Biggerpockets Quotes

FHA loans are designed only for homeowners who are going to live in the property – so you cannot use an FHA-backed loan to buy a pure investment property.

28 Cherry Street is currently listed at $145,000, and recent comparable sales show that the similar homes have sold for between $140,000 and $170,000. 28 Cherry Street, however, needs about $25,000 worth of work to be in nice condition. Therefore, if you pay $145,000 for it and put in $25,000 - you'll be at $170,000 and that doesn't count all the closing costs, holding costs, selling costs, unforeseen overages, or other fees that you'll have to pay. You will be underwater (owe more than it's worth) on this property no matter how much work you do to it. However, if similar homes were valued at $225,000, you would find that you had, indeed, made your profit when you bought.

If an investment makes no sense without appreciation - don't invest in it. This is known as "speculating" and, while it may be profitable for some, is a risky venture for both inexperienced and experienced investor alike.

remember: provide value.

ROI = (V1 – V0) / (V0), (where V1 is the ending balance and V0 is the starting balance)

never worry about action, but only inaction. – Winston Churchill

I never worry about action, but only inaction. – Winston Churchill

the FHA does require an additional payment, called "Private Mortgage Insurance." This "PMI" insurance protects the lender and is required when the down payment on an FHA loan is less than 20%. The extra PMI payment can make your monthly payment slightly higher, thus reducing your cashflow.

For the same reason, I also recommend taking photos (or a video) of the property before handing over the keys. This will be further evidence in the future when the tenant moves out.

REIT stands for a Real Estate Investment Trust.

Your social life is a homeostatic entity that desires to keep everyone on the same level, usually subconsciously. As you start to grow your wealth or your level of success, your friends will naturally feel the pull of homeostasis and, with no maliciousness intended, attempt to pull you back to their level. They won’t understand your newfound passion. However, if you instead hang around with five people far more successful than you, their homeostatic tendencies will kick in, and

life is too short to be stuck in a job you hate. Choose a career that makes you excited to wake up in the morning, energized through the day, and content when you fall asleep at night.

Being able to pay all cash allows people to be soft on the math and pay too much for a property because writing a check is much easier than finding a great deal.

How long did the tenant rent from you? -What was their monthly rent? -Did the tenant give proper notice when vacating? -Did the tenant receive back their security deposit? -Would you rent to this tenant

When you deny an applicant, it is important that you clearly document your reasons for why you are denying them to avoid discrimination complaints.

Therefore, it is important to require a deposit to hold the vacant property. This deposit is non-refundable and should be due within 24 hours of being accepted. Simply

applicant know that you cannot hold the property indefinitely so if they want to guarantee their position they will need to pay the deposit within 24 hours.

If a tenant moves in during the middle of the month, I don’t pro-rate the amount they pay upon first moving in. Instead, I pro-rate the second month to match the first. In other words – every tenant pays a full month’s rent when they move in, but when it comes time to pay the rent on the 1st of the next month, they will only pay for the amount of days they lived at the home in the previous month. For

This is also where the BiggerPockets Forums come in extremely handy. Post a question now, and within a few hours, you’ll have potentially dozens of experienced landlords chiming in to help.

a house built upon sand is subject to collapse.

Ninety percent of all millionaires become so through owning real estate." -Andrew Carnegie

A bank is a place that will lend you money if you can prove that you don't need it. -Bob Hope

Real Life Example: John has $100,000 to invest. He can choose to use that $100,000 to buy a house that will produce $1,000 per month in income or $12,000 per year. This equates to a 12% return-on-investment. John could also, instead, use that $100,000 as a 20% down payment on FIVE similar homes, each listed at $100,000. With an $80,000 mortgage on each, the cashflow would be approximately $300 each month per house -  which is $1,500 per month each or $18,000 per year. This equates to a 18% return-on-investment - 50% better than buying just one home.

The benefit of the FHA loan is the low-down payment requirement: currently just 3.5%.

Following a rule of thumb known as the 70% rule, an experienced house flipper will buy a home for 70% of it's current value less any rehab costs. For example: Home A should be worth $100,000 if it were in good condition, but it needs $20,000 worth of work. A typical house flipper will purchase the home for $50,000 ($100,000 x 70% - $20,000) and seek to sell it for the full $100,000 when completed. This is simply a rule of thumb, and actual numbers must be verified and adjusted to ensure a successful and profitable flip.

Flipping is not a "passive" activity, but instead is just like an active day job.

make it a policy to never rent to a person with an eviction on their record or recent felony (within 7 years.) Yes, people do change – but I don’t find the risk worth taking. I’ll leave that risk to other landlords.

As the old saying goes, “Those who lead, read.

a rising tide lifts all ships.

After all, there is a reason they want you to “sign up TODAY”!

Most new investors should plan on investing within a short driving distance to your home, rather than investing long distance (unless your location makes it impossible.) Doing this will help you to become an expert in that area, which will help you more easily analyze deals and opportunities.

To make your profit when you buy, you must purchase a property at a price that ensures you make your desired profits, based upon your ability to execute your exit strategy. In other words, you need to buy smart.

Start with the end in mind." -Steven Covey

How much do they currently make? -How long have they worked there? -Is this job considered temporary?

commercial property can often sit empty for many months or years. Unless you are starting from a very solid financial position, investing in commercial real estate is not recommended for beginners.

Make Your Profit When You Buy" - Real estate mantra

Showing units can be a pain because 50% of the time, tenants will not show up. To combat this, I use one of two techniques: 1.I give them the address to drive by first and tell them to call me back if they are interested in seeing the inside. This eliminates the people who are disinterested because of the location. 2.I try to “batch” all the showings to one time. I will tell all the callers that I will be at the house from “5:00 to 5:30 on Friday afternoon” and if they want to see it – show up then. Having multiple tenants look at a property at the same time can be a little bit awkward, but it creates a sense of competition and scarcity which allows for

gross monthly income must equal approximately three times or more the monthly rent -Applicants must be employed -Applicants musth have good references concerning rental payment, housekeeping, and property maintenance from all previous Landlords. -The number of occupants is limited to a max of two per bedroom or less

their current landlord – because many landlords will lie or embellish the truth in an effort to get rid of bad tenants. Instead, call all the previous landlords for at least the previous five years.

always process applications on a first-come, first-serve basis – processing the application until you discover they do not qualify. If someone doesn’t qualify, move on to the next. When

always process applications on a first-come, first-serve basis – processing the application until you discover they do not qualify. If someone doesn’t qualify, move on to the next.

intrigued

The Book on Flipping Houses: How to Buy, Rehab, and Resell Residential Properties).