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General Talk

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  #11  
Old 11-05-2009, 08:50 AM
Edmir Edmir is offline
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Default Rental Properties Suggestions?

Now for the average lawn care business owner who is reading this, thinking to themselves they would like to buy a rental property, where do you suggest they begin?

First, they need to make contacts with real estate agents that they turst. Being in Landscaping business, mos of us, have done business with Real Estate agents, I have several of them, they call me up, and need a full clean up of a property, they want to sell, a property that has been reposesed by the bank, or a property that they bought it an action. My first property was a commercial property. I know the real estate agent for years. So when I meet with her, I told her wat I wanted to do. I wanted to make money. She recommended the commerical property, and the location is within walking distance from shopping centers, from the local city high school, and from the community college where I live. This location enabled me to rent my property quick.
Another sugesstion would be to look in the local newspaper, when the properties have been repossed by the city for back taxes, or for defaulting on a loan. Or go to property action places see how the action the properties and what the procedures are for that?
Being in landscaping business some of us, have mowing contract with bankers, use those connections and talk to them? Tell them you are interested in investing in rental properties, how to go about financing them? Etc. They will help, beacuse they need people who can pay?

How much do they need to save for a down payment? How much can they charge for rent compared with the mortgage of the structure?


My commerical propert that I bought in 2007 was listed for 110,000. I offered $85,000. The owner had purchased the property in 2006 and went to www.tennessee.gov under asessnment properties section. There you can enter the property adress and it will tell you who owns it, and how much they bought it for, and in what year. Based on that I was able to determine how much profit he was trying to make on that property. Then I hired a home inspector before I purchased my property, to fully inspect the house and the property. The bank where I got my property financed appraised the property at $95,000. The house was in great condition. I put $10,000 down on the property and financed it for 15 yrs. My mortgage payment is $760 per month. I turned the upstaris of the house into a two bedroom apartment. I spend about $5000 remodeling the apartment and I did most of the remodeling work myself. That saved me about $3000 worth of expenses that I would have had to pay someone to do it for me. Charging the rent, they have to look at the location of the property, and how much other competitors are charging for a two bedroom apartement in that location. Do they inculde any utilities?
So before I bought this property, I was paying rent in the same location for a two bedroom apartment $450 per month. That didn't include utilities, only water.
My apartment rents for $500 that includes water, and cable. My mortgage is $760. I only pay $250 for my mortgage, where before I was paying rents $450 per month. So I have a positive cash flow of $250 per month. That adds up within a 12month period. Sometime you can look in the local newspaper, and see how much the apartments are renting within the location of that apartment.

It seems like a lot of times, the rent doesn't always cover the mortgage fully and the owner has to pay the difference.

When you want to buy a property try to buy a house that is two stories, or that has more then one unit. That means, you must have two apartments into that unit or house. Therefore, you can use the rent from one apartment to cover the mortgage and profit the rent from the other apartment. Sometimes when you finance you have to look at the numbers on the mortgage deal? You need to let the banker know, you want to have positive cash flow comming in everymonth? If the deal on the mortgage doesn't feet your needs, then don't do it?

What's your view on the types of buildings that are a good first time buy to rent?
With the recent economic crisess, banks have gotten more strict and some of them have tighten the financing options on the purchasing a house, such as now they require a credit score of 700 or higher, when I financed my house before the crises, my credit score was 680. Another sugesstion for a first time buy would be to buy a two story house, and turn the upstairs into a two bedroom apartement. Or buy a lot, where you can put a trailer there and rent that trailer. You can buy trailers for as cheap as $5000 up to $7000 cash. Do a lot of research, and shop around? Buying a house isn't like buying a car, you have to know how the market, works, and what to look for? Read a lot of books and programs, talk to people you know who are experts into the real estate market.

Hope this helped. It worked for me. The downpayment I used was from my savings with the landscaping business. I also work part time as a cook at a country club, I took that job, to make contacts. I lot of rich people come there to eat, and play golf. There I have made a lot of contacts, from attorney's to doctors, bankers, etc.
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  #12  
Old 11-06-2009, 07:50 AM
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That is very interesting!

What made that property a commercial property? From the description it sounds like a residential home. How does it get defined as either residential or commercial?

Can you park your lawn care equipment on that location too?

What do you see as your next real estate investment move? What would be the ideal next step?
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  #13  
Old 11-23-2009, 01:53 AM
Edmir Edmir is offline
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Hi Steve:

Been on the road lately. Haven't had time to read your posts? Just got back from Memphis. I also, work part time as a translator for Immigration Attorney's. I do this when they need me.

To Answer your Questions:
What made that property a commercial property? Properties have different zoning. My property is B-4 zoning, because of the location. B-4 is considered a commercial property. I have a list of businessess I can operate on my property based on the Zoning. That's why I purchased that property to begin with. The land is worth more then the house.

From the description it sounds like a residential home. How does it get defined as either residential or commercial?
It gets defined by zoning, it is a residental house, but the property is a B-4 Zoning. On my road, I can walk to McDonald's, Arby's, Real Estate Offices, Shopping centers, and Gass stations. Before you purchase a house, it will tell you the type of zoning your property is. You can check the zoning on www.tennessee.gov under real estate property assesment. On that side, you can enter a mailing adress of a property, and it will tell you, how owns it? How much they bought it for, and you can see how much they want to sell it for? That will give you some idea what the sellers profit is?

Can you park your lawn care equipment on that location too? Yea. I can park my lawn equipment, and put my business sign on my front lawn, without having to apply for a permit. I have put my for rent sign, and didn't even have to put an add on the local paper. Because of the location I had my place rented within a week.

What do you see as your next real estate investment move? What would be the ideal next step?
My problem is that I want it all. You can't have it all. I am very competetive, and like it. So right now, I plan on paying off my two cars, and my motorcycle. Then build more equity on my properties. While generating positive cash flow from rent.

I hope that answered your questions.

Hope everyone in this forum has nice, and safe holidays.

Edmir
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Old 11-23-2009, 12:09 PM
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This is all fantastic!

Keep us posted on all your future updates. You are going to find a lot more continued success!
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