Me as well. By now maybe you have one so that’s my next search. But I have a friend and former coworker who I throw around investment/business 😊ideas all the time and we never actually do anything. But that friend would be a good money partner.
You give excellent teachings here. Thank you and as an landlord that's getting really tired. I would do a deal like you said. It is true or sometimes. You just want somebody else to take over and give you cash every month But a lot of this works when you're young. If you're old it time is not on aside. Winning thirteen fifteen years unless you're going to leave it to your children
Coach, I don’t have any experience with private/hard money loans. Are the interest rates for those loan types typically lower or higher as compared to conventional fixed rate loans? The example you gave was a 6.5% private loan vs an 8% 30-yr fixed rate loan. Thanks for the videos and the insights!
2 random questions... 1) i work for the uaw... so lay offs happen... which could cause me to take a new job with half my current pay. Which is scarey to take on too much debt. Is my best bet to save 100k down payment on 250k house? (For my 1st rental hoise) because of the threat of lay off in the auto industry
Hi coach Carson! I’ve recently seen a lot of people saying that house hacking isn’t profitable for beginners in 2024 and can lead to financial disaster. I’m only 22 so never have bought a house before, but when I do I am thinking about trying a house hack/multifamily unit. I’m wondering if you think buying multifamily units as a (well researched and prepared) beginner is a bad idea in 2024?
I think it's a great idea to house hack in 2024! When is it a bad idea to live for less by renting to roommates or renting extra units (while still building wealth)? It's less risky than the alternative.. Do your thing! If you are thoughtful and careful about the property and the financing you will be fine. Who says its a bad idea?
@@CoachChadCarson Probably mostly fear mongerers are warning against it 😆 Thank you for the reassurance, I’m going to keep reading and researching and then hopefully give it a try!
Question 2. Is A.C unit something needed in Michigan? My own house i dont have an A.C unit, i prefer fans. But id bet 75% of michiganders have A.C. Seems like over kill for a rental house. An expensive captial expenditure i could avoid. Or would people not want to rent a house without A.c???
I’m not from there but I’d suggest talking to a few competent HVAC specialists. If you already have a central heating system but no cooling, you might be able to add the cooling for not that much money if the heat loads are not too high. Just throwing numbers around for example sake, someone in Florida may tell you a house needs 4 tons of cooling, but the exact same house in Michigan may be able to get by with 1 or 2 tons of cooling. May run longer for the hottest of summer days but likely those will be short lived in Michigan. But that’s why I’d say get quotes from several HVAC contractors and be inquisitive about how they sized the system. If they say something like “it’s 2000 sqft so it needs 4 tons of cooling” I’d say keep talking to more competitors. Disclaimer: I’m not an HVAC specialist, I just like learning about it. If you want to learn more, I’d start with a couple of TH-cam videos. I’ll find a couple that I’ve learned a lot from.
@LowOutput ok. Good idea. I do have duct work in places. That is good. I was worried about the price of a new unit. House is only 900 square ft. Maybe an elaborate fan system. I hear those attic fans work well. Either way. Cheap is good!!!! Lol. Thanks
Hi Coach, I also live in SC. Do you know of a good, honest realtor over here I the Upstate area that you can recommend? It's been a struggle finding a good one. Thanks
@@CoachChadCarson my situation is different, I manage my 2 units myself and I had $2000 in 3 years total on these 2 bungalows. I repair almost everything myself and the few trades that I can't cover were that little only. You have way more units and spread out all over the country I think. We're not Canada but it's all the same.
I’m m guessing a portion of his monthly holdbacks are to save up for infrequent but expensive things like a whole roof replacement or HVAC system replacement. I don’t think Chad does those himself and probably most landlords wouldn’t even if they are handy enough to fix most other things themselves. I’d consider HVAC replacement myself but probably not a roof myself.
In all likelihood Its not realistic to buy a property in desirable growing market with low inventory and get the property for 20% under market value. Also, if your plan it to hold 10 yrs for the property to double why aren't you using the $400K market value as the start and $800K as the ending value?
It's definitely not normal to buy 20% below value. But realistic? Why not? If you're a small investor who can look at a lot of properties, make a lot of offers, and help someone cash out quickly who's a little more motivated - it could be you. And if you only need 1-2 properties per year, you don't need a big volume of deals. I encourage you to do an exercise. Look on Zillow at the sold properties for the last 6 months in your market. And sort it from lowest to highest. Every time I do this exercise, I find interesting, lower-than-market purchases that another investor bought. They're not the norm. But it proves that it happens all the time. If they can do it, why not you (or me)?
I used the purchase price as the one that's doubling. But you could do it with market price, too. It would just take longer. For it to double in 10 years that's about a 7% growth rate.
Because their return isn't 5%. That's the growth rate on the overall property value. With leverage, their actual ROI would be more. And they'll also increase their return by building equity with debt paydown, tax savings, and future cash flow. I love 5% Tbills, but how confident are you that those yields will continue? Investing in tbills isn't a great long-term growth strategy.
2% appreciation with 20% down is a 10% return on that downpayment. Also, the mortgage interest is tax deductible, even though someone else is paying it (increasing that 10% return). Also, you likely have monthly cash flow (increasing that 10% return even further). Also, you get to claim depreciation, reducing your total tax liability (increasing that 10% return even further). It is not uncommon to get a property that consistently provides 20-30% return on your investment. Our duplex has provided a 50% return over the last two years.
T bills are one dimensional with a nominal 5% return. But when the currency they're giving you has been created just to make the debt service, that's inflationary and must be deducted from that 5%, resulting in a real return less than 5%. Risk free return is much more accurately described as return free risk. Why would someone invest in a currency or asset that can be created for nothing? 🤦♂️
Short term T bills are much better than neg cash flow. Most investors will not touch anything that is based on appreciation alone as the market is at an all time high which will result in losing your shirt. Try doing the math on a 50% value deduction after buying at the top and compare that to a short term bond.. @@AllNighterHeider
@@DiyaShah-z9b the numbers were $400k full value and $320k discounted price. There are lots of places with $400k houses that rent for $2300/mo. Not big cities. But in suburbs of cities like Atlanta, Dallas, Charlotte, etc. But the principle of the video will also work with $600k houses that rent for $2,500/mo that you buy for $450k or $500k. It's about getting creative with financing or partners to make deals work and control equity. That's the key in 2024.
Chad, I would be interested in you doing a future video on structuring partnerships deals.
Thanks
thanks for the feedback, David!
Me as well. By now maybe you have one so that’s my next search. But I have a friend and former coworker who I throw around investment/business 😊ideas all the time and we never actually do anything. But that friend would be a good money partner.
You give excellent teachings here. Thank you and as an landlord that's getting really tired. I would do a deal like you said. It is true or sometimes. You just want somebody else to take over and give you cash every month But a lot of this works when you're young. If you're old it time is not on aside. Winning thirteen fifteen years unless you're going to leave it to your children
Thank you for the considerations Coach
thanks for watching and for your comments!
Coach, I don’t have any experience with private/hard money loans. Are the interest rates for those loan types typically lower or higher as compared to conventional fixed rate loans? The example you gave was a 6.5% private loan vs an 8% 30-yr fixed rate loan. Thanks for the videos and the insights!
Very helpful Thank you for sharing
2 random questions... 1) i work for the uaw... so lay offs happen... which could cause me to take a new job with half my current pay. Which is scarey to take on too much debt. Is my best bet to save 100k down payment on 250k house? (For my 1st rental hoise) because of the threat of lay off in the auto industry
Hi coach Carson! I’ve recently seen a lot of people saying that house hacking isn’t profitable for beginners in 2024 and can lead to financial disaster. I’m only 22 so never have bought a house before, but when I do I am thinking about trying a house hack/multifamily unit. I’m wondering if you think buying multifamily units as a (well researched and prepared) beginner is a bad idea in 2024?
I think it's a great idea to house hack in 2024! When is it a bad idea to live for less by renting to roommates or renting extra units (while still building wealth)? It's less risky than the alternative..
Do your thing! If you are thoughtful and careful about the property and the financing you will be fine.
Who says its a bad idea?
@@CoachChadCarson Probably mostly fear mongerers are warning against it 😆
Thank you for the reassurance, I’m going to keep reading and researching and then hopefully give it a try!
Fantastic video
Question 2. Is A.C unit something needed in Michigan? My own house i dont have an A.C unit, i prefer fans. But id bet 75% of michiganders have A.C. Seems like over kill for a rental house. An expensive captial expenditure i could avoid. Or would people not want to rent a house without A.c???
Renters will more easily pay top rent for a unit with central air.
I’m not from there but I’d suggest talking to a few competent HVAC specialists. If you already have a central heating system but no cooling, you might be able to add the cooling for not that much money if the heat loads are not too high. Just throwing numbers around for example sake, someone in Florida may tell you a house needs 4 tons of cooling, but the exact same house in Michigan may be able to get by with 1 or 2 tons of cooling. May run longer for the hottest of summer days but likely those will be short lived in Michigan.
But that’s why I’d say get quotes from several HVAC contractors and be inquisitive about how they sized the system. If they say something like “it’s 2000 sqft so it needs 4 tons of cooling” I’d say keep talking to more competitors.
Disclaimer: I’m not an HVAC specialist, I just like learning about it. If you want to learn more, I’d start with a couple of TH-cam videos. I’ll find a couple that I’ve learned a lot from.
@LowOutput ok. Good idea. I do have duct work in places. That is good. I was worried about the price of a new unit. House is only 900 square ft. Maybe an elaborate fan system. I hear those attic fans work well. Either way. Cheap is good!!!! Lol. Thanks
Watching on my phone, but not seeing the links to resources mentioned in the video.
You can find them all here: www.coachcarson.com/buynextrental/
Not sure what value one add on the wait and hold model. Anyone who is ready, willing, and able can do that by themselves.
Hi Coach, I also live in SC. Do you know of a good, honest realtor over here I the Upstate area that you can recommend? It's been a struggle finding a good one. Thanks
Try Lisa Harrison. She's been great for me: www.zillow.com/profile/iSellHousesUpstate
Your monthly expense holdback seems high.
What amount of expenses do you find to be more normal?
@@CoachChadCarson my situation is different, I manage my 2 units myself and I had $2000 in 3 years total on these 2 bungalows. I repair almost everything myself and the few trades that I can't cover were that little only. You have way more units and spread out all over the country I think. We're not Canada but it's all the same.
I’m m guessing a portion of his monthly holdbacks are to save up for infrequent but expensive things like a whole roof replacement or HVAC system replacement. I don’t think Chad does those himself and probably most landlords wouldn’t even if they are handy enough to fix most other things themselves. I’d consider HVAC replacement myself but probably not a roof myself.
In all likelihood Its not realistic to buy a property in desirable growing market with low inventory and get the property for 20% under market value. Also, if your plan it to hold 10 yrs for the property to double why aren't you using the $400K market value as the start and $800K as the ending value?
It's definitely not normal to buy 20% below value. But realistic? Why not? If you're a small investor who can look at a lot of properties, make a lot of offers, and help someone cash out quickly who's a little more motivated - it could be you. And if you only need 1-2 properties per year, you don't need a big volume of deals.
I encourage you to do an exercise. Look on Zillow at the sold properties for the last 6 months in your market. And sort it from lowest to highest. Every time I do this exercise, I find interesting, lower-than-market purchases that another investor bought.
They're not the norm. But it proves that it happens all the time. If they can do it, why not you (or me)?
I used the purchase price as the one that's doubling. But you could do it with market price, too. It would just take longer. For it to double in 10 years that's about a 7% growth rate.
50k buys me whole property in my hood area
Why would a person do that in an effort to get 1/2 of 5% POTENTIAL growth over 10 years rather than just put $ into T.Bills with guaranteed 5% . 🤷♂️
Because their return isn't 5%. That's the growth rate on the overall property value. With leverage, their actual ROI would be more.
And they'll also increase their return by building equity with debt paydown, tax savings, and future cash flow.
I love 5% Tbills, but how confident are you that those yields will continue? Investing in tbills isn't a great long-term growth strategy.
2% appreciation with 20% down is a 10% return on that downpayment. Also, the mortgage interest is tax deductible, even though someone else is paying it (increasing that 10% return). Also, you likely have monthly cash flow (increasing that 10% return even further). Also, you get to claim depreciation, reducing your total tax liability (increasing that 10% return even further). It is not uncommon to get a property that consistently provides 20-30% return on your investment. Our duplex has provided a 50% return over the last two years.
I would never buy a property with neg cash flow!
T bills are one dimensional with a nominal 5% return. But when the currency they're giving you has been created just to make the debt service, that's inflationary and must be deducted from that 5%, resulting in a real return less than 5%. Risk free return is much more accurately described as return free risk.
Why would someone invest in a currency or asset that can be created for nothing? 🤦♂️
Short term T bills are much better than neg cash flow. Most investors will not touch anything that is based on appreciation alone as the market is at an all time high which will result in losing your shirt. Try doing the math on a 50% value deduction after buying at the top and compare that to a short term bond.. @@AllNighterHeider
I died laughing. These strategies sound smart but this is no longer 2008-2012. Come on coach you should know better.
No problem. While you're laughing we'll be closing and collecting rent checks..
Got a doomer here Coach
I agree but example u set is get 2400 rent on 320k property, which is not feasible these days..
@@DiyaShah-z9b the numbers were $400k full value and $320k discounted price. There are lots of places with $400k houses that rent for $2300/mo. Not big cities. But in suburbs of cities like Atlanta, Dallas, Charlotte, etc.
But the principle of the video will also work with $600k houses that rent for $2,500/mo that you buy for $450k or $500k. It's about getting creative with financing or partners to make deals work and control equity. That's the key in 2024.