Real Estate Investing - Posted by Paul Maguire
Posted by Paul Maguire on March 12, 2001 at 24:57:18:
Just a bit of lessons for those of you new to buying real estate from a seasoned investor. I have bought, sold, renovated, traded, lots and lots of properties, and hold over 13 million in real estate from single family to 2 million dollar multiunit buildings. I am 37 and do not have to work another day in my life, but I do, as will you , cause you love doing deals!!!
The biggest mistake I see in beginning real estate investors is there unwillingness to step up and take a risk. The other is an unwillingness to pay the price to take seminars, ask questions, be embarrassed once in a while, and spend a few bucks.
Here is some basics I use everyday:
Houses: look at the price per sq foot. compare what you are paying to what everything else is going for. There are deals in new homes as well, if you look at the price per sq. Often you can hold a home for 6 months to a year or more, with a simple 1000.00. Its like a lease option, with prices appreciating. Always buy near job centers, or growing areas where there is demand. I made over 250K last year buying new homes that when finally delivered, had risen in price substantially. I bought based on low price per sq foot starting prices compared to the market.
Units: Look at the cost per door of similar product, and look for under market rents owned by mom and pop properties. My largests is 32 units. ULtimately,this is where the money and cash flow is. with a duplex, 1 vacancy, you lost 50% of your revenue, with an apartment, 1/32nd of the revenue…I have buildings that I have owned only a short time, and they bring in 6 figures in positive cash flow.
I made almost all of my money on fixers in Oakland CA, mostly buying foreclosures. I paid points and got hard money loans, because the price was cheap for most of these properties, so 5 points was say 2500. I lost money and deals trying to mess with conventional lenders. ONce you get a track record, Hard money guys will lend to you all day long. Good luck out there, and if I can help any of you guys, let me know. RE is the best way to riches. I see all these dot com guys with their tails between the legs who were high and mightly last year. Remember too, real estate can be very forgiving in time. And a quote from a guy that owns a bank, had at one time 6000 units, and currently has 50,000,000 in tax free bonds from divesting all his real estate…" I never lost money in real estate by paying a bit too much, but often lost money in real estate by not paying enough". Good luck all. Paul