Real Estate Business

[Masked Avenger]

I am sure the title of the topic in relation to the time will set off some red flags for a lot of people.

However, I am really interested in looking into buying properties fixing them up, and turning them around for some profit or renting them out.

I got the idea because I know painters, plumbers, electricians, and carpenters that can assist me in my venture for relatively cheap. I had also considered government auctions as a possible way to acquire property.

So my question for the community is does this seem like a feasible idea? I am a college student, but I feel that my role in the project would be to buy and sell the houses. I go to school for marketing, not business so I believe I can make good sales pitches.

I am interested in working on smaller, lower-income homes. Start out with one and work my way up to two or three properties. Depending on the area, I would determine if I would sell or rent. The tradesmen that work on the house would also offer up their services to the person buying the property for a certain amount of months if anything goes wrong. A pretty good sales pitch I think.

I wouldn't say I am looking to make a living out of this venture. I do however think it would be something interesting to get into while I am still in college and have relatively few bills to pay.

What are your thoughts on the whole idea?
Where can I educate myself about government auctions in my area?
Any other general advice?

Thanks a lot!

[KyleXY]

Hi MA,

This is my personal experience and that of my friends so please take it with a grain of salt knowing so. I'm not sure where you're located so I'm basing this info base on the way things are in the US. If you're elsewhere and the rules differ because of a difference in law and how things are wherever you're located, you can disregard some of what I'm about to say.

Currently with the way things are in the US economy, to qualify for a loan to even buy property, you would need a sizable deposit. Buying property from government auctions or foreclosure listings mean you have to have cash in hand ready to pay on the spot. So unless you have a lot of capital to start with, this is going to be difficult to achieve. Personally I've own a few properties that I rent out to tenants. The process isn't as simple as many make it out to be. There is a lot of things to do during the sales process and getting tenants and running the whole operation takes a bit of work on top of that after you purchase the property. Of course it's not tremendously difficult either. However it isn't as fun as many make it out to be. In addition, while you can hire a property management company to take care of your property and handle the hiring process of tenants (or you could do it yourself), unless you get really good tenants, things can be troublesome. Realize that whenever something happens, you are responsible for maintenance cost and these things come up more often than you think. I own practically brand new properties when I bought mine and even with new appliances and such, things can happen.

For the amount of money needed to get involved, the time you have to spend taking care of everything up till it's rented and with all things going well and not having a whole lot of involvement thereafter, even after all of this, it's not worth the trouble for me personally. However if this is something you can see yourself getting into, I wish you the best of luck in this area. Now I never had any experience with flipping properties but a personal close friend of mine has. My friend use to be in the flipping business heavily. He use to buy, repair, and flip properties for sale for a living. He probably did over a dozen properties a year. But after running that business for about a year or two, he couldn't justify doing it anymore either. The profit margin were low relative to the amount of work that needed to be done. He found it more profitable buying an existing restaurant and running that full time and the work (labor intensity wise) was a lot less of a hassle. He eventually quit flipping altogether.

Now our experiences in the matter is but one side of the coin but for both of us, I think we can both honestly say we'll never go into the real estate business ever again. It's not nearly as easy as anyone makes it out to be but it's definitely not hard either. I would say though, if you're like me, you'll come to realize that the initial amount of investment, the time invested, and the returns, don't really yield as much as other things you could get into. I hope this tidbit of advice from my personal side of the story helps you. If you feel that it's still something you want to pursue, I wish you the best of luck and hope things work out.

[Masked Avenger]

Hi MA,

This is my personal experience and that of my friends so please take it with a grain of salt knowing so. I'm not sure where you're located so I'm basing this info base on the way things are in the US. If you're elsewhere and the rules differ because of a difference in law and how things are wherever you're located, you can disregard some of what I'm about to say.

Currently with the way things are in the US economy, to qualify for a loan to even buy property, you would need a sizable deposit. Buying property from government auctions or foreclosure listings mean you have to have cash in hand ready to pay on the spot. So unless you have a lot of capital to start with, this is going to be difficult to achieve. Personally I've own a few properties that I rent out to tenants. The process isn't as simple as many make it out to be. There is a lot of things to do during the sales process and getting tenants and running the whole operation takes a bit of work on top of that after you purchase the property. Of course it's not tremendously difficult either. However it isn't as fun as many make it out to be. In addition, while you can hire a property management company to take care of your property and handle the hiring process of tenants (or you could do it yourself), unless you get really good tenants, things can be troublesome. Realize that whenever something happens, you are responsible for maintenance cost and these things come up more often than you think. I own practically brand new properties when I bought mine and even with new appliances and such, things can happen.

For the amount of money needed to get involved, the time you have to spend taking care of everything up till it's rented and with all things going well and not having a whole lot of involvement thereafter, even after all of this, it's not worth the trouble for me personally. However if this is something you can see yourself getting into, I wish you the best of luck in this area. Now I never had any experience with flipping properties but a personal close friend of mine has. My friend use to be in the flipping business heavily. He use to buy, repair, and flip properties for sale for a living. He probably did over a dozen properties a year. But after running that business for about a year or two, he couldn't justify doing it anymore either. The profit margin were low relative to the amount of work that needed to be done. He found it more profitable buying an existing restaurant and running that full time and the work (labor intensity wise) was a lot less of a hassle. He eventually quit flipping altogether.

Now our experiences in the matter is but one side of the coin but for both of us, I think we can both honestly say we'll never go into the real estate business ever again. It's not nearly as easy as anyone makes it out to be but it's definitely not hard either. I would say though, if you're like me, you'll come to realize that the initial amount of investment, the time invested, and the returns, don't really yield as much as other things you could get into. I hope this tidbit of advice from my personal side of the story helps you. If you feel that it's still something you want to pursue, I wish you the best of luck and hope things work out.

Thanks for the information. I can't say I had my heart set on it but the idea sounded worthwhile. I had even thought about fixing up smaller places in college areas for students to rent. You're right about maintaining the property. I was under the assumption that anything tenants break themselves they would have to pay for (possibly dictated in a contract).

I also live in Massachusetts and planned to take on such an idea in the Metro West area or Western part of the state.

[guidemesingapore]

Well raising capital to buy a place would be the first roadblock. If you take up a loan, then you need to make sure that by the time you upgrade the place and sell it, it would make enough profits to make up for the interest paid during the loan period.