1.2 Billion Dollar Real Estate Investor: "Buying your house is the dumbest investment you can make"

diggy

diggy

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Aprogressivone said:
Okay this is my entry point. It does not work that way. In america was have a graduated tax system. Getting a pay raise and going into another tax bracket does not lower your take home pay. Tax rate is not flat. Lets focus on the single filers tax rate for 2018. I'm not gonna start at the bottom of this but lets start with the 12-24% tax range. 12% is $9526-38700. 22% is $38701-82500. 24% is 82501-15700. If you are making $ 38700 you are getting taxed at 12% a year. Lets say you get a 10k raise which "pushes you into the next bracket". You now make $48700 a year. The only thing taxed at 22% is that 10 thousand dollar raise. Your entire income is not taxed at 22%. Anything below $38700 is still taxed at 12%.

Now lets move to real estate. Grant is a bit aggressive in his ideas but the main idea is that you can buy properties that generate you cash flow on a monthly basis. What some people put down on a down payment for their personal home could be used elsewhere to get you cash on a monthly basis. Lets look at this property in Petersburg VA for example. 25 S Jefferson St, Petersburg, VA 23803 - 4 beds/3 baths

This is a 6 unit building for $127k. I am going to be really conservative with my numbers here to prove a point. 5 out of these 6 units are currently rented. Let's say you moved into the 6th unit which means it is your primary residence and not an investment property. This is a house hack I am showing you. A primary residence only needs 3-5% vs 20-25% an investment property would. The down payment on this at 5% would be $6350. The Mortgage, Interest and Insurance would be about $811 a month. Petersburg does not have high rents but at a minimum you can rent each unit for $500 dollars a month. 500X5 is 2500. $2500-811 is $1689. $1689 x 12 is $20268. Lets be ultra conservative and say we keep 50% in profits for maintenance when first starting out until we know what the building really costs to run. it could actually only be 20-30%. We are left with an extra $10,134 a year that you didn't have without doing this deal. You could move out after a year or two and get another property just off the cash you created from this first deal. Rinse and Repeat. If you are lazy like me lets take out an extra 10% for a property manager. That is giving you a total take home of $9120 a year. It could be higher in the tune of 2-4k depending on maintenance for the year. That is called house hacking.

Without being so conservative, even shytty ass Petersburg has rents at the $600-700 dollar mark. Lets rent them at $625. using the same formula as above you are left with $12495 a year now. When you move out you can now rent all 6 units at $625. You are are generating $15870 a year after mortgage and maintenance.

So many Americans have their only asset as their house. They have zero stocks or mutual/index funds and weak ass funded 401k's. I'm talking so called middle class. While home ownership is important technically. That house does not pay you until you sell it or rent it. By thinking outside of the box and be willing to sacrifice for a few years you can generate some serious monthly cash flow. Lower your standards and you have the potential to really do some serious stuff. This is what really buying up the block is. We don't need a celebrity to do this. You can buy property and just start collecting rents man. At least its black owned still.
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One of my friend's started with one house which he lived in, fixed and flipped, then ended up snowballing this into over 100 rental properties. He sold them all to my knowledge over the years to investors and people with tenants in them.
 
Ezekiel 25:17

Ezekiel 25:17

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Most people ain't built for that Real Estate life or don't care. They make enough working a job they like and save enough. With how many people lost their house in the recession, buying is way, way better. And it's 2019, we off that 30 year loan, coli put me on 15


That video kinda opened my eyes. Instead of buying a single family, I'll buy multi family unit. Live rent free essentially
 
Ezekiel 25:17

Ezekiel 25:17

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AlainLocke said:
So does housing costs in places that are actually worth living in and have opportunity.

If y'all wanna go ahead and pay housing insurance, repair and maintenance and taxes on ya "homes" on top of the interest and loan for 30 plus years out of ya own pocket and then every single economic crash that occurs, ya networth goes to 0 and the banks kicking ya out...

Then go ahead.

There's a difference between a consumer of housing and being a landlord.

I much rather "own" a house through a company and not live in it myself and have someone pay my company to live in the house it owns and then rent to live somewhere else.:mjlol:

It's 2020 almost and people still think "homebuying" makes sense like it did in the 50s.

shyt changes, the government ain't giving away land and homes like it is going out of style.

People are mobile and global now. Nobody sitting in the same fukking house for 30 plus years.

Motherfukkers end up selling their shyt anyway. :russ:
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And yet y'all complain about gentrification.

Regardless I'd you but a house, you can still rent that house out, so yes it can be putting money in yo pockets. That's the part I'm not understanding, you can always rent the house you bought out.

BTW, the bank can't kick you out that easy if own the home. You need to be years behind property tax and it most places property tax is what, $2k/year?
 
stepbackj34spud

stepbackj34spud

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Quarquar said:
I buy a triplex or duplex instead of a single family. Let's say my mortgage is 1500 a month. With a single family I'd be entirely responsible for that bill. With a house hacked triplex, I'd live in one unit and rent the other two out for say, 1000 a piece for 2K a month. I'm living for free and making a few extra hundred as well. When I choose to move on, my mortgage is entirely covered and I have an additional source of income. That is house hacking. It is a much smarter investment, especially if you are in your 20s and 30s just starting out with no family, than buying a stand alone single family that you would be completely responsible for. If the water heater or hvac goes out in your single family, you need to come up with the 1k to 4k to fix it. With a house hack, you should have a lot of extra capital lying around because you dont pay rent and you are making extra money from your tenants/neighbors.
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This is exactly what I plan to do in a couple years. Buy a multi-family home. Have my tenants pay for the house even if I’m living in the smallest unit house.
 
stepbackj34spud

stepbackj34spud

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North of Death said:
Again, you are a stupid motherfukker...I own multiple units myself and I am also a landlord..My tenants pay 80% of my housing cost including the cost for repairs, HOA, and other miscellaneous items that I write off on my taxes...My refund stay bunking:myman:...Point is renting for 30-40 years gets you absolutely no where financially especially if you are BLACK...I get not trying to buy a house in New York or DC or San Fran, no one is disputing that...I am in the south where the land is cheap and I live in a relatively big city, shyt is cake down here in the housing market if you know what you doing.
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Bro can I hit your pms for advice?:lupe:
 
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