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Long term profits.. Buy apartments. Make sure they are cashflow positive. You might have to start with a duplex. Using 400k as down payment gives you at least
by WheelsAtLarge 9y ago
Long term profits.. Buy apartments. Make sure they are cashflow positive. You might have to start with a duplex.
Using 400k as down payment gives you at least 2mil buying power. There will always be expenses so keep the 100k for that. Build a partnership and the sky's the limit.
Make sure you do the math on expenses and payback period so you'll know your approximate holding period. The problem is that there are many people looking to do the same and bargains are hard to find. It's a lot of work.
Up and coming neighborhoods are probably your best bet. Think gentrification. Great for investors. Sucks for current residents. Always look at the neighborhood and try to project its future.
Stay way from real estate stocks. They are great on the way up -no work, all gains. But on the way down, they'll have to liquidate or go bankrupt leaving you very little protection.
BTW, a big chunk of the real estate billionaires are developers that bought, developed and held for 20-30 years. It's not a business where you need lots of brains but you need lots of patience and sweat equity. FU wealth comes with time and even multiple generations. So the goal is to get to a point where you can meet your expenses and have a nice living ASAP, wait and then go for the ride to wealth. Be ready for multiple ups and downs in real estate. Building relationships helps a lot. There's a reason why the rich have so many parties. It's a way to keep relationships with people you wouldn't otherwise see. Good Luck!
- bsvalley 9y agoIs it easy to land a $2mil loan for an investment property? Even if I come up with 400k down seems like banks would require me to earn a lot per year to qualify. I'd be curious to know more about how to qualify for such a large loan.
- tabeth 9y agoAssuming the rental is already occupied and there's a lease in place a part of that income is included when calculating your income for a mortgage.
- mars4rp 9y ago75%
- WheelsAtLarge 9y agoA 2mil loan is hard to get so that's why you need to assure the bank that the building you buy is worth at least 2mil and you have the money to pay it back with cash flow. Banks are happy to tell you why they won't lend to you so learn from it. Experience is the best teacher. Your BIG advantage is that you have 500k. That's a good amount of cash to work with. Also be very, very careful who you listen to. Make sure you read and learn before you start. You're a sheep going to visit a wolf. Make sure you don't get eaten.
- brudgers 9y agoA bank will also look at the track record of a person who is proposing to pay off a loan with cash flow from a commercial property. The bank will generally not rely heavily assurances by a potential loanee regarding property value. Typically a bank will require the use of a property appraiser who appraises the property according to standard practices for appraising property based on income.
- WheelsAtLarge 9y agoYes, they're not going to take anyone's word without backup. They want to stay in business to. They'll tell you exactly what they want.
- vanderreeah 9y agoIsn't the fact that it "sucks for current residents" a reason not to recommend this approach?
- sullyj3 9y agoOnly if you care about other people.
- vanderreeah 9y agoSure, but I wish he'd answer since the fact that he mentions it would seem to include he does care at least a bit; but this is then directly contradicted by his recommending this course anyway. Seems a bit psychopathic to me.