Real Estate/Money Question(s),Advice needed if possible

[NySportsfan]

What?s up everyone,
I have lurked on madjacks for years,posted a few times about that old "gambling for a living" argument, and being that Im a relatively young guy I have just recently started thinking about investing and such, I have a plethora of questions and thoughts I wanna get from people, and Im sorry if they?re not in the most eloquent fashion, just trying to get my points across, and I skip around a lot so I apologize, just whatever pops into my head
First thing, I wanted to invest in real estate, first by buying a lower priced house, living in it for 6mos-1yr, building equity, then renting it out to make a few hundred dollars profit a month, then buy a new house to live in, and repeat that process a few times. Just the one caveat, I gamble for a living primarily, not a whole lot of w-2 income, and Im afraid the mortgage place wont give me a loan because of it, even though I can show tax returns, just think they?ll be insecure with that and feel my income is unstable even though I treat gambling as a business. Also, didn?t know where to advertise rental property and attract tenants and how to set a monthly rent price, but that?s one thing.
Second, I put a decent amount into a Roth IRA starting recently using tech funds index, but wanted to know recommendations there, Im in it for the long term definitely with a Roth, just curious what funds are good. Also, wanted to do some mutual funds and was curious some decent ones there, I know Im being vague but just looking for a starting point.
Third a little off topic, was wondering if anybody knew of any good real estate lawyers, and accountants in the Vegas area, as Im moving there pretty soon, that know the ins and outs of professional gambling so to speak, and can offer me assistance, want to save as much as possible with closing costs by doing my own work, but not sure how its going to turn out, but feel real estate is a very good investment as I have family and friends who did it and Im pretty well versed on it.
Thanks in advance for all your responses, its greatly appreciated

 

[AR182]

nysportsfan,

you can get a mortgage without showing income, but you would have to pay at a higher interest rate or pay higher points.just don't tell anyone that your a gambler. use a different cash occupation than gambler.

it is not as easy as you seem to think to find a property that generates positive cash on a monthly basis.one reason is that in order to not pay pmi(insurance) on an investor property you have to put 20% as a down payment. haven't dealt with real estate in ny for many years , so don't know what prices run on ny property, but you may still be able to get a positive monthly cash flow even with putting 10% down & paying for pmi.

the first thing that you should do is fine an experience real estate agent to work with, & subtly pick his brain. then start looking for properties, but make sure that this agent shows you, not tells you, what the rents are in the neighborhood of any house that interests you. you have to figure out what the monthly mortgage payments are, what the monthly taxes are, what the cost of house ins. is, & how much cash that you will have on the side for emergencies. i cannot stress enough the importance of the last point.

if you want to keep your expenses down, market the house yourself for renters. a good place to advertise in is the neighborhood newspaper.

finally open up a separate checking account for your rentals, pay everything you can with a check, keep accurate records, & keep receipts of everything you buy, because it is a tax deduction.

good luck

 

[Doughboy]

If you are looking for good funds, and just getting into investing, go with a Vanguard S&P 500 fund and just pump money into it evey month. If you are looking for a growth fund, then the American Funds Growth Fund of America is probably the best growth fund around. Just make sure you set up a steady investment schedule and stick to it, no matter what the market does. Eventually you can grow from there.

 

[SixFive]

about renters, it's not hard to find them, but it's very hard to find GOOD ones. I've had many headaches over crappy renters who don't like to pay on time or pay at all. It's not a simple process to get them out of your place either, especially if they have kids. Try to rent to a single person (without a live-in) who has no kids. Check their job reference and be sure to call their employer. The employer can't tell you much, but ask about their attendance for sure. If they call in sick a lot, that usually translates to being a poor renter. Instead of worrying about fixing the house up to rent, I might suggest fixing it up and then selling it then repeat the process. If you're going to rent out, u need to have a good cash cushion to prepare for any deadbeats. You also need to have a good, dependable handyman on your payroll unless you know how fix most things.

On the Roth's, diversify them into small cap/aggresive, growth, growth and income, and international and you should be fine over the long haul. U can stay within one fund family like Vanguard, Fidelity, American, or Janus and do fine.

 

[NySportsfan]

Thanks AR182, Sixfive and doughboy its appreciated greatly since im Oynug and new to these things! just another note.....I right now live in Long Island, NY with some buddies, cant afford my own place yet, but the housing market here is exploding, they just keep going higher, I dont know what it is with houses and mortgages as someone else mentioned, but with mortgages falling, and house prices going up, I wonder who is getting screwed here, somebody must be, but I guess its a mystery, happy capping to everyone

 

[TAZ]

Get a good accountant.
As noted above, keep good records of everything pertaining to the business of buying-fixing up-selling the houses. Selling rental property is taxed as a capital gain, so you need an accountant to help make sure that the gain is as small as possible.

 

[skulldog]

I think if your attitude is somebody must be getting screwed, then maybe R.E. is not for you. It's simple supply and demand and the only reason that the economy is not totally in the shitter is because of the % rates.

If you still decide that you want to enter the world of R.E investing, then he's a few tips.

1. Go out and get pre-approved by a mtg company(not on the internet) and tell the broker that you want a No income verification loan and that your going to live there(what you do after the closing is your business), once you have the letter.

2. Go and find a Buyer's Agent and tell he/she what your looking for, show the pre-approval and set up some appointments.

Maybe I should have started with: Check the Landlord/Tenant Laws in your state, some states like NH, are excellent for the landlord, but others like MA suck!!!. The more homework you do on your own, the better off you'll be.

Usually for a No income verification loan you'll need 10% down and excellent credit( credit score of 680 and above)if you don't know what your credit score is then I sugguest you have your report pulled(hard copy) and go over it w/a competent mortgage broker.

Six five makes some good points about renters etc and brought up fixing up then re selling them, it's called "flipping properties", which is what my wife and I do about 2/4 times per year.

NySportsfan, Real Estate is not a get rich quick thing and like gambling there is risk, so do your homework, align yourself w/people who are more experienced than you, decide what it is you want and go for it.

I've been a R.E broker for 17 years and would be happy to answer any further questions, just post them here.

GL

 

[NySportsfan]

Thanks skulldog. I think I came across wrong there which I sometimes do, I didnt mean somebody gets screwed, I basically just meant something has to give, but you cleared it up for me... I fully understand its not a get rich quick thing, the main reason I want to get into it is because I read cnn/money magazine, and read about younger people who started off with small down payments and the like, and with some sweat and hard work, either rented it out and get a steady income stream, or live in a house with appreciated value...Of course theres a tremendous amount of work involved, thats a given, and a buyers agent is a MUST, especially initially......Just saw you work in Boston, I actually know people in Marblehead which is a nice little town about an hour from you, just FYI....As for pre approval, I think thats when they actually look at your score and examine it closely, as opposed to pre qualified which is a real ballpark figure, If I recall, I did some homework but its slipping my mind a little...I dont know that Id need a no-income verification loan anyway, but I guess I wouldnt want to show myself as a "gambler" or what is called an unstable occupation, havent got a copy of my score yet, but Ive paid every single bill on time for the last 2-3 years, no major balances though and only a few accounts, dont know what score thatd be....
Lastly, Im very glad you are willing to offer me help with Real Estate. Eventually I want to get involved with it in Las Vegas or somewhere in the southwest, as Im looking to move out of the "high pressure" NY, but very happy that you can offer me assistance....Actually, thought about being a real estate broker and going into training, it crossed my mind, but I get the feeling it would be a long process and very difficult because you probably only get commisions initially... Re:Flipping properties, I wasnt going to do that, but again, have heard of it. In a nutshell, I wanted to buy a reasonably priced house in the low-mid 100s in Las vegas or thereabouts or near a college, then try and crunch the numbers to see if i can make money renting it, then use some of the equity to buy a primary residence and so on, of course Id say it was to live in, but could eventually switch it as you said without telling them after closing.....Thanks again for your help, I may take you up on advice again sometime soon

Michael

 

[AR182]

sixfive wrote: "I've had many headaches over crappy renters who don't like to pay on time or pay at all. It's not a simple process to get them out of your place either, especially if they have kids. Try to rent to a single person (without a live-in) who has no kids. Check their job reference and be sure to call their employer. The employer can't tell you much, but ask about their attendance for sure. If they call in sick a lot, that usually translates to being a poor renter."

i'm glad that it reminded me about renters.as skulldog mentioned each state has it's own laws. for example, arizona is landlord friendly, while nyc & surrounding area are tenant friendly. i'm pretty sure that each state has an organization that helps landlords. for example, az. has an organization called arizona multihousing assoc., which is made up of landlords, atty's., & contractors with members paying $75 per yr.this org. supplies different type of forms, free access to the atty's. & they supply a handbook about tenant, landlord law, that is interpreted in plain language by atty's.

instead of you doing the background check on prospective tenants, there are local or national companies that will do employment history, past rental history,banking info & crime history. they charge anywhere from $35-$50 per family application. i have the applicants pay this fee when they complete an application.

i have found that the best tenants are the ones that have a female involved. i find that they provide the best stability in a family. i don't like renting, but do if i have to, to a single person because if that person gets either sick or layed off, the rent payment falls behind.

 

[SixFive]

i have found that the best tenants are the ones that have a female involved. i find that they provide the best stability in a family. i don't like renting, but do if i have to, to a single person because if that person gets either sick or layed off, the rent payment falls behind.

I had one female tennant over the years who didn't have kids and who did not have a live-in, and she was the best. Problem is, so many of them drag in their deadbeat boyfriends, and then it's trouble all the time.