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Living cheaply in other countries

Discuss and talk about any general topic.

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Postby zacb » Thu Dec 12, 2013 11:22 pm

HouseMD wrote:
zacb wrote:Yeah. After a year I might try 20% down, and see how that goes, or maybe FHA depending on the situation. But I figure at between 20%-30%, I could figure something out. And at 500 a month, subtract home owners insurance and taxes, and 350-400 sounds like a reasonable amount. But this will take at least a year to get to this point. Might try IM as well (got a coach).

Look up your potential market's mill rate, average home price, mortgage rate, and average rent and run the numbers before you jump into anything. Make sure you know what you are getting into. Taxes in some areas cost more than what you will charge in rent per month, I was shocked when I discovered how high they are back home.

I understand. I have run some preliminary numbers , but I don't have to worry about it for now. But on the bright side, we have a market (400 jobs) and most likely a drone factory coming to town, along with support services. That will help the local economy quite a bit (around 10k downtown).
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Postby SilverEnergy » Fri Dec 13, 2013 2:11 am

HouseMD wrote:
djfourmoney wrote:
SilverEnergy wrote:You do NOT need your own money to invest in real estate. You can use a private lender or partner with others.

Even if you do use your money, the banks can and will provide at times 75 to 80 percent of the costs of buying that property.

Plus, real estate is a great hedge against inflation.

Of course, you should only refinance once you are successfully getting positive cash flow per month and have added value to your property.

Then when you do this, you can put money in your pocket by paying off a mortgage with another one.


When you invest for CASH FLOW in real estate, you put money in your pocket in good AND bad markets.

I was only saying that you CAN make money through appreciation but I ALWAYS invest for CASH FLOW first.

So when people are losing money investing in stocks, mutual funds and bonds in BAD MARKETS, I will be getting a CASH FLOW monthly check in real estate and stocking up on gold and silver on the side.

Well Zach is lucky he finally found a job. To make his plan work, he would need to get his wages up to the FHA min. Like the UK's Help To Buy Scheme, getting a loan guarantee from FHA isn't hard as long as you meet the income requirements.

Investment is minimal I think its 10% of the home's value. So if the house is 10-15-30K as it said, then he can get in for low, low investment. But as I said this is only possible in forgotten parts of the country and the only people that haven't left are old, lazy or poor. Are these the people you want to rent your house too? I guess those tenants can be good if you screened them properly.

Then you can charge enough rent to pay the principal.

I would get a equity loan however because honestly any property you are paying $15-20K for is going to need a ton of work. All you have to look at is the comps for the area you're considering purchasing. If the house is well below market value, then there reasons for that, usually expensive repairs as most people want a house they can immediately move into.

I am not po-po'ing the idea of real estate investment and even Carlton Sheets no money down works still, even more so with the millions of foreclosure homes on the market. But as I said this really only applies in long forgotten areas because you are competing with flippers and private interest for foreclosed homes near popular metro areas. The private interest guys are there with a blank cashier's check at auction, do you really want to get into a bidding war with those guys?

If you're investing in stocks you're on the wrong side of the transaction, as Max Keiser said about three years ago, "I don't know what's stopping you guys, get your brokers license". He's right, win or lose, you get paid. The company you work for charges enormous fees in most cases. Its unethical of course but its normal in that space and if you can handle that, I wouldn't be investing in stocks, I'd be a broker instead. Build up about $40 Million, live in a four wall box for about 5-10 years and cash out, retire.

Of course there's Bitcoin, Lite Coin and Quark Coin... I'm sure there others but these are being mention in investor circles.

The trouble with a low initial investment in real estate is that it makes actually getting cash flow out of a property very difficult. In my old state, the average 2 bedroom home sells for well over $300,000. Let's say you luck out and get a 2 bedroom home for $250k, but better yet you actually get it appraised at $250k and luck out with some lower taxes. The average mill rate in my old state in towns where people rent is about 35, so you're paying 35 dollars per thousand dollars of home value per year in taxes. That comes to $729 a month in taxes alone. Now if you put 20% down and get the home with a 200k mortgage and don't need to get supplemental PMI. You're looking at a $1,108.13 a month mortgage payment on a 30 year fixed rate at 5.28% (average rate in this state is 4.28%, and banks always add 1% extra if it is not your principle home of residence). This leads to a minimum payment of $1,837 just to break even, without providing any utilities. Trouble is, average rent for a 2 bedroom in the area is about $1,200 with heat and hot water included. Worse still, you should plan for repair expenses equivalent to one month's rent per year, and a vacancy rate of one month per year if you are playing it safe. This leaves you with an $11,318 deficit (Your mortgage is $637 per month too expensive, and you have a $3,674 buffer that is not accounted for in relation to repairs and vacancies) in cash flow on the property per year that you need to somehow fix, either by bringing in outside income, convincing someone to pay way over market rates and hoping they'll stay, or by putting more money down on the property to begin with. And this is if you are managing your own property. The numbers are even worse if you hire a management company, which will want 10% of rent to deal with your issues. That puts you down another $2,204.40 per year if you are charging full rent, or $1,440 if you are charging the market rate.

There are states where the numbers work better, but you need a combination of low home prices, high rents, and low taxes to make it work if you aren't putting down more than 20% and want to actually get cash flow from the property rather than just break even. Trouble is, you should never invest in a housing market you are unfamiliar with, as you could end up with property in a bad neighborhood or an unstable tax climate, plus you won't be living nearby (in my case, not even in the same state) as your property, so a management company will be a necessity.

Multiunit apartment buildings are the best way to go, no matter what way you slice it. They really help your investment to return ratio, but have a much higher initial investment cost. You could also try getting some foreclosures, but it is easier said than done. Many in the local market are auctioned off at bank-only auctions first, after which the leftovers are passed on to the public. What is left is usually extremely rundown, in a bad area, or a combination of the two.


Multi family properties(commercial real estate) are definitely better than single family properties(residential real estate in terms of much more cash flow and the fact that if some of your residents leave, you can still have a high occupancy rate.

Commercial real estate is where the true money is at.

Warm up in residential but then break off into commercial real estate and put your focus into that.

And always invest in areas where the population and jobs are growing.
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Postby SilverEnergy » Fri Dec 13, 2013 2:13 am

Check to see if the rents and property values are going up in the area that you want to invest in.

Make sure that the jobs and population are growing in the city where you want to invest in.

Job and population growing are what drive up the rents.

Plus you can raise the rents 3-5 percent per year to keep up with inflation.

The books I posted in the book section are very good at explaining what to do.

DO NOT attempt to do every thing yourself. Build a team or you might find yourself overwhelmed.

Hire a property manager, real estate accountant, bookkeeper and a real estate accountant.

You might be able to get a virtual assistant to do your accounting and bookkeeping, just check on that.

You MUST get an inspector to check the property to make sure nothing serious is wrong with it.

You will also need a real estate broker.

You can rennovate the property and raise its value so you can raise the rents.

Once again, DO NOT attempt to do everything yourself as you will FAIL.

GET a property manager.
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