What To Know if You Want To Get Into Real Estate
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- čas přidán 21. 08. 2024
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One thing I will add to Dave's comment about establishing multiple LLCs and liability, you MUST run them as their own stand alone entity. There is a concept called "Piercing the Corporate Veil", which simply means that lawyers will look for activities that they can use to get their foot in the door into your other LLCs and/or your personal finances. Example, you have multiple properties each as their own LLC, but you run everything through one checking account.
Not only that lawyers can go after the owners of the LLC.. an strong umbrella insurance policy is better than a LLC
Well stated.
I swear Dave Nailed it. When I started in real estate I bought a duplex in lower income area. There was fighting shouting and damages to my property. I sold it and I started investing in only single home in class B and A- neighborhoods. So far good experience
I had real estate in junk areas and all I got was junk tenants. I wish I had gotten into commercial years ago.
@@johnwilburnkeep up!!!
@@johnwilburn"junk tenants" is wild. Makes it sound like you think people are junk. Hope that's not true. 💛
@@drcatrinaking When they lie about themselves to get in the property, trash it, and move out owing money, then lie in court and attack the character of a hood landlord who gave them a better place to live than he lives in himself….. are those not junk tenants?
A displaced Texan here in Florida in a college town. San Antone should be a good rental market if ur leaning that way. We usually rent to students/grad students. We've not had any problems and / or missed rent, even during the pandemic. We have our tenants sign with a real estate attorney and have never had any issues. Parents sign as guarantors if needed as well. FYI, if you do LLC, all transactions must be kept separate from your personal accounts. If you stay sole proprietorship, you can mix funds as needed, but make sure you carry a good umbrella policy on top of standard insurance.
It’s a great idea to have an LLC for each property, in Dave’s case - up to 5 million dollars worth. This was a HUGE Takeaway for listeners. Thank you, Dave!
Great advice. Newer single family in good neighborhoods is where it’s at for me. I hired a great property manager, they pay for themselves and it’s about as passive as it gets.
Guess who else wants those newer single family houses in nice neighborhoods? First time home buyers!!! That way they can actually start their life. Stop being so d*mn greedy and get a real job. You’re part of the problem!
All of our rental properties are over 100 years old (mostly semi-commercial 3-5 plex) and they are super solid buildings. Yes they require maintenance but so does a newer building, and I have no doubt that they will last longer and age better than any new construction put out today. They’re historical, architecturally beautiful stone buildings.
Agreed. You also need to know the construction of the area. Where I am from a house built in the 70’s is WAY better built than those in the 2000’s
I am happy guys like Dave can counter all the scams out there. He has actually done this and knows with first hand experience on how it is gonna go. The 25yrs guy on social media who has probably never even owned a property on his own has no clue what is gonna happen. He may have bought one in 2020, had it go up in value, and sold it for a profit, but that isn't how it is always gonna be. There are huge problems that can happen and when using debt those problems are magnified. Understand all the risks associated with whatever you do and your current skills
One piece of advice given to me... the most important thing about real estate is buying low if you can. That is why Ramsey is buying apartments... more $$$$ and the commercial aspect of Real Estate in cities scattered around the USA can make you money but you need capital to get into that game. I know of two people who have... they grouped together as a family and purchased land and built two very large warehouses for rent, 10 years later they purchased apartment buildings (three of them) and sold them only five years later and made millions. They still rent out the warehouses. The other sold one house in Cambridge, MA and did a 1031 (not sure if I have the code right) and transferred the profits to an apartment building in Salt Lake City, UT and now lives off the rental profits.
That is really good. The one thing to understand is that when you purchase a multi-family building with more than 4 units, the insurance criteria changes. Just research the laws of your area and make great decisions.
Yes, it's a 1031 Exchange, using monies from sale of one to purchase a similar property...there's a few rules and categories, but it takes the capital gains tax away, mostly.
It's a federal tax option for real estate
This is my rule of thumb. The worse the neighborhood the lower your appreciation but the higher your yearly return. So you decide where you want to be.
Buy in areas that are growing and never stop buying. I own over 100 rentals in San Diego and the best advice I can give anyone, is to start with a duplex and just keep trading up. It takes sacrifice and time but there's nothing like owning rentals.
If you know it's NOT passive income you'll be good. Just remember tenants will mess up property eventually
And lie, and steal, and disappear.
stay away from real estate better in the long run
Who cares what people say. The IRS looks at it as PASSIVE income, and that's why it's an awsome income stream. Don't forget rental houses have a 27 year depreation. Commercial buildings have 39 year depreation. Try getting these benefits with stocks.
Most peoplle dont trash rental properties. These who do that are not so many IMO
We invest in nice residential properties in high appreciation markets. They start cash-flowing after 2-3 years and appreciate in value 5-10% per year. I only want to deal with classy tenants and so far it’s been great. My husband always tells me to focus on cheaper run down properties but I can’t handle problematic tenants. I’d rather get into commercial or multi-family as the next step. Has anyone invested in boutique hotels, self-storage? What’s been your experience?
Guess who else wants those nice residential properties in appreciating neighborhoods? First time home buyers!!! That way they can actually start their life. Stop being so d*mn greedy and get a real job. You’re part of the problem!
The good news about paying cash, is that it is really easy to get something to cash flow...
So I ran the numbers last month - if you just look at home appreciation and stock appreciation and ignore both dividends and cash return the stock market has averaged 10% while RE has averaged 2% since 1950. The RE returns are about 1/5 the variance though - so if you get a 5:1 mortgage, you would be roughly be matching the market over the long term
How can you ignore cash flow for paid off real estate? They’re not talking about primary residences here. Real estate and depreciation are the largest part of rentals. Plus if you buy quality real estate it will be way better than 2%. Terrible comparison. You get an F in research. Please retake the course.
Cash flow is what investing is all about. Building up your asset column. Several wealthy people I know has massive asset columns: real estate, royalties, patents. They could care less about ROI from stocks.
I like the hassle free of investments instead of rental and at 58 with no debt is just more free time.
I’m with you, I don’t begrudge anyone for investing in real estate, I have plenty of friends who make money do it. But I prefer passive investing, I don’t want the headache of dealing with tenants. If that means I retire with a little less than I otherwise could have, I’ll still have enough to live comfortably
Real estate is worth it. Love Dave!!!
I'll admit when he said 60 was old for a house I started feeling nervous about my 100+ year old lake house.
Yeah my stupid parents decided to remodeal a 100 year old house and did not get it tested for asbestos they both got cancer and my step dad died since he did most of the work but my mom lived there too luckily she lived
@@jasonleatherwood2172 sorry if this question is dumb, but is the asbestos the cause for both their cancers? (hope your mom is getting better! my mom passed away from cancer and I think about her everyday)
🎵 So much drama in the LLC
My first home was built in 1892 still there
“Tick-Tack” 🤣❤️
San Antonio is going south.
i have a rental that is a victorian mansion that was built in 1880. it still has the original slate roof, though there are a few leaks and finding a roofer for such a property isn't easy. but it brings in a full income of rent. my wife and i own it outright, along with three other properties in kingston, ny.
You need a historical restoration company and maybe architect.
One of my rentals has a slate roof too. Needs replacing and the quotes I’ve received are astronomical. Because it’s a heritage building, the city requires it remain slate.
don't even get me started on the electrical wiring! i love that it has an abandoned stairwell that is used as a chase to get plumbing and wiring up to the attic
apartment
@@Josh-lp2ng
@@Josh-lp2ngWhat kind of quotes are you getting?
LLC is overrated IMO if you are not big investor its just not worth it. You pay so many fees,taxes its just... no
My take on Real Estate is simple. It's an easy game to win if you come to the table will a lot of cash. I am talking several hundred thousand, at least. A million+ if you can.
Your take is wrong.
For all you people that want to argue that rental property is NOT passive income, well that's your detemination. The IRS says it is passive income and that's all that matters.
In the real world there is no such thing as passive income.
@@amireallythatgrumpy6508 OH, which world do you live in? I'm here on earth and if I GOOGLE "passive income" HERE IS THE RESULTS "Passive income is a steady stream of unearned income that doesn't require active traditional work to maintain. Common ideas for earning passive income include investments, real estate or side hustles".
Which is a theoretical ideal but a practical impossibility. It is just like perpetual motion. Works in theory (until you account for friction that is always present in practice) @@rickdunn3863
Great advice Dave thank you!!
Nice ideas for investing
If anyone here wants to understand how to buy real estate you need to follow Dion Talk Financial Freedom (or something like that). And Bigger Pockets. You’ll not learn how to effectively do it like Dave unless you make 9 figures a year.
Opinion... rents are sky high, values are sky high and rates are sky high.
What about the tax complications? If you only have one or two rentals. It doesn’t make sense to me but I am no expert. Maybe you could explain in more detail?
Dave, better be careful with this topic because LLC can be broken if you aren't running them correctly. Then you open to all your assets...
He doesn't need to be careful. That's the LLC owner's job.
Oh he and his team of lawyers knows more about that than you do.
Correct, very few people (people here in the comments, not Dave) realize that just paying for an LLC isn't a get out of jail free card when it comes to liability, they do have to be run/managed correctly or you lose all the protection.
The closest thing to passive income in Real Estate is buying some undeveloped land, but even that is not completely passive.
or a REIT or real estate DPP
Did I hear that he wants to invest/flip with $125k? Not sure that's enough to flip a house.
All depends on where you live.
Maybe he's buying 50k properties that don't need too much work.
@@dnah02 Yep. I'm looking at a property right now that's around $25k. It needs some work, but nothing overly crazy. I think some people get pigeon holed into ONLY thinking of property values based on where they live. It's like someone from knoxville not understanding how a beach front mobile home lot in Cali goes for several hundred K. And how some people form cali act like you can't find a house anywhere for under $100k.
The cost of real estate has been going down over the last decade for all of us bitcoin monetary system participants. It will continue to go down.
Two perspectives exist and the fiat system perspective is not the only show in town. Fiat users like Dave living inside of an illusion perpetuated by a select few. 😏
How could you say there is NO real estate that is passive?? What about owning ground lease with a triple credit tenant like wendys for example? How about triple net lease industrial property with 15 year lease? Not passive mostly???
Because in the real world, passive income simply doesn't exist.
Real estate is great if you have cash, you don’t do the financing roller coaster to flip properties, and if You think you’re gonna buy and rent out houses and make significant money, you missed a few days in math class.
I had a rental property for about 4 years, while I took a job in another state, and it was originally my primary residence, so it wasnt purchased with the intent of renting it out. It was in a solid middle class neighborhood, so rent was high. I had good tenants the whole time. Once the market rebounded in 2013, I sold it. I wouldnt go back to owning rental property, as it is just a headache overall, as you need to upkeep it, and be ready when something goes wrong. Investing will get you better returns, and it is truly PASSIVE income! Dave said it himself, that he has hundreds of millions in real estate and it is far from passive income, and you can see that his obsession over real estate and just money in general has taken a toll on him. You can see form his demeanor, and triggers, and even his physique. To each their own, but overall you can see his health isnt as good as it should be for his age, and thats NOT GOOD!
i like you john but easy on the crypto now... ETF was approved after all ;)
Maybe I'm jaded with good experiences, but I love my rental properties! Cant wait to buy more!
Bc screw anyone who wants to own a home to actually live in. Not like there’s a shortage of affordable housing. 🙄
@@thepatscajamas You being too broke to afford a home is not my problem. Rent is more than a mortgage payment. If you can rent, you can buy. Stop crying.
@@thepatscajamas No one is stopping people from owning a home.
@@mattschmitt9924 Nothing to do with being broke. You’re making a lot of assumptions, which is unsurprising for someone that lacks any kind of empathy for other people. There is a massive shortage of affordable single family homes because they’re all being bought up by rich landlords and corporations that can outbid anyone that actually wants to buy it to live in, rather than scalping it.
@@jimmymcgill6778 They absolutely are, you’re just too privileged and sheltered to see it.
Is this video from 2005 or 2006?
It was posted 2 hrs today Jan 10, 2024.
Possible it's a repost.
@@arfriedman4577 It was a joke being that during those years a lot of people thought that they were brilliant at real estate in hot markets after a few upgrades. I feel bad for the guy having that same arrogance.
@@JustinCase780 I didn't listen yet. I was reading through some questions and giving answers I know or where they can get more info.
Blessings to all.
One kitchen sink + one bath tube + one toilet + one bathroom sink = ONE PROBLEM. The questions is, how many problems do you want? And how much profit do you want to make from each PROBLEM?
0:12 ghostly white noise? lol...can anyone make that out?
Buy one but might flip it at a loss.
If you invest in mutual funds, isn’t the money stuck in them until you retire? Whereas real estate you instantly have that profit accessible? I just don’t understand Dave’s advice on paying cash for rental properties. How can an average person just have a few hundred thousand laying around to buy a rental. At my rate I would be in my 70s or 80s by the time I would have cash for buying a rental. I feel like Dave’s advice is for people who are rich already and have insanely high paying jobs.
Mutual funds can be sold anytime you have a 24 hour wait to get the cash, Real estate has the cash flow with tenant but difficult to sell compared to mutual funds. Average people don't typically invest in real estate.
The average person shouldn't even consider buying a rental AT ALL.
@@amireallythatgrumpy6508 so Kiyosaki is better off to follow on building assets since he recommends buying a franchise before getting into real estate investing.
Nope. 99% of the American population are in survival mode. They should not be thinking of any form of investment. Their priority needs to be keeping out of trouble not creating trouble for themselves.
They are attempting to invest before they're ready and are only digging a hole for themselves.
When it comes to investments, if you find yourself in a hole, stop digging. And for most people, investing in ANYTHING is just digging a hole. Investing only works when you know how to do it properly. And the vast majority lack the intelligence and/or interest to do this. @@Piccolo_Re
Buying homes with cash is a stay rich strategy, not a get rich strategy. It will cash flow great, but most people cant save faster than the rate that properties sometimes appreciate. The returns are also lower than an index fund which is 100% passive.
Love the last name Dave
I think personally a house you should buy is a house you live in. Because any other house is just asking for problems
The IRS considers It passive
In the real world, there is no such thing as "passive income".
Residential rental is always passive to IRS unless you do short term rental. You must manage property yourself. Right now can be good. Lots of other videos on this and cost segregation. Still have a few years of large depreciation write offs.
@@apollo1464 Yup or your a "real estate professional"
✝️
I’m watching from Canada. What is the Canadian equivalent to an LLC?
Parliament
Call your Canadian town business office or business lawyer.
I'm American. What I found on Google is an llp or corporation.also a sole proprietorship.
Each has different pros and cons.
Kim Jong Trudeau lets you buy rental properties?
I would think Canada has rental properties like usa.
I imagine you don't like Justin Trudeau so you call other name.
Google
What is LLC ??
Limited liability corporation in usa.
It's set up for tax reasons, legal reasons, personal liability reasons and a few others.
You can see on google.
Limited liability corporation
Why did someone erase my response to this post?
I gave proper response.
My explanation was erased too.
@@arfriedman4577can you write it again 🙏 ?
remember when Dave referred all his listeners to a time share exit company that turned out to be a scam? 😂
So he already have rentals, but he's still calling in?
Seems like a fake call.
You do not need to pay cash for them.
Flips can get you ROI back in months, instead of years. There is nothing wrong with old houses.
He always loves to make fun of people on tictok. All because they don't do it the same way as Dave.
I found lower income property is a hassle. They are less likely to pay rent on time and trash the property. Just my experience though
@@tubenachos I said nothing about low income.
So this is my thought... I would rather buy more insurance than pay money to have a LLC, I have about 2.5 million in rental properties (8 units).
LLC costs $50 to file.
@@DavidRakeck sure... $50 more for you because you are gifted. I would hire a lawyer and accountant and would have to use an accountant every year to file my taxes. Point is... it would cost you $50 more cause you are special, someone like me it would be an aditionally $1k per year to file my taxes and $2.5K origination fee.
@@johnSmith-uz8nl accountant would be like $350-$500 per year.
Why buy investment real estate with a 6-8% rate of return after all expenses, when I can get 10-12% from an Index Fund? I think the unnatural appreciation in home prices from the 3% mortgage rates made a bunch of dumb people feel really smart.
Ive never seen 10-12 ever but i only been doing it for 17 years i average 6% ive had some years at 15 some at -3 but average is 6 and in in moderate risk so idk
@@jasonleatherwood2172What lol …. Hmm last year of S&P500 is over + 20%
@@jasonleatherwood2172 I've been investing for 25 years and I've had 8% long term. Like you I've had times Ive really cleaned up but other years I've last but 8% is what I've gotten long term.
I swear Dave Nailed it. When I started in real estate I bought a duplex in lower income area. There was fighting shouting and damages to my properties. I sold it and I started investing in only single home in class B and A- neighborhoods. So far good experience
@@jasonleatherwood2172 10% is the market average. If you aren't beating that than you have some bad index funds
What to know if you want to get into real estate can be summarised into one short word: DON'T!
excellent advice...that leaves more for me!
90% of millionaires own real estate.. I bet I can guess your networth!
99% of millionaires have the intelligence of a brick. What's your point?@@obijohns6197
😁😁
Dave owns several hundred million dollars of real estate and its not at all passive income? That smells fishy.
Only delusional people think there's such thing as passive income.
I’m so disappointed in seeing that Dave is part of the problem when it comes to SFH shortage. I understand he said these are higher income SFHs but still, it’s so selfish and so greedy. We need laws to stop this so families can own the houses they live in instead of having to rent. My market has been taken over my investors and locals just can’t buy here. Unlike Dave not everybody buys these houses in cash so if the market turns they are screwed. Meanwhile the locals have to wait for the market to turn so we don’t get into debt buying a house that’s 200k more than it’s normally worth. It creates this stalemate and it’s ruining people’s lives.
AKA DAVE HATES POOR PEOPLE
I mean he used to be poor too when he want broke 😂
It’s just you and your own personal financial issues blaming others.
@@blackworldtraveler3711 No, not really. I actually have a very high net worth for my age (35) and being single. Basically he said he doesn't like to rent to poor people because he doesn't like their mindset or dealing with them. Which is very understandable, I just wanted to let everyone else know..
I use to be broke broke never going back to that.
Dave inspires people in bad financial shape to make better decisions. After going broke him self. The points he made in the video are very true about low income properties. It’s just the way it is.
I’m looking to buy a 1 acre piece of land for $13,500 to diversify away from the market to own real assets. Any advise if it’s a right move? Not risking a lot for the price
Raw land is speculative.