Posted by Gene on June 06, 2005 at 22:07:18:
I would like to stress how the bay area could be very difficult at this time.
The market is highly inflated and possibly could make a major downturn. There is a huge amount of risk in most CA markets right now.
I agree with JN that education is you most important first step.
Good luck
Gene
this is a whole new world to me - Posted by James Vick
Posted by James Vick on June 06, 2005 at 21:15:02:
Being very young and brand new to this i really do not know where to start. I am a 22 year old United States Marine that is looking into real estate as a career after the Marine Corps, but i want to get started now. The military offers me a VA home loan that is guarenteed up to aprox. 350k. Let me lay out my plan in basics and if anyone can send me tips and direct me in the right direction I would truelly appriciate that. Being a young father it is important for me to secure a future for my daughter. The military has provided an excelent stepping stone, but i know there is so much more. I want to buy property soon in the San Francisco bay area and rent it out imediately. I was told that in doing this, my renters would basicly be paying off my morgage. I plan to start with one property and then move up. Here’s my problem; this sounds way to easy to be true. Please send me any information that can help me get started. Thank you.
James.
Re: this is a whole new world to me - Posted by Bad Shift
Posted by Bad Shift on June 11, 2005 at 02:25:20:
“my renters would basicly be paying off my morgage”
This is pretty funny. I currently rent a home by a creek in the Bay Area for $1800. The house was appraised a year ago at over $700,000. My rent is $2200 LESS than just the interest of an equivalent mortgage. And rents here have been dropping for the last 5 years. I know it might sound a little strange on this board, but the smart money right now is NOT in real estate. This house would have to appreciate 12% y-o-y for 10 years running before an investor could expect to start having positive cash flow.
Two more things: the last time we had more than 50% home purchases on I/O? Guess. No, not 1991, when housing prices dropped 20% in CA. But 1928. Anyway, good luck. Hope you’ve got a back up plan.
Getting Started Investing in Real Estate - Posted by Jeanne
Posted by Jeanne on June 08, 2005 at 13:25:14:
James,
Here is my “standard reply.” It’s similar to what JT-IN said.
My suggestion would be to find a local real estate club. They are a great place to meet other investors, real estate professionals, and mentors:
http://www.creonline.com/real-estate-clubs/index.html
I recommend taking advantage of all of the free resources on the site, including the searchable Archives, “How-to” Articles, and Success Stories. Here is the link to the How-to Articles: http://www.creonline.com/articles/index.html
Please feel free to post your specific questions on our Main Newsgroup. We get thousands of visitors every day. Most likely, someone will have some input on your specific situation. I?m sure many others would benefit from a group discussion. Please read our editorial policy before posting.
http://www.creonline.com/wwwboard/index.html
Sincerely,
Jeanne Foyt
Creative Real Estate Online
When you get the the “Money-Making Ideas,” make sure to pay close attention to this one by Johnboy:
Getting Started Step by Step (Part 1
http://www.creonline.com/money-ideas/mm-058.html
Re: this is a whole new world to me - Posted by Nimesh Patel
Posted by Nimesh Patel on June 07, 2005 at 09:58:00:
Hi James:
First of all, thank you for the service to our country. Being in the Service is not easy and it is very hard/stressful (most civilians don’t understand that).
Believe it or not, the experience you obtained in the Marines will be of tremendous asset to you. My own two cents on this issue is this James. FIRST use your G.I. Bill to complete your college degree. This way, you have a reliable income stream. Then, you can invest in real estate. Being only 22 years old, you are probably thinking to yourself “oh God in 4 years I will be 26 years old”. I am 30 and I made that big mistake in my life by delaying getting my college degree. Remember, that is just my own two cents on this issue and I wish you the best of luck on your decision and future plans.
Re: this is a whole new world to me - Posted by Sean
Posted by Sean on June 07, 2005 at 08:40:14:
James,
You have the basics right, but there are lots of details… Yes, you can buy a property, rent it out and the renter will pay down your mortgage over time… However with that property and tenant come things like Management and Upkeep of the property, screening and finding tenants, managing the tenant, getting your check out of them every month… Vacancies, evictions, etc etc etc…
Now housing is tight in the Bay Area, so finding a strong tenant is probably not as tough there as it is other places, but its still an issue… its also an area where home prices are getting beyond the price most folks can afford to pay… which I don’t care what economist says what about it, that’s usually means the markets going to go down… now long term holding it doesn’t matter as much, because eventually property values go back up and your mortgage will continue to pay down. The down side can be when the market slows down so much that your rent isn’t enough to cover your mortgage and taxes, let alone maintenance and other issues.
I know a family who is in the service, and they basically bought a fixer upper everywhere they were stationed. They would buy it, fix it up, live there, and when they were transfered would rent it out, and buy a new fixer upper in the new place… they did this every time they were moved. They retired after 20 years in the service with a small but respectable portfolio and cashflow, as well as his pension.
The plan is very solid and does work, but it is work… not 9 to 5 perhaps, but still work.
Thank you for your service, and don’t let the ignorant folks like Asparuh get to you… Ignorance is bliss, and love is blind… its not your issue some folks are burdened by both.
Re: this is a whole new world to me - Posted by Mr. Big
Posted by Mr. Big on June 07, 2005 at 07:32:30:
What are your goals? What are your plans? You tell us you are a young Marine concerned about your daughter’s future. All right. It might be that your goal is to buy some real estate, take nothing out of it, and have it paid off free and clear in 20 years when you retire. Or it might be that you wish to leave the service sooner than that and go into real estate investing full time. These are quite different goals that require different game plans.
You say "I want to buy property soon in the San Francisco bay area and rent it out imediately. I was told that in doing this, my renters would basicly be paying off my morgage. I plan to start with one property and then move up. Here’s my problem; this sounds way to easy to be true. "
It basically is that simple but not quite that easy. In many parts of the country it is possible to buy rental properties that will pay their own expenses, pay the mortgage and give you a positive cash flow every month. Usually apartment houses are better for this than single houses, because houses commonly rent for less than the cost of owning them. And San Francisco is notorious for being a hard place to do this, because of the high prices low rents and pro tenant, rent control and other laws.
But real estate is very versatile. There are lots of different ways to make a living and even make a fortune. I suggest looking at the Success Stories on this web site and see if they spark some new ideas. Then figure out just what it is you want in the next year, 5 years, 10 or 20 years and if real estate might help you reach your goals.
Re: this is a whole new world to me - Posted by TC(FL)
Posted by TC(FL) on June 07, 2005 at 07:13:55:
Some excellent advice. Learn as much as you can. As for the VA loan, when I got out of the Navy, I was required to occupy (not just own) the property in order to get the loan. You may want to look into this because if it’s still the same, you won’t be able to legally rent it.
BTW, thanks for your service!
Be careful, and take your time… - Posted by Matt
Posted by Matt on June 07, 2005 at 24:45:57:
My best advice is to be very careful right now, and take your time to read and learn over the next year or so. Don’t rush into anything, especially putting your name and finances on the line - borrowing money to buy property in an inflated market like San Francisco.
I would recomment you search on Ron Starr on this site and on Google. He has some good grounded advice on how not to get carried away.
Many people see the current real estate market as unsustainable, and a bubble. Not everywhere, but in some high priced areas like San Francisco. I’d take my time to learn first, and be very careful about jumping in too fast into a market, then regretting it later if the property doesn’t cashflow.
Jumping in too fast in the overheated real estate areas in many parts of the country would be like engaging in battle without a plan, just jumping in because you were eager to get started.
Many people here have made a fortune in real estate, but most did not start buying recently with these prices.
My advice would be to be very careful, and take it slow.
matt
Re: this is a whole new world to me - Posted by JT-IN
Posted by JT-IN on June 06, 2005 at 21:37:53:
James:
First off, let me thank you for your service to all of us in this country. What you have seen and accomplished in the Marine Corp will help you greatly in the pursuit of a RE investment career. It is much about discipline, and you have acquired some excellent training in that area.
What is normally recommended for any “Newbie” are several things… Read all you can on this site in the 1) How To Articles, 2) Money Making Ideas, and 3) The Success Stories.
I have added the links to each area on this site, for you to easily find the above. Make it a point to absorb every morsel of the above links, which will provide you quite an education in itself.
http://www.creonline.com/articles/index.html
http://www.creonline.com/money-ideas/index.html
http://www.creonline.com/success-stories/index.html
Your idea of purchasing a rental is a good one. You will find the SF area full of challenges, due to the highly appreciated market. By learning many of the techniques containted in the assigned reading will assist you in your journey.
You can post as many questions as you come across, just as you have with your original question. You may also want to go to the top middle of the main page that you posted on, and just above the button where it posted your question, you will see the top button which allows you to search the archives. There is a wealth of other info there… just as much as you have time to read.
One can literally obtain a PhD in RE inv in a rather short order just by committing to read all the above, read the daily postings, and go out and attempt to apply these techniques regularly. When you encounter problems or circumstances out there in the real world, come on back and post the details of the encounter, and there will lots of folks to assist you and point in the direction of success.
Enjoy the journey as it can and will be quite exciting. Again, thanks to you and your fellow Marines and Service members for your massive contribution.
JT-IN