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pronstar

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Rod's reply in another thread really got me thinking...

Just a show of hands:
Any inmates interested in this?

For a conversation starter, I'm thinking it starts small.
A few folks chip in a little money ($5k - $10K each), to make a decent return on several properties.
Focus on rentals, ideally multis but also some SFH...maybe flips down the line.

The sky is the limit from there.

Consider:
Rents are high compared to purchase prices.
Population set to double in the next 15 years.

Not looking for anything more than ideas and possible interest at this time.
Posting here is in now way a commitment to be part of it, and I'm not making any promises to anyone at all.
 

shintoooo

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I'd be interested. I have clients that live here in CA and own real estate only in San Antonio. Mostly commercial. They do really well.
 

milkmoney

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I am only 3 hours , well my house is only 3 hours away from you.
Interested or curious ???
 

LargeOrangeFont

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I'm in. Let's buy a subdivision! :)

I've been doing research for the last couple hours since seeing that post.
 

Go-Fly

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I did this same thing back in the 80's. There was four of us that pooled our money and bought commercial property. Turned it all over to a management company to keep it rented. For ten years we rolled all the profits back into the LLC to buy more property. Then we took profits. It was fun to go to the P.O box every month and see a check for $100k. Now days it is auto deposit and all I see is a report once a year. If you can get the right people, there is money to be made. It will take five to ten years to make it work. There are some real pit falls while building a good rental base, however.
 

LargeOrangeFont

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I did this same thing back in the 80's. There was four of us that pooled our money and bought commercial property. Turned it all over to a management company to keep it rented. For ten years we rolled all the profits back into the LLC to buy more property. Then we took profits. It was fun to go to the P.O box every month and see a check for $100k. Now days it is auto deposit and all I see is a report once a year. If you can get the right people, there is money to be made. It will take five to ten years to make it work. There are some real pit falls while building a good rental base, however.
Thank you for the advice, man with a yacht. :)
 

LargeOrangeFont

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Sale pending, but this is sorta what I've got in mind:
http://www.realtor.com/realestateandhomes-detail/6443-Hollis-Ave_Dallas_TX_75227_M84820-26001

Not much down to be cash flow positive :thumbsup
Yea that ain't bad. My personal rule for myself is a 10% return per year on my initial investment (minus any unforeseen repairs). With 25% down this looks like it slides right into that bracket. Obviously over time rent will go up and it will get better.

Costs are still at least covered with one unit vacant. That is relatively low risk I'd say.

Question- at these price points is the rental return better buying 2-3 single family homes in the $70-$90k range? I don't know what the rental picture for a SFH is in that area, vs. the rents listed in that listing.
 

Blue

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I've got some $$$ looking for a home pun intended...

RDP Investments & Property Management LLC.:D
 

RodnJen

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The property tax will definitely come into play. As for target markets, I've found that it's better to target a market that's attractive to an educated workforce rather than looking for the cheapest property. If you can afford to charge rent below market, you will likely keep your tenants and avoid high turnover costs.
 

thetub

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Good idea Pron

look at all the details in the area jobs, crime , schools and drive around at night time in the area .

ask around and see if you know or find anyone with rentals there and get any advice or information.

already starting to move money out of Kalifornia as a member suggested things here are not looking to bright IMO for rentals (property taxes) and laws are changing and taking profits away.

I have heard Austin Texas is growing like crazy??
 

RodnJen

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Good idea Pron

look at all the details in the area jobs, crime , schools and drive around at night time in the area .

ask around and see if you know or find anyone with rentals there and get any advice or information.

already starting to move money out of Kalifornia as a member suggested things here are not looking to bright IMO for rentals (property taxes) and laws are changing and taking profits away.

I have heard Austin Texas is growing like crazy??
Good advice. Depends on where your rental his and how you acquired it.
 

thetub

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I did this same thing back in the 80's. There was four of us that pooled our money and bought commercial property. Turned it all over to a management company to keep it rented. For ten years we rolled all the profits back into the LLC to buy more property. Then we took profits. It was fun to go to the P.O box every month and see a check for $100k. Now days it is auto deposit and all I see is a report once a year. If you can get the right people, there is money to be made. It will take five to ten years to make it work. There are some real pit falls while building a good rental base, however.
would love to pick your brain for information...
 

pronstar

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Lots to discuss for sure, keep the ideas coming.

Rod, there's definitely opportunities in the areas with better school districts, that's where all the transplants are looking.

Tub, Austin is growing, a bit far from where I'm at tho.
At least for me, I'd like to start in Dallas, where I can physically look at places and collect rents.
But in the future, who knows where things could go.

Go-Fly, we're all ears...Shintoo, someone has to keep the books :D

Love the discussion, let's keep it going.
As for me, I've got a lot of homework to do, including getting a better lay of the land so I'm more educated about going rents and whatnot.
 

LargeOrangeFont

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The property tax will definitely come into play. As for target markets, I've found that it's better to target a market that's attractive to an educated workforce rather than looking for the cheapest property. If you can afford to charge rent below market, you will likely keep your tenants and avoid high turnover costs.
I don't disagree, but I would almost always prefer a multi unit property as opposed to a more expensive single family deal when jumping in like this. The multi unit allows you to be picky with renters and it is not breaking you or draining your wallet when you have it empty.

That said, I'm not an expert, and I'd love to learn more about the Dallas market. This particular deal is a similar price, and similar return to my duplex in Havasu, and I'm hoping there are more lucarative prospects. I don't want too many eggs in the Havasu basket.

Not to detail, but Vegas is another good market to look at. There are members here with some
great insights into the Vegas market.
 

Hypnautic

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Subscribed...

I have available cash flow that I have been using to property flip. Unfortunately, the Vegas valley is heavily saturated right now and hedge fund money is buying at almost 100% ltv and holding.

Would be interested to see what opportunities there might be.
 

Bigbore500r

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My friend just moved to Texas in 2016, and has flipped 3 houses already. Small houses, low buy in. Makes 30k a pop but the house is only 100k so that's a good margin
 

thetub

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I'd be interested. I have clients that live here in CA and own real estate only in San Antonio. Mostly commercial. They do really well.
you too..

love to pick yore and yore clients brains...
 

Raffit78

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I did this same thing back in the 80's. There was four of us that pooled our money and bought commercial property. Turned it all over to a management company to keep it rented. For ten years we rolled all the profits back into the LLC to buy more property. Then we took profits. It was fun to go to the P.O box every month and see a check for $100k. Now days it is auto deposit and all I see is a report once a year. If you can get the right people, there is money to be made. It will take five to ten years to make it work. There are some real pit falls while building a good rental base, however.


Care to elaborate on your story?

Also suggestions for new investors? When you say commercial is this mostly warehouse space, retail space, multi family?

I can't seem to wrap my head around the future of 5-10 years and enough equity or money from rental income to re-invest without major outside liquidity investment.

For instance: you purchase retail space 3-4 million. 20% down 600-800k. Now a days this combo gets you 3-4% cap rate. That MIGHT make your mtg payment. So even in 5 years with rent increase how can enough profits come in to drop another 600-800k on a new property?
(Please excuse my ignorance).

Because if I can make a passive income of 100k a YEAR, I would be ecstatic!
 

Raffit78

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Sale pending, but this is sorta what I've got in mind:
http://www.realtor.com/realestateandhomes-detail/6443-Hollis-Ave_Dallas_TX_75227_M84820-26001

Not much down to be cash flow positive :thumbsup




195k let's assume 200k to keep things easy. That's 40k down at 20% giving you a mortgage of 880-900k a month. Taxes in Dallas are 2.72%. Bumping your payment up another $453.00 a month. Another $150.00 for insurance. (0 improvements)

Rent values in that zip code is 1100-1400.

Your mortgage would be $1503.00 a month. Based on 4.25% interest rate (which is a steal)

Unless I've miscalculated, or my rent value is completely off.
 

zhandfull

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Interested.

I have no experience with investment groups of this type , but my thoughts are if pooling money the group would be self financed and not leveraging investments with mortgages. Instead the group would buy cash and bank any profits for additional investments. Is that not the basic principles of this type of investment.? Long term investment equals profits plus hopefully asset price appreciation. Start paying dividens at a set time in the future, 10 years possibly?
 

shintoooo

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If we can get a pool of 10 or 20 people to put money in and form an LLC, then we can buy let's say 5 properties out right with no debt or put down 50% and buy 10 and be cash flow positive.

Sure there might not be as big as a payout but at the same time the risk for each investor is less and we can absorb an empty rental much easier than let's say 4 people. We reinvest everything back into the LLC and continue to buy properties. In 10 years we could own 20-30 properties or maybe more if it's done right.
 

Dan Lorenze

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My cousin is a successful real estate developer/banker. He told me that Dallas is the next big thing. :thumbsup
 

wsuwrhr

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So it seems you have yoooor answer Pronnie. When do we start?
 

bldrinker

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If we can get a pool of 10 or 20 people to put money in and form an LLC, then we can buy let's say 5 properties out right with no debt or put down 50% and buy 10 and be cash flow positive.

Sure there might not be as big as a payout but at the same time the risk for each investor is less and we can absorb an empty rental much easier than let's say 4 people. We reinvest everything back into the LLC and continue to buy properties. In 10 years we could own 20-30 properties or maybe more if it's done right.
How much buy in?
 

shintoooo

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How much buy in?
I guess it depends on what type of property we are going for. I would say to start would be $10,000 to $20,000 per person. We don't necessarily have to put down 50% on a property since rates are still cheap and it's good to leverage as long as we can be cash flow positive. It just depends on the property.
 

Raffit78

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I guess it depends on what type of property we are going for. I would say to start would be $10,000 to $20,000 per person. We don't necessarily have to put down 50% on a property since rates are still cheap and it's good to leverage as long as we can be cash flow positive. It just depends on the property.

I agree, or even do a few rounds of buys ins, would become real beneficial when the houses are cheap to get better leverage.
It doesn't even need to be based on single family.

I don't believe a loan can be taken out on an llc or a inc.

So there would need to be personal guarantee on loans.
 

Waffles

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This is really interesting. How do these things work on the back end? Who controls the money? Who decides how when where the money is allocated/reinvested? Is it like a huge board where things get decided on unanimously?
 

Singleton

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Did this with my sister in the Plano, McKinney area for a few years. We formed an LLC and all properties were purchased with cash. At one point we had 4 properties that were all rentals.
A few years back my sister was going through a separation with her husband and we cashed out. Should of kept the properties but had to support my sister.
My experience is housing is costing more in the north Dallas subs and will support rent but initial purchase price for houses in the good school districts is 275 to 350k for a basic 3 bedroom 2 bath house.
 

LargeOrangeFont

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I guess it depends on what type of property we are going for. I would say to start would be $10,000 to $20,000 per person. We don't necessarily have to put down 50% on a property since rates are still cheap and it's good to leverage as long as we can be cash flow positive. It just depends on the property.
I am in for this strategy in the the right market.
 
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