Podcast Summary
Insights into Foreclosures and Acquisition Strategies: Listen to episode 128 for tips on foreclosures, discounted Bigger Pockets books, and investing in turnkey rentals with no money down using Rent to Retirement.
The Bigger Pockets Podcast episode 128 offers valuable insights into real estate investing, with a focus on foreclosures and acquisition strategies. A quick tip includes a sale on two popular Bigger Pockets books, offering a 10% discount with the code "show 128" until July 2nd. Additionally, DealMachine simplifies lead generation by providing access to phone numbers and contact information at no extra cost. Rent to Retirement also presents an opportunity to invest in turnkey rental properties with no money down. Overall, this podcast episode offers practical advice and resources for real estate investors.
Anka Raider's Focus on Foreclosures: Anka Raider, a Romanian investor, shares her strategies for acquiring foreclosures, emphasizing the importance of building relationships with agents and understanding the market.
Anka Raider, a buy and hold investor, shares her focus on acquiring single family and small multifamily properties, particularly through foreclosures. Starting her real estate journey at a young age after reading "The Rich Dad Poor Dad" book, Anka moved to the US from Romania and was inspired to save and invest in real estate. During the podcast, she shared her strategies for finding and acquiring foreclosures, and emphasized the importance of building relationships with real estate agents and understanding the market. Despite being based in Romania, Anka's enthusiasm and valuable insights made for an engaging and informative conversation. So, whether you're just starting out or looking to expand your real estate portfolio, Anka's experience and strategies are worth considering. To learn more about Anka and her approach to real estate investing, be sure to check out the full podcast episode.
Starting small and taking calculated risks can lead to significant gains in real estate investing: Starting small, taking calculated risks, and learning as you go can lead to successful real estate investments
Starting small and taking calculated risks can lead to significant gains in real estate investing. Anika shared her personal journey of pursuing a career in real estate while holding a degree in business administration. She began by obtaining her real estate license in 2005 but lacked the resources to make her first investment. In 2007, she landed a job as an IT consultant and started saving up money. Her father, who trusted her abilities, offered to be a 50-50 partner on their first investment property. They bought a single-family home with cash and, by the end of the year, had enough savings to buy a second property with cash under Anika's name. Their initial strategy was to use cash for their investments because they had it available, but they later used a home equity line of credit to purchase more properties. The line of credit allowed them to borrow against their equity in a property they already owned, providing them with additional funds to expand their portfolio. They invested in properties within a 15-minute radius of their parents' home in the suburbs of Chicago. Their first purchases were appraised at $150,000, but they only took out $90,000 in a line of credit. The lesson from Anika's story is that there is no one-size-fits-all approach to real estate investing. Starting small, taking calculated risks, and learning as you go can lead to successful investments.
Buying affordable properties during market downturns: Start with a live-in investment, use FHA 203k loan for renovations, build equity, gain experience, and expand portfolio
Starting early and focusing on affordability were key factors in the interviewee's successful entry into real estate investing. They bought their first properties during a market downturn, specifically 3 bedroom, 1 bath single family homes that were foreclosures and sold as REOs on the MLS. These properties were the cheapest options available, and the investors were able to learn the real estate game while mitigating some risk due to the clear title of the REOs. For those starting out, the interviewee recommends considering the "hack your housing" approach by buying a property to live in and fixing it up with a loan like the FHA 203k, which provides additional funds for renovations. By following this strategy, new investors can build equity, gain experience, and eventually expand their investment portfolio.
FHA 203k Loan: Purchase and Renovate with a Low Down Payment: Homebuyers can use the FHA 203k loan to purchase and renovate a property with a low down payment, but must keep PMI payments throughout the loan term unless refinanced. Intended for owner-occupied places, not investors. Be mindful of Fannie Mae's 4-loan limit.
The FHA 203k loan can be an advantageous option for homebuyers looking to purchase and renovate a property, as it allows for a low down payment and additional funds for repairs. However, this comes with the commitment of keeping Private Mortgage Insurance (PMI) payments for the entirety of the loan, unless refinanced. This loan is intended for owner-occupied places and not for investors. It's important to note that Fannie Mae, the largest buyer of mortgages in the country, only allows a maximum of 4 loans on a credit report, so careful planning is necessary when considering this type of loan. The 203k loan is a popular topic in house hacking, and for more information, check out Brandon's book "No More Money Books" on Amazon, specifically chapter 2. As of the recording, the book holds the number one spot in the real estate category on Amazon.
Patience and financial security in real estate investing: Investing in real estate while working full-time can provide financial security and reduce risk. Be patient and wait until passive income surpasses salary before making the transition.
Investing in real estate while keeping a day job can be a smart strategy. Brandon, who has 33 properties, shared that he continued working full-time until his passive income from real estate surpassed his salary. This approach allowed him to leverage his income and reduce financial risk. After seven years, he felt comfortable quitting his job, but even then, he waited for several months before making the transition permanent. This story illustrates the importance of patience and financial security when pursuing real estate investing as a career. Additionally, Brandon's decision to travel with his family after achieving his goal serves as an inspiring reminder of the personal rewards that come with financial success.
Persistence pays off when seeking business loans: Keep calling banks for favorable loan terms, focusing on best interest rate and term length, even if initial options seem limited.
Persistence pays off when it comes to securing business loans. The speaker shares her experience of hitting the limit on SBA loans and having to explore other options. She recommends reaching out to local banks and specifically asks about commercial loans on residential property, focusing on the best interest rate and term length. The speaker's dedication to making calls to a list of over 100 banks led her to find favorable loan terms with two Chicago-based institutions. This approach can serve as an inspiration for individuals facing challenges in obtaining loans. The speaker's successful outcome involved a 20-year amortization with a 7-year fixed rate, which while requiring larger monthly payments, can lead to substantial cash flow and long-term appreciation.
BRRRR Strategy for Rental Property Investment: Buy, repair, rent, refinance, repeat for profitable rental property investments. Can result in significant ROI with right deals and persistence.
The BRRRR strategy, which stands for Buy, Rehab, Rent, Refinance, Repeat, is an effective method for investing in fixer-upper rental properties. This strategy involves buying a property, repairing it, renting it out, then refinancing the mortgage to recoup the initial investment and repeat the process. The example given was a 4-unit building purchased for $85,000, with $20,000 spent on repairs. After renting it out, the property was appraised for $180,000, allowing for a $130,000 loan to be taken out, resulting in a significant return on investment. Although not common, these types of deals can still be found through persistent searching and building relationships with selling agents.
Real estate agents face conflicts of interest when prioritizing deals based on commission: Real estate agents may prioritize deals with higher commissions, leading to potential conflicts of interest. Passive investment opportunities, such as Fundrise and Pine Financial Group, allow investors to earn income without managing properties. DealMachine simplifies lead generation for potential real estate deals.
Real estate agents, when presented with multiple deals, may be inclined to prioritize the one offering a higher commission, despite their professional obligation to act in the best interest of their client. This practice, while common, could potentially lead to conflicts of interest and may not be entirely legal. Meanwhile, for those interested in real estate investing but not the management side, there are passive investment opportunities available. Fundrise offers a private credit strategy that provides high returns through bridge financing on high-quality assets. Additionally, Pine Financial Group's mortgage fund offers a targeted 8% preferred return and an attractive profit split, allowing investors to earn passive income through lending to house flippers. Lastly, DealMachine simplifies the lead generation process by providing unlimited access to phone numbers and contact information for potential real estate deals, all fully compliant with the federal do-not-call list. By investing in these passive opportunities and utilizing tools like DealMachine, investors can effectively streamline their real estate investment strategies.
Hubzu: Online Auction Site for Houses with Reserve Prices: Hubzu offers users the chance to view properties before bidding, but it's crucial to be aware of the reserve price and potential counteroffers from the bank.
Hubzu is an online auction site where houses are listed every 7 days, with a reserve price. The price can change depending on bids, and if the highest bidder doesn't meet the reserve price, the property might not be sold. Users can view properties with a real estate license or have an agent show them the properties before bidding. Unlike courthouse steps auctions, where you might not have a chance to see the properties before bidding, Hubzu allows users to view properties before placing bids. The user in the discussion has had good experiences with Hubzu, but it's essential to understand the reserve price and potential counteroffers from the bank. The user also mentioned buying properties through MLS and REO, but the focus of the discussion was on Hubzu.
Buying Properties through MLS, Auction Sites, or Courthouse Steps: MLS listings offer detailed property info but not all properties are listed. Auction sites use bidding systems or automatic price increases, while courthouse steps offer savings but require due diligence and cashier's checks.
While MLS listings and real estate auction sites like Hubzu and Auction.com offer different ways to buy properties, each comes with its unique advantages and potential challenges. MLS listings are more common and provide detailed property information, but not all properties may be listed. Auction sites like Hubzu operate on a bidding system where the price goes up only when someone places a bid, while sites like Auction.com have automatic price increases to meet minimum reserves. Buying at courthouse steps or judicial sales can result in significant savings but requires cashier's checks and due diligence, as properties may have hidden issues or requirements. Ultimately, it's essential to understand the process, risks, and benefits of each method before making a purchase.
Auctions might not be ideal for new real estate investors: New investors should focus on gaining experience and knowledge before trying auctions. Experienced investors with financial capacity can succeed in auctions as part of a numbers game.
Auctions might not be the best option for new real estate investors due to the higher level of risk involved. It's recommended that new investors focus on gaining more experience and knowledge before diving into the auction market. Those who have already built a solid foundation in real estate investing and have the financial capacity to absorb potential losses may find success in auctions as part of a numbers game, where the good deals make up for the bad ones. However, for new investors, it's crucial to do thorough due diligence and consider the potential risks before making an offer at an auction. Additionally, investing in real estate from a long distance can be successful with the right team and research in place. It's generally not advisable to buy sight unseen, and it's essential to have a solid understanding of the market and property before making an offer. As for future plans, this investor aims to grow their business to the point where investing in larger apartment complexes and commercial buildings becomes a viable option.
Learning from Successful Real Estate Investor Agents: Find a company with successful investor agents for valuable industry knowledge and resources. Consider various financing options like traditional banks, commercial loans, hard money or private lenders for rental properties, and effective negotiation strategies for multifamily properties.
For new real estate investors who have recently passed their license exam, it's essential to find a company to work with that has other successful investor agents. This will provide valuable knowledge and resources for navigating the industry. Additionally, financing options for rental properties can vary, with traditional banks suitable for those with good credit and fewer loans, while commercial loans may be more beneficial for larger transactions or those with multiple loans. Hard money or private lenders are more open to LLC financing, but it's not always required. Lastly, effective negotiation on multifamily properties involves determining the property's worth and making an offer based on that value. Remember, sometimes listed prices may not reflect the property's true worth.
Anka's Favorite Books and Hobbies: Anka recommends 'Total Recall' by Arnold Schwarzenegger and 'The Obstacles of the Way' by Ryan Holiday for inspiration. She enjoys traveling, motorcycling, and drawing. The key to success in real estate investing is setting goals, taking informed action, and being persistent.
Both Anka and Brandon have a straightforward negotiation style - they offer their best price and let the other party decide. Anka shared her favorite real estate-related book, "Total Recall" by Arnold Schwarzenegger, and recommended "The Obstacles of the Way" by Ryan Holiday for business inspiration. Outside of real estate, Anka enjoys traveling, motorcycling, and drawing. The key to success in real estate investing, according to Anka, is setting goals, taking informed action, and being persistent. Anka can be found on BiggerPockets and at thesummeroff.com. A fun fact about Anka is that she once used a large portrait of Brandon as a pick-up strategy!
Real Estate Investing and Building Relationships: Learn, network, and take action in real estate investing for success. Building relationships in the industry can lead to valuable opportunities and resources.
Anka Raider shared valuable insights about real estate investing and the importance of building relationships in the industry. After the interview, the hosts discussed the idea of taking a motorcycle trip around Eastern Europe, which they found amusing. They also encouraged listeners to engage with the show by leaving comments and questions on the show notes, with the chance to win a copy of Brandon's book as a reward. The hosts also promoted BiggerPockets Agent Finder as a valuable resource for finding investor-friendly agents to help navigate the real estate market. Overall, the episode emphasized the importance of learning, networking, and taking action in the realm of real estate investing.
