Folks, I’m in Austin,TX right now (what a town!) and don’t have time for photos to pretty the blog up. But I wanted you to know about this young Kansas City Real Estate Investor that I have had the honor to help for the past few years. His name is Ryan. Enjoy.
How long have you been investing in real estate and what got you started? And would you mind sharing your age?
I bought my first house July 2005. I am 26.
What is your area of focus? I mean, Buy & Hold, Buy & Sell…
Primarily Buy and Hold. However, I have one property under contract with a lease option to purchase agreement. Additionally, I have a potential buyer for another home that is currently being remodeled.
You like to use construction loans to purchase homes. Tell a little about your thinking there.
Using construction loans is a good method of financing when a home is in need of serious repairs. Additionally, it is good way to avoid using any of your own money. Refer to the simple figures below:
Purchase Price: $80k
Total Loan Amnt: $100k
After Repair Value $120k
Based on these numbers you have created $20k in “sweat equity” without using any of your own money. (Note: construction loan usually have an interest rate of prime + 1. This is much higher than a typical 30 yr fixed loan.)
If you are planning to hold the property it is wise to refinance the construction loan with a long term loan. When refinancing you can essentially use the 20% “sweat equity” as a down payment. By leveraging your equity for your down payment you avoid using your own money and get a better interest rate.
To date, what has been your biggest success?
Since my investment strategy is aimed more towards buy and hold… I would have to say my biggest success would be the amount of property I have been able to accumulate in the two years of investing. Additionally, the amount of equity I have in my real estate holdings.
Your biggest regret?
I really don’t have any regrets. Although, I have made a ton of mistakes. But with every mistake I make I would like to think I learn something from it.
I guess one regret would be that I didn’t start investing in RE while I was in college. With all the free time I had it would have been fairly easy to manage / own a few rental properties.
Investing in rental property can be tedious and move at a slower pace than some people like. To this you say what?
Rental properties aren’t going to make you rich over night. But over the long-run if you are able to grow your RE portfolio and pay off the loans you can generate a sizable monthly income. Also, the properties will continue to appreciate – further increasing your wealth.
Buy and Sell strategy in a good market is obviously more fast paced. If you have a reliable source for finding good deals and good people working for you then you really can’t go wrong. But you could probably say that about any business.
Anything you would like to add, say or preach about?
Just for the record. I am by no means an expert in real estate. It is something that I enjoy doing and will continue to do until I am old and hopefully retired.