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2013 started with a new 7-plex

2013 w/stats arrow upOur goal for 2012 was to increase cash flows and add cash flows.  Happily, we did that.  We now own and self-manage 100 lovely houses and apartments.

We closed on a great 7-plex at the end of October.  Over the following 3 weeks we installed a new parking lot, a new roof, new landscaping, and gave notices to all the smokers.  Bye-bye.

Tomorrow, the first gorgeous, fully renovated, 3BR townhome goes on the market.  I expect to be able to increase the rent on that first unit by $300/mo. over the former rents.  That’s my sick and twisted definition of fun.

So in 2013 I want to really “put a dent in the universe.” (Steve Jobs)

We have a tried and true formula at this point, and I’m going to spill the beans this year on what we do and how we do it.  Stay tuned!

In 2013 we plan on adding and beautifying more units, adding cash flows, doing some writing, and taking some time off.

I better get back to work 🙂

This is a great retirement gig!

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Warren Buffet Digs Real Estate

Warren BuffetOur favorite 82-year old mid-western billionaire is sweet on real estate.  Whodathunkit?

Warren Buffet just branded “Berkshire Hathaway HomeServices.”  This new real estate franchise will be operational in 2013.

It looks like he’s positioning his new company front and center of the real estate recovery.

Get ready for the rocket ride!

Read more about it at the KCM Blog and Bloomberg.

Video

15-Year-Old Landlord Buys Second Rental House

Do you know a teenager that can’t find a job?

Meet 15-year-old Willow Tufano who created her own “shovel-ready” job.  She’s a landlord who just bought her second rental house with her partner/mother.

Thanks to the KCM Blog for passing on this inspiration.

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More Evidence of the Housing Recovery

Sherwin Williams Co. stock chartHow do stock market pro’s know the housing market is recovering?  They look at stocks like Sherwin Williams (SHW) because share prices of companies that offer housing-related goods and services are “on a tear.”

According to Jeff Clark who writes the “Market Notes” for Dr. Steve Sjuggerud’s Daily Wealth blog:

“As today’s chart shows, there’s a safer way to bet on the housing boom… Sherwin Williams (SHW) is one of the world’s largest paint and coating producers. The stock is in a “slow and steady” uptrend. Its share price has more than doubled in the last 12 months. And it just reached a new all-time high.”

As the housing market is recovering, some investors are buying real property and some investors are buying housing-related stocks.  It’s all good.

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Why should Real Estate Investors buy now?

Home Cost Chart

Thanks to our friends at the KCM Blog for this enlightenment.

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Fannie Mae Expands Investor Financing Options

Uncle Sam offering bailout dollarsHey real estate investors…have you ever wondered when your bailout would come along?  Well this may help out:

“Fannie Mae recently announced expansion of it’s Homepath Mortgage product that provides home buyers and investors financing for the purchase of Fannie Mae-owned properties.

The new product will allow eligible individual and LLC borrowers to finance up to 20 properties using the Homepath Mortgage.  NAR has long called for expansion of financing opportunities for investors as a way to increase the absorbtion of REO properties.  Fannie Mae will offer flexible lending terms and will not require appraisals of the properties.

Visit Homepath.com for more information on the program and participating lenders.”

Thanks to the National Association of Realtors for this heads-up and for their smart advocacy.

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How to Add an Extra $1 Million to Your Retirement Plan

chart: building wealth

“Make $1 million with 3 properties. Assumes the following for each property: a purchase price of $182,600, annual rent of $26,400 and annual expenses of $17,780.”

If you would like to add an extra $1 Million to your retirement plan, start today.  Buy one investment property:  a house, a duplex, a 4-plex, etc.  Just start.  Start with one.  Next year add another one.  Add another one on year three.

If you’re crazy like me, keep adding.

(I acquired 92 units because I have the greatest ever handymen, and I didn’t want them to find a new client.  I wanted to keep them busy.  They just kept renovating themselves out of a job as we added each new property…until we had/have almost no service requests.  True story.  My Mom finally asked me, “How many units are enough?”  I told her I never thought of it like that, I was just trying to keep Allen and Andy busy!)

The more units you acquire, the easier it gets.  You develop an “economy of scale” and your great helpers (handymen, landscapers, janitorial crew, bookkeeper, etc.) start to run like a watch.  I know you don’t believe me about this, yet.  But eventually you will.  (You can always hire the management out if you don’t find the game as exciting as I do.)

Interest rates are at an all time low.  Get out there, take a risk and add just one unit to your assets this year.  Then rinse and repeat next year.

Read the full CNN Money article here.

Happy investing, and happy retirement!

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Why taking risks is a good thing – Francis Ford Coppola

Articles

Fund Your Fabulous Retirement with Cash Flow from Rental Property

Nest EggRecently, I got an email that went something like: “Sure, right, easy for you to say.  You can buy rental property because you have a law degree and money and credit.”

Huh?

Let me just say, that when I started investing in real estate with my son, I was fresh out of law school with huge student debt, in my mid-40s, no money, no time, no retirement plan, and barely any credit.  Plus, I had just finished a 14 year stint as a single-mom.

Yep, I was really special.

We made only a tiny bit of profit on our first investment, after investing a whole summer of work.  (We made the mistake of trying to be flippers.  Now that I think of it, that was only one of a huge number of mistakes!)

We went negative on our second investment, a condo, which went down in value about $25K the first year we owned it because of a ton of foreclosures in that development.  The condo is now worth double what we paid for it with a nice positive cash flow.

On our third investment, an eight-plex (which we had no business buying), we found out at the last minute after investing $15,000.00 earnest money, $3500+ for an appraisal and inspections, etc., that we couldn’t qualify for the loan.  I wasn’t willing to walk away, so I broke down and begged a relative for the loan.  It was horribly embarrassing.  The relative gave us the loan and took a first position lien (because the property was a good investment) at a whopping 8.5% interest.  We had no track record, so we paid through the nose for the first three years that we owned that property.  My son and I did all the work (in our spare time after hours and weekends) for the first three years.  Plus it was negative cash flow and Josh and I had to work to feed the creditors.  (Please don’t follow this example!)  After that we were able to refinance at 6.5% interest and we finally had positive cash flow.  Today, 8.5 years after the purchase, the property is worth twice what we paid for it and we are currently refinancing for about 3.85%.  Booya!  Now we’re talking cash flow.

So don’t be a big stinking crybaby!  (To paraphrase Donald Trump.)

Let me tell you what is way more valuable than money or credit.  It’s the burning DESIRE, the drive, the motivation to be successful, to win, to be self-made.  This is the entry ticket to the game.  If you have this great desire, it’s game on.

You are going to make mistakes.  You will sometimes lose money.  You will experience frustration and aggravation and nasty little punks that get all up in your face.  You will start out working long hours.  You won’t know how to do a thousand things.

But over time, you will experience pride and accomplishment.  You will have a ton of fun making things look great and renting it to nice people, and you will fund your fabulous retirement before you know it.

You may have to be creative, especially to start.  But if you actively look and actively make offers, suddenly you’ll find a property and a situation that will click.

Now get out there with a smile on your face and put together a great retirement…one cash-flowing rental property at a time!

Quotes

The Greatest Opportunity Ever Is Just About to Pass You By

How much louder can I say this? This moment is the greatest opportunity ever to be an American homebuyer. It is the best moment in history. We may never see opportunity this great in our lifetimes. Time's "a-wasting" actually... You're about to miss the best moment, if you don't get on it, right now. The "V" bottom (as I call it) – where you can get the very best prices – is passing you by as I type.

Dr. Steve Sjuggerud

Dr-Steve-SjuggerudDon’t miss today’s article by Dr. Steve Sjuggerud!  Go there and read it now.  Seriously!  Do it now.