmoney lenders, and local bank, I can easily access to $500k hardmoney without any paperwork but at 12% interest rate for short term finance.

I started with renting, then rehab, then flipping, because I can buy cheap and rehab cheap, I can turn around make 25k to 50k in a month with all OPM.

I also started to build in 2002, I am build 3 to 5 spec house a year, maintain a crew that half in construction half in repair rentals.

In 2004, I begin to invest in land and land development, now partner in a 132 lot subdividtion land development.

The latest adventure is I just purchased a 9700 sf commerical condo complex, 6 unit at all, at about 55% of the market value, been rehabing for 3 month, had 40% space leased, if all leased
out, I will have a $2700 positive cash flow just from it.

Last year, I sold my house (5000 sq ft) on the hill facing the lake, and downsized to a lake front house (only 2900 sq ft), it is also purchased in a stressed sale, tear down the back half, and rebuild it. now is worth 745k, only had 560k in it.

So are these hard work have a good return? Well, I had have accumulated 67 residential units for rent, a commerical complex that is going subdivided in 9 units, a partnership in a subdividsion that is 30% sold, 3 spec house now are under construction or near complete. ovall all a profolio of $7.6 million in properties (also owe a lot), and a positive cash flow to provide for our families for many years to come. believe it or not, I had never got a paycheck from any body.

This was done step-by-step, one project at a time, over a fifteen-year period. my goals are simple and extremely well thought out. I want to accumulate a portfolio of about 200 units, which I feel I can continue to manage on my own.

Don't get me wrong, Landlording is hard, you have to ask yourself that do you want to get up in the middle of the night to make a repair call? do you have the time to go after tenanat if they don't pay? do you willing to kick the tenant out as soon as they behind even it is -10% outsize? do you want to go to court 2 or 3 times a month for either eviction or collection? are you willing to take them back to court every month to collect your backrent? do you feel sorry if you have to send them to jail if they don't show up in court?

landlord is more than a full time job. but I am still enjoying it.