Are you wearing a flannel shirt, skinny jeans, a vintage tee, a mustache or vintage eyewear?
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Consider your calendar: do you have plans to hear an indie band play live, attend an art gallery opening, or meet up with your closest friends for craft pints at a gastropub?
If you answered yes to at least 3 of these, then, my friend, you are very likely a participant in the hipster phenomenon.
If you don’t already live in one of the cities cited by Travel and Leisure that best serve the hipster set, then you might want to scope out an apartment in one of these hip places where the welcome mat is rolled out to the authentic and eccentric!
1. Seattle, WA Seattle is hands-down the best city for hipsters for the great coffee and cool coffee shops that fuel the lives of the trendy and aware. Of course, Seattle is home to the original Starbucks location, but Cherry Street Coffee, Citizen and Café Racer rank high as hipster coffee houses. The lifeblood flows caffeinated through this town.
2. Portland, OR Thanks to shows like Portlandia, much of the world has been exposed to the hipster phenomenon that is alive and well in Portland, Oregon. We all know that hipsters love bikes, sustainability and craft beers, which is why spots like BikeBar make this town iconic for the hip. Stationary bikes create electricity to power this organic brewpub. (Yep, you read that right.)
3. San Francisco, CA If hipsters aren’t riding their bikes, they are walking. This is why San Francisco is a popular spot for techie hipsters on the move. This town has tons of alternative transportation, like streetcars, for example. (If you choose to drive, however, you’ll be tickled to know San Francisco is the home of the carstache.)
4. New Orleans, LA An eclectic and historical city like New Orleans is the one of the best places for the hipster set to shop. Hipster essentials include everything from vintage cars to retro kitchenware to thrift shop couture. Fave vintage stores include Rag Doll, Retro Active and Funky Monkey. You can also hit up local flea markets for a grab bag of goodies. Try the Creative Flea and River Road Flea Market.
5. Portland, ME Portland, Maine, has a lot of the same hipster features as its West Coast doppelganger, but expressed in its own New England style, of course. Though they have boatloads of craft beers around town like Allagash and Shipyard, the teetotaler hipster is in for a treat at Vena’s Fizz House. This natural soda bar and mixology shop is home to impressive mocktails such as a non-alcoholic version of the Dark & Stormy aptly named the Dim & Story.
6. Providence, RI Art nerds love life in Providence, Rhode Island. This town has been a hipster haven since 1985 when AS220 opened. Okay, it sounds like a giant super-computer, but it’s actually a giant arts center. Over 100,000 square feet of space housed in three buildings provides ample room for art shows, theater, dance, live music, bars, restaurants and live/work spaces. A hipster must-do: Foo Fest!
7. Austin, TX “Keep Austin Weird” is Austin’s unofficial city motto and one of the reasons hipsters are attracted to the creative culture in this town. Plus, the city hosts SXSW every year, a giant music, film and interactive festival. The live music scene here is unbelievable, with too many awesome venues to name. (Alright, we’ll name one: check out Mohawk for their multiple stages and hip happy hours.)
8. San Juan, PR Hey, San Juan’s cool and we really want to visit, but it’s outside our apartment living purview. We list the city here for hip completeness.
9. Philadelphia, PA All-American hipsters flock to Philly because they dish some of the best dive bars in the United States. An ironic night out wouldn’t be complete without a visit to The Dive for a Schlitz, the Local 44 for a six-pack of craft brew to go, and Johnny Brenda’s for live music. Johnny Brenda’s is located in one of the newest hip neighborhoods: Fishtown, a great spot to shop for a Philly apartment.
10. Denver, CO Finally, after all that beer drinking and late night music listening, every good hipster needs to get some exercise — and you don’t have to leave Denver to break a sweat. Denver has over 850 miles of paved bike trails and a super cool B-cycle bike-sharing program. This makes it easy to roll on over to the Highlands for some hipster shopping, dining and relaxing.
Honorable mention: Brooklyn, NY We’re calling an audible from T&L’s list to include the home of much that is hipster: Brooklyn, New York. Here’s an urban neighborhood where biking is de rigueur, artisan craftsmanship is revered, and flannel is an unofficial uniform. Style your facial hair and declare your place in Brooklyn, home of the cool in the city that has it all.
Hey, if you aren’t ready to relocate to one of these happening cities, you can at least move to a hipster neighborhood in your own hometown!
With the start of summer upon us, now may be a great time to evaluate your credit card portfolio. Credit card sign-up bonuses and welcome offers are the quickest and easiest way to rake in lots of points and miles, so we regularly update the roundup of our favorite current offers in our best credit cards guide.
But to help you keep up with an ever-changing list of bonuses, we’ve also compiled a list of the best card offers currently available — especially the ones that are worth an extra look right now because they are at all-time highs or may end soon.
Since many issuers have restrictions on how often you can earn a bonus on a card, it’s important to time your application for when there’s a good offer. Also, higher bonuses don’t always stick around for long, so if you’re considering one of these offers, you’ll want to hop on it sooner rather than later.
Finally, if you’re not ready to jump on a higher-end card, consider these great starter cards or even one with a 0% introductory annual percentage rate (APR) offer.
The best credit card offers for June 2023
Card
Sign-up bonus/welcome offer
Welcome offer value*
Annual fee
The Business Platinum Card® from American Express
120,000 points after you spend $15,000 on eligible purchases with the card within the first three months of card membership.
$2,400.
$695 (see rates and fees).
Ink Business Preferred Credit Card
100,000 points after you spend $15,000 on eligible purchases with the card within the first three months of card membership.
$2,000.
$95.
The Platinum Card® from American Express
80,000 points after you spend $6,000 in the first six months, though you may be able to get a higher bonus through the CardMatch tool (terms apply).
$1,600.
$695 (see rates and fees).
American Express® Green Card
60,000 points after you spend $3,000 on purchases in their first six months of card membership. Also, get 20% back on eligible travel and transit purchases in your first six months to earn up to $200 back.
$1,400 ($1,200 in points plus up to $200 in cash back).
$150 (see rates and fees).
Capital One Venture X Rewards Credit Card
75,000 miles after you spend $4,000 on purchases in the first three months of account opening.
$1,388.
$395.
Capital One Venture Rewards Credit Card
75,000 miles after you spend $4,000 on purchases in the first three months of account opening.
$1,388.
$95.
Chase Sapphire Reserve
60,000 bonus points after you spend $4,000 on purchases in the first three months of account opening.
$1,200.
$550.
Chase Sapphire Preferred Card
60,000 bonus points after you spend $4,000 on purchases in the first three months of account opening.
$1,200.
$95.
American Express® Gold Card
60,000 points after you spend $4,000 in the first six months of card membership, though you may be able to get a higher bonus through the CardMatch tool (terms apply).
$1,200.
$250 (see rates and fees).
Southwest Rapid Rewards Plus Credit Card, Southwest Rapid Rewards Premier Credit Card, and Southwest Rapid Rewards Priority Credit Card
60,000 bonus points plus a 30% off promo code after spending $3,000 on purchases in the first three months from account opening.
$900.
$69 (Plus), $99 (Premier) and $149 (Priority).
United Club Infinite Card
80,000 bonus miles and 1,000 Premier qualifying points (PQP) after you spend $5,000 on purchases in the first three months from account opening. Offer ends Aug. 9.
$880.
$525.
IHG Rewards Premier Business Card
165,000 points after spending $3,000 on purchases in the first three months from account opening.
$825.
$99.
Hilton Honors American Express Surpass® Card
130,000 Hilton Honors bonus points and a free night reward after spending $2,000 in purchases on the card in the first three months of cardmembership. Offer ends July 19.
$780.
$95 (see rates and fees).
* Welcome offer value is determined using TPG valuations and is not provided by nor reviewed by the issuer.
The Business Platinum Card from American Express
This business card stands out not only for its 120,000-point welcome offer but thanks to added travel perks that can easily cover the card’s $695 annual fee (see rates and fees). Cardholders enjoy automatic Gold status in both the Hilton Honors and Marriott Bonvoy loyalty programs, along with access to a wide variety of airport lounges — including Amex Centurion, Priority Pass and Delta Sky Club (when traveling on same-day Delta flights). Enrollment is required for select benefits.
Cardholders also enjoy 5 points per dollar on flights and prepaid hotels booked at American Express Travel, along with 1.5 points per dollar on eligible purchases in select business categories and eligible purchases of $5,000 or more (on up to $2 million of these purchases per calendar year).
Related: Amex refreshes Business Platinum Card with new perks, higher annual fee and a 120,000-point bonus
On top of that, the card comes with up to $200 in annual airline fee statement credits and a 35% points rebate for flights booked through Amex Travel in first or business class on any airline (up to 1 million points back per calendar year), or in any class on the U.S. airline of your choice each year. Non-travel benefits include up to $400 in annual statement credits toward U.S. Dell purchases, up to $360 in credits toward Indeed, up to $150 toward select Adobe purchases and up to $120 toward wireless telephone services.
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Enrollment is required for select benefits.
Read our review of the American Express Business Platinum Card for more information.
Official application link: The Business Platinum Card® from American Expresswith 120,000 points after you spend $15,000 on eligible purchases with the card within the first three months of card membership.
Ink Business Preferred Credit Card
Then there’s the Ink Business Preferred. According to TPG’s valuations, this card’s welcome bonus alone is worth $2,000 since you can take advantage of Chase’s excellent collection of airline and hotel transfer partners. Points redeemed through the Chase travel portal are worth 1.25 cents each, which isn’t bad, either.
Another factor in this card’s favor? Its tremendous earning rates. You’ll earn 3 points per dollar across the following categories on up to $150,000 in combined purchases (1 point per dollar thereafter):
Travel.
Shipping purchases.
Internet, cable and phone services.
Advertising on social media sites and search engines.
Depending on which categories you spend in, you could earn a whopping 450,000 bonus points per year if you maxed out that $150,000 cap.
Among the Ink Business Preferred’s unsung benefits are cellphone protection, primary rental car coverage (when renting for business purposes) and other travel and purchase protections. You can also add employee cards to your account for free.
Read our full review of the Ink Business Preferred Credit Card for more information.
Official application link: Ink Business Preferred Credit Card with 100,000 bonus points after you spend $15,000 on eligible purchases with the card within the first three months of account opening.
The Platinum Card from American Express
Often referred to as the king of the premium travel rewards cards, the Amex Platinum offers a slew of benefits — along with a $695 annual fee (see rates and fees). Cardholders enjoy perks such as automatic Gold status with both Hilton Honors and Marriott Bonvoy plus access to a wide range of airport lounges, including Amex Centurion, Priority Pass and Delta Sky Club (on same-day Delta flights). On top of that, you’ll get up to $200 in annual airline fee statement credits, an up-to-$200 hotel statement credit to use toward prepaid Amex Fine Hotels + Resorts or The Hotel Collection bookings (the latter of which requires a minimum two-night stay) via Amex Travel, and an up-to-$189 Clear Plus membership statement credit — along with numerous other perks. Enrollment is required for select benefits.
Related: It’s a ‘lifestyle’ card now: A closer look at the Amex Platinum’s 6 new benefits
Non-travel benefits include an up-to-$240 digital entertainment statement credit (split into monthly $20 credits) for Audible, The New York Times, SiriusXM, Peacock, The Wall Street Journal and services under the Disney umbrella — including Disney+, ESPN+ and Hulu.
Cardholders also receive an up-to-$155 Walmart+ credit (subject to auto-renewal; Plus Ups are excluded), an up-to-$300 SoulCycle bike credit and an up-to-$300 Equinox statement credit for eligible Equinox memberships (now available as an annual benefit rather than monthly credits). You also receive Uber VIP status and up to $200 in annual Uber Cash (split into monthly $15 credits for U.S. rides and Uber Eats orders plus a $20 bonus in December).
Enrollment is required for select benefits.
Finally, cardholders will enjoy enhanced earning rates on many travel purchases:
5 points per dollar on flights booked directly with airlines or with Amex Travel (on up to $500,000 on these purchases per calendar year).
5 points per dollar on prepaid hotels booked with Amex Travel.
1 point per dollar on other eligible purchases.
And while the current welcome offer provides solid value, be sure to check the CardMatch Tool to see if you can receive an even higher one (offers are targeted and subject to change at any time).
Read our review of the American Express Platinum Card for more information.
Official application link: The Platinum Card® from American Express with 80,000 points after you spend $6,000 on purchases in the first six months of card membership.
The American Express Green Card
The American Express Green Card provides a compelling offering in the mid-tier travel category. With 3 points per dollar on broader travel, restaurants and transit as well as annual statement credits for Clear and LoungeBuddy that more than cover its annual fee, the Green from Amex is a card that modern travelers should consider.
The earning rates and benefits of the American Express Green Card will be most attractive to young professionals and millennials (or millennials at heart) who travel for work, pleasure or both. The card earns 3 Membership Rewards points per dollar on travel, restaurants and transit, so you’ll want to consider this card if a large chunk of your budget goes toward these categories.
The Amex Green also offers annual up to $189 Clear Plus and up to $100 LoungeBuddy statement credits that can more than offset the $150 annual fee (see rates and fees) while making your time in the airport more efficient and relaxing. If you can utilize these statement credits, the card can easily be a worthwhile addition to your purse or wallet.
Read our review of the Amex Green for more information.
Official application link: Amex Green with 60,000 Membership Rewards points after you spend $3,000 on purchases in your first six months of card membership. Also, get 20% back on eligible travel and transit purchases in your first six months to earn up to $200 back.
Capital One Venture X Rewards Credit Card
The Venture X card is Capital One’s premium rewards card and offers great earning rates and incredible perks.
Aside from a hefty welcome bonus of 75,000 miles after spending $4,000 on purchases in the first three months – worth about $1,388 according to our valuations thanks to Capital One’s excellent airline and hotel transfer partners – the card gives members up to $300 back in statement credits annually for bookings made through Capital One Travel and 10,000 bonus miles every account anniversary, starting on their first anniversary (worth $100 toward travel, or $185 by our valuations).
As for earning rates, the Venture X racks up 10 miles per dollar on hotels and car rentals booked via Capital One Travel, 5 miles per dollar on flights booked via Capital One Travel, and an unlimited 2 miles per dollar on everything else.
Frequent travelers will also enjoy taking advantage of access to Capital One’s developing network of airport lounges as well as the ability to enroll for Priority Pass membership for entry into more than 1,300 lounge locations worldwide (though this no longer includes participating restaurants). It also added the ability to access Plaza Premium lounges worldwide in 2022 and launched The Premier Collection in 2023, giving cardmembers on-property perks at a curated set of luxury hotels.
Read our review of the Capital One Venture X card for more information.
Official application link: Capital One Venture X Rewards Credit Card with 75,000 bonus miles after you spend $4,000 on purchases in the first three months from account opening.
Capital One Venture Rewards Credit Card
The Venture Rewards packs a pretty good punch for a mid-tier credit card. It earns a flat 2 miles per dollar spent on all purchases worldwide, but you can earn 5 miles per dollar on hotels and car rentals booked through Capital One Travel. The miles you earn with this card can be transferred to Capital One’s 17 airline and three hotel partners or redeemed through the Capital One Travel portal.
The card stands out for offering an application fee credit for Global Entry or TSA PreCheck every four years; many other cards that offer this benefit have annual fees of $400 or more. This TSA PreCheck/Global Entry application fee credit alone is worth up to $100. When making everyday purchases, you may also get Warranty Manager Service which can be used for extended warranty protection. The Venture Rewards card doesn’t impose foreign transaction fees, so you can use the card overseas without accumulating extra charges.
Read our review of the Capital One Venture Rewards Card for more information.
Official application link: Capital One Venture Rewards Credit Card with 75,000 bonus miles after you spend $4,000 on purchases in the first three months from account opening.
Chase Sapphire Reserve
This is one of the best premium credit cards available.
It earns a whopping 10 points per dollar on Lyft (through March 2025), Chase Dining booked through Ultimate Rewards, and hotel and car rental purchases through the Ultimate Rewards Travel portal. Cardholders also earn 5 points per dollar on airline travel booked through the Ultimate Rewards Travel portal, 3 points per dollar on travel (after using the $300 travel credit) and dining, and 1 point per dollar on everything else.
Chase defines travel and dining quite broadly, including everything from parking fees to Airbnb stays and food delivery orders. Perks of the card include a $300 annual travel credit, Priority Pass membership, a $5 monthly DoorDash in-app credit (through December 2024), a complimentary DashPass membership and an impressive array of travel protections.
Read our review of the Chase Sapphire Reserve for more information.
Official application link: Chase Sapphire Reserve with 60,000 points after you spend $4,000 on purchases in the first three months of card membership.
Chase Sapphire Preferred Card
If you can’t justify a high annual fee or want a solid card with an appealing set of perks, the Chase Sapphire Preferred is an ideal fit. It earns 5 points per dollar on all travel purchased through Chase Ultimate Rewards; 3 points per dollar on dining, including eligible delivery services, takeout and dining out; 3 points per dollar on select streaming services; 3 points per dollar on online grocery purchases (excluding Target, Walmart and wholesale clubs); 2 points per dollar on all other travel; and 1 point per dollar on all other purchases.
The points you earn with this card can be transferred to Chase’s airline and hotel partners or redeemed for 1.25 cents each through the Chase Ultimate Rewards portal. Benefits include a $50 annual credit on hotel stays purchased through Ultimate Rewards, at least 12 months of DashPass membership (when activated by Dec. 31, 2024), primary rental car coverage, up to $500 in trip delay reimbursement if you’re delayed more than 12 hours or overnight, up to $10,000 in trip cancellation and interruption insurance and up to $100 per day for up to five days in baggage delay reimbursement if your bag is delayed more than six hours.
Read our review of the Chase Sapphire Preferred for more information.
Official application link: Chase Sapphire Preferred with 60,000 points after you spend $4,000 on purchases in the first three months from account opening.
American Express® Gold Card
The Amex Gold card is a favorite of many TPG staffers thanks (in large part) to its terrific earning rates:
4 points per dollar on dining at restaurants (including takeout and delivery in the U.S.)
4 points per dollar at U.S. supermarkets on up to $25,000 in purchases per calendar year (1 point per dollar after that).
3 points per dollar on flights booked directly with airlines or through Amex Travel.
1 point per dollar on all other eligible purchases.
The card also offers up to $120 in annual credit for Uber rides and Uber Eats purchases and up to $120 in statement credits for select dining purchases (enrollment is required for select benefits) — all for a manageable annual fee of $250 (see rates and fees)
And while it’s not providing a limited-time bonus for new cardmembers, you can often find elevated welcome offers through the CardMatch tool. The card currently features a public welcome offer of 60,000 points after you spend $4,000 on eligible purchases within the first six months of card membership. However, some new customers can earn a 75,000-point or even 90,000-point welcome offer via the CardMatch tool after meeting the same minimum spending requirements. Note that these elevated offers are targeted and subject to change at any time.
Alternatively, you can refer a friend through the Amex referral program — and when your friend applies for a new account by June 7, you can earn an additional +5 rewards per dollar (as either points or cash back, depending on the card) on eligible U.S. supermarket purchases for three months after they’re approved (starting from the first date the referred friend’s account is opened), on up to $25,000.
Additionally, new applicants for the Amex Gold through a referral link will be eligible for an up to $200 statement credit after reaching minimum spending requirements, on top of that card’s usual welcome offer.
Read our review of the American Express Gold Card for more information.
Official application link: American Express® Gold Card with 60,000 points after you spend $4,000 in the first six months of card membership.
Southwest personal cards
All three personal of Southwest’s personal credit cards — the Rapid Rewards Plus, Rapid Rewards Premier and Rapid Rewards Priority — are currently sporting identical welcome offers: 60,000 bonus points plus a 30% off promo code after spending $3,000 on purchases in the first three months from account opening. This is the first time Southwest has offered a promo code as part of a sign-up bonus on a credit card.
The code will appear directly in your Southwest.com account within eight weeks of meeting the spending requirement. It can be used — only once — on a single one-way or round-trip Wanna Get Away, Wanna Get Away Plus, Anytime and Business Select fare, and is available for use until October 31, 2024.
Given it is a single-use promo code, it would be best to save this for a more expensive ticket. You’ll get the biggest savings when using the code for round-trip travel and/or during peak travel periods like the summer or the holidays.
Read more about the three cards and this limited-time offer.
Official application link: Southwest Rapid Rewards Plus
Official application link: Southwest Rapid Rewards Premier
Official application link: Southwest Rapid Rewards Priority
United Club Infinite Card
The United Club Infinite Card is the ideal card for United lounge access — bar none.
The United Club Infinite Card’s $525 annual fee sounds high until you factor in the United Club membership included with the card. Membership normally costs $650 per year for non-elite members.
In addition, one of the primary disadvantages of many airline credit cards is a low return on spending, even on branded purchases, as most airline cards only offer 2 or 3 points per dollar on airline purchases. But the United Club Infinite Card sets a new standard with an impressive 4 points per dollar on United purchases.
If you spend thousands of dollars on United flights each year, the United Club Infinite Card is worth considering.
Read our review of the United Club Infinite for more information.
Official application link: United Club Infinite with 80,000 bonus miles and 1,000 Premier qualifying points (PQP) after you spend $5,000 on purchases in the first three months from account opening. Offer ends Aug. 9.
IHG Rewards Premier Business Card
New applicants for the IHG Rewards Premier Business card can earn 165,000 bonus points after spending $3,000 on purchases within three months from account opening.
Your bonus will come in the form of IHG points, which TPG values at half a cent each. Thus, this bonus is worth $825.
Generally speaking, you won’t get fantastic earning rates on most hotel credit cards — especially on broad categories like dining and groceries. That said, the IHG Premier Business card could be a solid option, especially at participating IHG properties.
When you use your card at IHG hotels and resorts, you’ll earn 10 points per dollar spent on your stay. This is in addition to the 10 base points that all IHG One Rewards members accrue at most participating brands. And since you have automatic Platinum Elite status with the card, that’ll give you another 60% bonus on top of the base points. When combined, that translates to a total of 26 points per dollar spent on most IHG stays — or a 13% return on spending, based on TPG’s valuations.
Beyond IHG purchases, cardholders of the IHG Premier Business will earn points at the following rates:
5 points per dollar spent on travel, dining and gas purchases.
5 points per dollar in select business categories, such as social media and search engine advertising and at office supply stores.
3 points per dollar spent on all other purchases.
You’ll also receive a free night certificate (worth up to 40,000 points) every year when you renew your card and enjoy your fourth night free on award stays of four nights (or longer)
Read our full review of the IHG Rewards Premier Business for more information.
Official application link: IHG Rewards Premier Business card with 165,000 bonus points after spending $3,000 on purchases within three months from account opening.
Hilton Honors American Express Surpass® Card
The Hilton Honors American Express Surpass® Card provides solid earnings at Hilton properties and automatic Hilton Gold elite status, which offers complimentary breakfast, increased earnings and space-available upgrades when you stay at Hilton properties.
Hilton Honors Gold status is one of the best mid-tier hotel loyalty statuses you can obtain. As a Hilton Gold elite member, you’ll get complimentary breakfast, space-available room upgrades and improved earnings when staying at Hilton brands. Luckily, you can easily earn and maintain Hilton Gold status since it is an automatic perk of the Hilton Honors American Express Surpass Card.
The Hilton Surpass card is an ideal choice for those who stay at Hilton properties often and want a cobranded credit card with a modest annual fee and valuable perks.
Read our full review of the Hilton Surpass for more information.
Official application link: Hilton Surpass with 130,000 bonus points and a free night reward after spending $2,000 in purchases on the card in the first three months of cardmembership. Offer ends July 19.
*Bonus offer value is based on TPG valuations and not provided by issuers.
For Capital One products listed on this page, some of the above benefits are provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply
For rates and fees of the Amex Platinum card, click here. For rates and fees of the Amex Business Platinum card, click here. For rates and fees of the Amex Gold card, click here.
For rates and fees of the Amex Green card, click here.
For rates and fees of the Hilton Honors Amex Surpass, click here.
Additional reporting by Ryan Wilcox and Eric Rosen.
Update 11/6/22: Offer was lowered down from 125,000 to 100,000. Everything else is the same. (ht Shri)
The Offer
Direct Link to offer
American Express is offering a new sign up bonus on the Platinum personal card:
Get 125,000 points signup bonus when spending $6,000 within 6 months.
10x points per $1 spent at restaurants worldwide on up to $25,000 in spend within your first six months month (that’s 9x bonus points on top of the standard 1x point)
Card Benefits
Annual fee of $695 is not waived the first year
Authorized Platinum cards are $175 for three user (then $175 per Platinum)
Authorized Gold cards are free
Full details here
Card earns at the following rates:
5x points per $1 spent on purchases made with airlines or with American Express Travel
5x points per $1 spent on hotel & airline bookings made directly from the American Express travel website
1x points on all other purchases
$200 airline incidental credit per calendar year
$200 Uber credit ($15 per month and additional $20 in December)
Lounge access:
Centurion lounge access
International American Express lounge access
Delta SkyClub lounge access
Priority pass select membership
Airspace lounge access
$240 digital entertainment credit. This is a credit of $20 per month and can be used on Peacock, Audible, SiriusXM and The New York Times.
$200 hotel credit. This can be used on select prepaid bookings (Fine Hotels + Resorts® and The Hotel Collection) when using American Express Travel
$179 Clear credit
Walmart+ monthly credit. Cardholders will receive a $12.95 credit (covers the full cost of membership).
$300 Equinox credit. This is a $25 credit each month
Global Dining Access by Resy
The Global Lounge Collection
Our Verdict
We once saw a better version of this offer with 15x back on dining and shop small. I wouldn’t hold my breath for that one to come back, and this is still a monster offer with up to 375,000 points bonus potential if you max out the restaurant part.
I’m not sure if the recent 150,000 bonus on the personal Platinum card is still available. Regardless, a lot of people will prefer this Resy offer for 125,000 + up to 250,000 points. A downside of the Resy offer is that you can’t use a referral link to signup.
We’ll add this to our List of Best Credit Card Signup Bonuses. Check out these Things To Know About American Express before applying.
For the past six weeks, I’ve been hard at work writing my “introduction to financial independence and early retirement” project for Audible and The Great Courses. It’s been challenging — and fun — to rework my past material for a new audience in a new format.
Naturally, I’m emphasizing two important points in this project: profit and purpose.
I believe strongly that you need a clear personal mission statement in order to find success with money (and life).
I also believe that the most important number on your path to financial freedom is your personal profit, the difference between your income and your spending. (Most people refer to this number as saving rate. I prefer the term “personal profit” because it’s, well, sexier.)
That last point is important.
Too many people want magic bullets. They want quick and easy ways to get out of debt and build wealth. They believe (or hope) that there’s some sort of secret they can uncover, that somehow they’ve missed. Well, there aren’t any secrets. Money mastery is a combination of psychology and math. And the math part is so simple a third-grader could understand it. Wealth is the accumulation of what you earn minus what you spend.
There are only two sides to this wealth equation — earning and spending — but a disproportionate amount of financial advice focuses on the one factor, on spending, and that’s too bad. Sure, frugality is an important part of personal finance. And if you’re in a tight spot and/or have a high income and still struggle, then cutting expenses is an excellent choice. But the reality is, you won’t get rich — slowly or otherwise — by pinching pennies alone.
The Biggest Lie in Personal Finance
Recently at his excellent blog, Of Dollars and Data, Nick Maggiulli wrote about the biggest lie in personal finance. What is that lie? He writes:
While there are lots of people who are in financial trouble because of their own actions, there are also lots of people with good financial habits who just don’t have sufficient income to improve their finances.
That’s why the biggest lie in personal finance is that you can be rich if you just cut your spending. And the financial media feeds this lie by telling you to stop spending $5 a day on coffee so that you can become a millionaire.
With charts and graphs and data, Maggiuli demonstrates that the problem facing people with low incomes isn’t their spending — it’s their earning. If you’re living at the poverty line — currently $26,200 per year for an American family of four — you’re not going to escape through thrift. Thrift is an emergency measure, a stopgap. It’s a bandage on a major wound.
Here’s the bottom line:
If you’re poor and hope to be not poor, your attention should be focused on increasing income, not on cutting costs. Your expenses are likely already very low.
If you have an average household income — currently $63,179 according to the U.S. Census Bureau — your path to building wealth will probably include both frugality and income enhancement.
If you have a high income but still struggle to make ends meet, your attention should absolutely turn to cutting costs. You need to rein in your lifestyle. But you won’t accomplish this with frugality; you’ll do this by optimizing the big stuff.
Maggiuli is fed up with the Biggest Lie. It “triggers” him.
“This is the same financial media who write stories about how people save money by living in a trailer, making their own dish soap, or reusing their dental floss,” he writes. “Yes, it’s that ridiculous. But what really gets me is how these examples are provided as ‘proof’ of how cutting spending can make you rich.”
From my experience, this sort of stuff is perennially popular because it’s easy. It’s easy to write and it’s easy to read, even if it doesn’t offer any real solutions. It’s more difficult to write about boosting your income. And, it’s more difficult to act on that information because it takes time, effort, and actual sacrifice.
Real-Life Examples of the Biggest Lie in Action
Just this morning, Trent at The Simple Dollar published an article about optimizing dishwashing for money and time. Trent writes:
If I can invest some time and thought and effort into optimizing a routine I do three times a week, and that optimization trims off five minutes of effort and $0.50 in cost, I’m literally saving 13 hours per year and $78 per year for the rest of my life.
Trent isn’t wrong. If his math is correct (and his discipline too), he will literally save 13 hours and $78 each year by optimizing how he does dishes. This isn’t a lie. In this case, the lie comes from what is implied: Do this and you’ll grow rich. You’ll reach financial freedom by becoming a smarter dishwasher.
Here’s the truth: You don’t reap the thirteen hours and $78 annual benefit as a one-time win. You’re saving five minutes and fifty cents per day. This may seem like a niggling point, but it’s important. If you gain thirteen hours or $78 at once, that’s something real and tangible, something you can work with. But an extra five minutes and fifty cents per day? Not so much.
I’m not saying that you shouldn’t optimize your dishwashing routine. Do it! But don’t expect it to make you rich. Because it won’t.
Here’s a bigger example of the lie in action.
Elizabeth Willard Thames writes at Frugalwoods, which is one of my favorite money blogs. Recently, especially, Liz has been publishing lots of amazing stuff. I look forward to each new article. (Those of you who make use of the Spare Change list of links on the GRS front page have probably noticed that I bookmark Frugalwoods frequently.)
As you might guess from the name of her blog, Liz focuses (almost?) exclusively on thrift. She and her husband practice extreme frugality. She wrote a book, Meet the Frugalwoods [my review], that documented their journey from poor college students to achieving financial independence on a 66-acre farm in central Vermont.
Now, there’s no doubt that Liz and Nate are thrifty. They practice what they preach. But their frugality is not the reason for their wealth, the reason they were able to retire early. You can’t buy a 66-acre farm in Vermont simply by optimizing your dishwashing routine. Or clipping coupons. Or hosting potlucks. To do this, you also need a high income. And that’s a part of the story that Liz doesn’t share with her readers. She and her husband made a lot of money, and that’s how they got rich — not through frugality.
I’m sure Liz doesn’t mean to obfuscate the truth, but that’s the net effect. She’s complicit in “the biggest lie in personal finance”.
To her credit, Liz seems to be incorporating more of the truth in her writing. Today, for instance, the About page at Frugalwoods acknowledges their high incomes. This didn’t used to be the case.
Now, I don’t mean to dog on Liz and Trent. They’re both good people and fine writers. But I think they do their readers a huge disservice by covering just one aspect of the wealth equation, by rarely (if ever) mentioning income. They’re active participants in Maggiuli’s “biggest lie”.
And I’ll confess: For a long time, I was guilty of the same thing. Sometimes, I still am. Hell, I’ve spilled a lot of words lately about my quest to optimize my food spending, haven’t I? I’m not claiming to be any better than Liz or Trent. But I want to at least acknowledge the lie — and the reciprocal truth.
The Biggest Truth in Personal Finance
If frugality isn’t the path to riches, what is? The answer is simple: Big Wins. Big Wins are the quickest way to wealth.
You can scrape your dishes and rinse them in cold water every day for the rest of your life, and you still wouldn’t match the benefits you’d obtain by purchasing a cheaper home. Or choosing a more fuel-efficient car. Or negotiating your salary.
The best way to spend less is to cut back on the big stuff.
If the average American family were to trim their housing costs by 10%, they’d save roughly $150 per housing payment — more than twenty times the benefit of optimizing your dishwashing routine. Transportation offers similar opportunities. According to the American Automobile Association, the average driver spends just over $9000 per year on her vehicle. Reduce this spending by less than one percent and you’ve accomplished the same thing as a year of diligent dishwashing.
But, as Maggiuli notes in his article, income is the elephant in the room, the subject that too many writers ignore.
You can only cut costs so far. There’s no way to reduce your spending below zero, and most of us can’t come close to that. As I mentioned earlier, the U.S. poverty line for a family of four is currently $26,200. (For two people, it’s $17,240.) Not counting his business, Mr. Money Mustache (a famously frugal fellow) spent $13,068 in 2019.
If you’re living like this and want to escape, you shouldn’t look for ways to cut costs. That stuff is useless to you. If somebody tells you otherwise, they’re lying. In these circumstances, you should be trying to increase your income. And even if you have a standard middle-class salary, boosting income is usually the best way to meet your goals.
There are three primary ways to earn more money.
First, become better educated. Despite the dire details in the gloomy mass media, one fact is undeniable: The more you learn, the more you earn. In the U.S., education has a greater impact on lifetime earnings than any other demographic factor. It’s more important than your race, your religion, your gender, your location. (In fact, the Census Bureau says education has five times the impact of gender on annual earnings.) That’s great news because while you can’t control your age or race, you have total control over your education.
Second, become a better employee. I read a lot on Reddit (and other places) where people piss on their employers, complaining about how their boss (or company) is out to screw them. This stuff is counter-productive. Sure, there are some shitty employers out there, but most are happy to promote and reward their best workers. If you want to earn more, work longer and harder than others will. If you’re in a situation where hard work goes unrewarded, switch jobs.
Finally — and most importantly — learn to negotiate your salary. Study after study shows the same thing: Failing to negotiate your salary can cost you over half a million dollars during the course of a typical career. Half a million dollars! For over a decade, I’ve been pushing Jack Chapman’s book, Negotiating Your Salary: How to Make $1000 a Minute. Let me do so again.
“You can’t frugalize income you don’t earn,” Liz writes in Meet the Frugalwoods. She speaks the truth! The biggest truth.
I’m no enemy of thrift. Yes, absolutely, pinch your pennies, if that makes you happy. Frugality is an excellent way to build good habits. Over the long run, many frugal habits combined can make a big difference to your financial situation.
But if you have a low income, do not focus on thrift. It’s a red herring. Instead, turn your attention to Big Wins. And, especially, to increasing your income. Because this is the biggest truth in personal finance: You can’t get rich through frugality alone.
This is a republished post from 9/11/21, the 20th anniversary of the 9/11 attacks. In it, I give my remembrance of where I was on that day. I’d love to hear your own recollection in the comments.
Today marks the 20th anniversary of a sad day in our country’s history, a day when 2,740 Americans and 236 people of other nations lost their lives in a horrific terrorist attack.
For my generation, September 11th has often been compared to Pearl Harbor, or the Kennedy assassination in the fact that if you ask anyone where they were on that day, they’ll each have their own remembrance and story of what happened to them on 9/11.
While we’ve been fortunate that we haven’t been hit by another attack of that magnitude since that day, I think it’s a good idea to never allow ourselves to forget the horror that was unleashed so that we can remain ever vigilant against those who hate our way of life, and the freedom that we enjoy here in America.
September 11th, 2001
Twenty years ago today I was working at the same company that I work for now, but at the time our offices were in another city 10 miles away from where we are now. I remember waking up to a beautiful September day, looking up at the unusually blue skies, and thinking what a beautiful early fall day it was. I got ready for work just like any other day.
I was driving to the office, and was just pulling onto the street where I work around 7:50 am central when the first reports of the first plane hitting the tower came through. I remember the station I was listening to breaking into the broadcast with some confused reports of a small plane hitting one of the World Trade towers, and that they weren’t certain at this point as to what exactly had happened.
I remember thinking at the time about a story I had recently read about a military plane that had crashed into the Empire state building in dense fog during World War II. I thought to myself how it must have been something similar to that happening here. There must have been bad weather or fog out in New York, and a small plane must have gotten off course or had problems with its instruments.
I parked my car and walked into my office building and went into the warehouse office space that I shared with 3-4 other people. I sat at my desk and began to get down to work, checking my emails. A few minutes later I remember one of my immediate superiors coming into the room to tell me that a plane had also hit the second tower of the Trade Center. I remember thinking that this probably could no longer be categorized as an accident. Both towers of the World Trade Center had been hit. This was an attack of some sort! There was no way two separate planes would hit the towers by accident.
My boss told me that my co-workers were all in the front conference room watching the coverage on the big screen TV if I wanted to join them.
Watching The Towers Fall, The Pentagon Attack, And Plane Crashes
I walked into the conference room where someone had turned on one of the local NBC affiliate. They were showing footage from a news helicopter, showing smoke pouring out of the windows. We all watched in horror as the buildings smoked, and we talked about how many people probably worked in those buildings. 20,000? 30,000? How many had probably already been killed in the fires?
At some point later, it seemed like 20 minutes or so, there was word that there were more hijacked planes, and that possibly one of them had flown into the Pentagon. This was war. Who would want to do this? Terrorists? China/Russia? Iran or Iraq? It didn’t make sense. Looking around the room everyone just had looks of shock on their face, trying to figure out what all of this meant.
We continued watching until around 10 am, all of a sudden the south tower started to collapse. I heard an audible gasp in the room where we were watching the coverage. It seemed to be only a matter of a few seconds and the building was completely gone. I watched in horror and utter disbelief as the huge cloud rose into the air, and I realized that thousands of people had probably just lost their lives. We then heard the news about another plane crashing somewhere in Pennsylvania. How many planes had been hijacked, and how many more crashes would we see on this awful day?
We continued watching as the second tower continued to smoke, and we wondered if it would fall as well. The news was reporting that the second tower seemed to be leaning a bit and probably wasn’t stable, and about 1/2 an hour later the north tower fell as well. I remember multiple people gasping and one saying “Oh my God!”. Others were choking up. All those lives were snuffed out in an instant.
The dust and debris cloud rose from the north tower as well, and it was just shock and disbelief in the room at what had just happened.
We continued watching the coverage in a daze for a while, and slowly people started filing out of the room to try and get some work done and process what had just happened.
Processing The Disaster
I remember working on some things that day, but I wasn’t really able to focus on anything. In the end, I remember surfing the web a good deal of the day reading news reports and accounts of what had happened.
I left work at the normal time that day or a bit early and then headed home to watch the news reports to try and figure out what happened. I sat in front of the TV watching the news until the wee hours of the morning. I had a sick feeling in my stomach, I knew thousands of lives had been lost that day.
The next day I just wasn’t up to going to work, so I called in sick and then sat on the couch the entire day watching the coverage. I remember that they didn’t completely know what had happened yet, although some were speculating that it was a terrorist attack from radical Islamic groups.
I remember being outside that day and it was so weird that there were no planes flying overhead. Normally we hear a lot of planes in the house where I lived because we were on a flight path heading into the Minneapolis/St. Paul International airport. We wouldn’t hear those planes again for some time. It was an eery silence.
I also remember hearing at some point that my cousin who lives and works in New York was OK. She had been in Manhattan on that day and had been able to walk across one of the bridges to get off the island and get to her home.
20 Years Later
All these years later thinking about that day still gives me that sick feeling in the pit of my stomach, thinking about all those people that lost their lives, and the fear and pain they must have felt before they died.
In 2010 I was in New York City for work and had the chance to visit the site of the World Trade Center disaster for the first time. I saw the empty holes where the towers once stood and the construction of the new tower as it progressed. Watching the new building go up did give a sense of hope.
While there I also visited a World Trade Center museum where they house artifacts, remembrances, and tributes to loved ones who died that day.
One wall had thousands of photos hanging on it, showing pictures of people lost on that day. One art piece hanging on that wall caught my eye. It was a heart (see above).
When I saw what it said it brought tears to my eyes. It was from a small boy named Kevin who had lost his father that day. He made the heart for him, hoping he was having a “great time in heaven”. That truly brought home the human impact of the day for me.
Psalm 46:1-3 God is our refuge and strength, an ever-present help in trouble. Therefore we will not fear, though the earth give way and the mountains fall into the heart of the sea, though its waters roar and foam and the mountains quake with their surging.
While time does seem to heal wounds to a certain degree, we’ll always have a scar on our hearts from that day, one that we’ll remember until we die.
Where were you on September 11th? Were you in or near New York City on that day? Where were you when you heard, and what is your remembrance of that day? Tell us your story in the comments.
Last Updated on February 25, 2022 by Mark Ferguson
Many people have dreams of making it big as a real estate agent, but they want to start slow as a part-time agent. They want the freedom, income, and other benefits that come with being a real estate agent but are afraid to lose a steady income. Getting a real estate license and working part-time as an agent may seem like a great idea, but it is not easy to pull off.
There are some cases when working part-time may work; like an agent who only uses their license for their own investing strategies. There are also a couple of other instances where being a part-time agent can work if you have a very flexible schedule. The problem with being part-time in real estate is that clients need things done at all times of the day. If you cannot get away from your job, you are going to find yourself struggling to help those clients.
How hard is to become an agent?
One of the drawbacks to becoming a part-time real estate agent is how much work it takes to become a real estate agent. One of my team members just got their real estate license. It can take hundreds of hours of education and testing to become an agent. If you already have a job, even part-time, it will be tough to find the time to complete your education.
There are night classes and online classes that you can take to get your real estate license, but you will have to spend a lot of time studying. The real estate exam is not easy to pass and it will take a lot of time to prepare for it. If you want to become a part-time agent, make sure you factor the time it will take to get your license into the equation.
In Colorado, you will need to take 168 hours of classes either online or in-person to complete the education portion. Once you pass the classes you must take the test, pass the background check, and find a broker to work with. This all takes a lot of time!
If you are interested in getting your real estate license, Real Estate Express offers classes in most states and is very affordable.
Will you have enough time for clients?
Once you get your license, you must hang it with a brokerage. After finding a brokerage, you must start working with clients and generating business. This is where it gets tricky for a part-time agent who has another job. Whether you are listing homes or working with buyers, selling real estate is a random hours job. You may not have to work 40 hours per week, but you will have to work all hours of the day.
If you have a day job, you had better be able to get away from that job to take calls for your real estate job. Buyers are going to want to look at houses and offers must be negotiated and presented. If your clients have to wait eight hours to get a hold of you, they are going to get frustrated. There is a good chance you will lose clients if you cannot get back to them in a timely manner. In a tight sellers’ market such as the one we have now, speed is very important in getting offers accepted. If buyers feel an agent cannot submit offers quickly enough for them, they will probably find another agent. If you cannot respond to your clients for hours at a time, are you being a good agent to them?
You can also check out the video below on part-time agents
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What does a real estate agent do?
Most people think that being an agent is about showing houses and writing offers. However, there is much more to being a real estate agent, and that is why we are paid so much for selling homes. Real estate agents have to do many things to close deals and generate business. Here are some of the things an agent must do in order to be successful:
Show houses
Write contracts
Help buyers complete inspections
Contact lenders
Contact title companies
Contact other agents
Complete continuing education
Host open houses
Talk to your circle of influence
Create brochures
Take photos
Create advertisements
Answer their phone
Floor duty
Create plans and goals
Manage expenses
As you can see, there is a lot that a successful agent must do. Not only do you have to work with clients, but you have to find clients as well. It takes a lot of time to be a great agent and it is very difficult to do part-time. Being able to answer your phone at any time is one of the best ways to get business. If you are returning calls hours after you receive them, there is a great chance that person already has another agent who called them back quicker or answers their phone.
Can you maintain a good reputation as a part-time real estate agent?
As a real estate agent, I deal with other real estate agents, title companies, buyers and sellers, lenders, attorneys, investors, and many people in our community. My reputation is a huge reason why I have been so successful as an agent, broker, and investor. When you are a part-time agent, it is very tough to find enough time in the day to get all your tasks done and follow up with people. If you are calling back people days later or not at all, word will spread very quickly around the real estate community. It is very important to provide great service as a real estate agent and that is tough to do when you only work part-time.
If you get a reputation as someone who is hard to get a hold of, does not call back, or is too busy to follow up, it will be very hard to shake that reputation. Even if you become a full-time agent and do an amazing job, people will remember the less than par work that you did previously. People remember the poor work people do and they expect people to do good work.
I go over everything it takes to become a real estate agent in my book How to Make it Big as a Real Estate Agent. How to get leads, how to find a broker, how much money you can make, how to make money, how to manage your time, and how to avoid the struggles many agents have. It is available on Amazon as a paperback or Kindle, and it is also on audible as an audiobook!
Can joining a team help?
If you want to be a part-time agent and there is no possible way that you can quit your current job, there are some steps you can take to be more successful. I have a team of ten people who help me run my real estate business, fix and flip business, and REO business. We have some part-time help and many members of my team started out as part-time workers. If you join a team, your team can help cover for you when you have to work your other job. By joining a team, you agree to give up part of your commission to the team so the team is motivated to help you succeed. I think there is a better chance of succeeding as a part-time agent if you can join a team rather than trying to do everything yourself.
You will be doing other tasks than just working as an agent, but it will all be real estate related. You will also have a flexible schedule on most teams that will allow you to drop everything and go show houses if needed.
Does it help with investments?
The best situation to become a part-time real estate agent is when you are a real estate investor. I own 20 long-term rentals and I complete 20 to 30 fix and flips per year. I save money when I buy a home from the MLS and when I sell a home because I do not have to pay a listing agent. Being a part-time agent who invests in real estate is well worth it in my opinion.
If you are only an agent to save money on your own properties, you do not have to worry about having a flexible schedule or working leads. If you are only an agent because you are an investor, being a part-time agent may work out great.
What other options will help part-timers succeed?
Joining a team is one way to succeed as a part-timer. There are some other ways to make a part-time real estate career work. The most important thing to have as a real estate agent is availability. Many people do not want to be on-call all the time, but there are sacrifices you must make for an awesome career. While you may not have to work 30 hours per week as an agent or even 20 hours a week to sell houses, you need to be available most of the time. If a buyer or seller needs to talk to you on a Sunday afternoon or on a Monday morning, you should be available. You may have to show houses on the weekends or in the evenings. Real estate agents make their own schedules and have a lot of freedom, but when a client needs to see a house after hours, an agent should accommodate them.
If you want to be a part-time agent and have a very flexible schedule, you have a much better chance of making it. If you have to work another 9 to 5 job every day, it will be very tough to make a real estate career work. There are some amazing jobs today that can help agents make money and have a flexible schedule. Uber or Lyft are ways agents can make money, but also be able to drop everything to help out a client.
Conclusion
A part-time agent can make it in the real estate industry, but to be successful, part-timers need to join a team until they can go full-time. If you are an investor who just wants to save money on your own investment properties, becoming a part-time agent is a great idea.
Many of my sales come from listing REO and HUD homes for banks and for the government. If you want to become an REO agent, you must be a full-time agent. Banks and HUD need immediate responses on their properties and getting back to them in a day or two will not cut it. I have to do inspections within 24 hours and most tasks in 48 hours. To be successful you need to commit and it is tough to commit to something when you are part-time.
Last Updated on February 25, 2022 by Mark Ferguson
Finding a great rental property can be tough. In many markets, prices are increasing and being able to make money on a single-family house or multifamily building is difficult. One option is to buy the cheapest homes you can in your area and make them a rental. You can also buy a townhouse or condo and turn into a rental property since they are typically less expensive than a single-family detached home.
I think a townhouse or condo can be great investments, but you must look at the numbers closely. There are many costs associated with condos like HOA fees. The appreciation also may not be as much on condos and there are some very scary issues that can cause a great condo or townhouse investment to become a nightmare.
Why are condos and townhouses so much cheaper than houses?
Before I get into the pros and cons of condo and townhouse investments, I want to be clear on what a townhouse or condo is. A condo is a unit within a large complex of apartments or other condos. There may be units beside you, above or below you. You rarely have any yard except a shared space with other units.
A townhouse might have a small yard and may have neighbors beside the unit, but not above or below. Townhouses are typically worth more than condos because they have less connected neighbors and some land.
Both condos and townhouses are worth less than a single-family home that is otherwise similar.
How does an HOA work on a townhouse or condo?
Almost every townhouse and condo will have an HOA. The HOA takes care of the shared land in the complex and most HOAs take care of the exterior maintenance and landscaping. Many HOAs also pay for the water on a condo or townhouse and they may provide common amenities like a swimming pool, clubhouse or tennis courts. Some single-family neighborhoods have detached homes that are in an HOA as well. The HOA fees are usually much higher on a condo or townhouse because the HOA takes care of many more things. Here is a list of many things an HOA takes care of on a single-family detached home, patio home, and a condo or townhouse.
——————-Condo/Townhouse Patio Home Single-Family
Common Amen. Yes Yes Yes
Landscaping Yes Yes No
Water Yes No No
Exterior maintenance Yes No No
Exterior Insurance Yes No No
Clubhouse/pool Yes Maybe Maybe
Trash/snow removal Yes Maybe No
If you are wondering what a patio home is, that is usually a single-family detached home that has an HOA that maintains the lawn. The condo and townhouses have much more involved HOAs, which makes them much more expensive.
In my area in Northern Colorado, I see HOA fees for most single-family detached homes $400 or less a year (if they have an HOA). HOAs on condos or townhouses can are usually at least $100 a month and in some cases $400 a month. HOA fees can be even higher in larger cities with complexes that have security and many more amenities. Only one of my rental properties has an HOA and it is $300 a year.
Is it a bad thing to have an HOA on a rental property?
I have no problem with having an HOA on one of my rentals. The HOA takes care of the common amenities in the neighborhood and I have never had a problem with them. The only other job of this HOA is to make sure all the homes in the neighborhood are in compliance with the rules and regulations of the HOA. Many HOAs don’t allow work trucks to be parked outside, or excessive junk to be stored in the yard. For many people, this is a good thing and for others a bad thing. As a landlord, I think of it as another set of eyes on the property and I think it is a good thing to know if the tenants have junk everywhere or are not mowing the yard.
I don’t think having a small HOA with few responsibilities is a bad thing. A larger HOA will provide many benefits as well. Even though a larger HOA will be more expensive, it will lower many costs for a landlord. The HOA will pay for exterior insurance and maintenance, which will reduce the landlord’s expenses. The HOA will handle yard maintenance and snow removal, which can lower the landlord’s expenses as well. In my case, I invest in single-family homes and I have the tenants take care of the lawn and pay all utilities themselves so that does not save me much money.
HOA special assessments
The problem with a large HOA is they can create special assessments if they need more money for any major repairs or financial problems. I know of a couple of landlords who had their HOA fees increase greatly in a one-year span because the HOA had to repaint the exterior of the entire complex. The HOA fees went from just over $100 a month to $200 a month for every condo in the complex. Another HOA imposed a $30,000 special assessment on every single condo in a complex to pay for improvements. This particular landlord was planning on flipping the condo and all his profit disappeared with this assessment.
The HOA cannot impose a special assessment or raise the HOA fees without agreement from the HOA members, but in many cases, the members don’t show up to HOA meetings to oppose the changes. If you are buying a condo or a townhouse that has a fixed HOA fee, that does not mean it cannot be raised or a special assessment is levied upon the property.
Will the HOA allow rental properties?
Another problem that can come up with HOAs and rental properties is that some HOAs may not allow rental properties! My office recently had a home listed that was in an HOA and the HOA decided they would no longer allow rentals. The property was used as a rental property so the owners decided to sell it. Then the tenants decided to stop paying due to covid and it was a nightmare for the owners.
Be aware that HOAs can decide to ban rentals although it is rare.
Will condos or townhouses appreciate as much as detached homes?
Another factor to consider when buying a condo or a townhouse is the value of the property. Condos and townhouses are cheaper than detached homes because they are cheaper to build and demand is higher for single-family homes. You also own more land and have lower HOA fees with a single-family house. When you have an HOA fee that also reduces how much a borrower can qualify for when they get a loan. Usually, the condos and townhouses with the highest HOA fees will be worth less than similar condos or townhouses with lower HOA fees, because more buyers can afford them. A $100/month HOA fee could reduce the amount a buyer can qualify for by as much as $20,000.
I don’t invest for appreciation, I invest for cash flow when I buy rental properties. That does not mean I do not consider possible appreciation or depreciation on the properties I buy. There are some people who prefer a condo to a detached home, but most people want a detached house. In my area condos are the first to start losing value in a down market and the last to increase in value in an appreciating market. While condos and townhouses can appreciate and often do, single-family detached homes tend to appreciate more. It is the land that is causing the appreciation and detached homes have much more valuable land.
How can FHA rules affect condo prices?
FHA will loan on condos and townhouses, but they have very strict rules. FHA will not allow a buyer to use an FHA loan to purchase a condo in a complex if there are too many investors in that complex. If there are more than 50 percent investors in a particular complex FHA won’t lend to anyone in that complex. FHA is a very popular loan and it can greatly decrease values in a complex if the units cannot be sold using FHA. Here are some more requirements for FHA loans being used on condos. Even though conventional loans do not have to abide by FHA rules, some banks will also have guidelines similar to FHA to lend on a condo.
Is it smart to buy a condo or townhouse for a rental property?
As you can see there are many factors you must consider when investing in a condo or a townhouse. The number one factor should be cash flow and how much money you will make. You have to remember to factor in the HOA fees and the possibility that they may increase in the future. If you buy a condo in a complex that is older and will need work soon, you may see a huge increase in HOA fees or a special assessment. If many investors decide to buy units in a complex it could greatly lower the value of every unit due to FHA rules and don’t expect as much appreciation.
I think you can make money with condos, but given similar returns between a condo or townhouse and a single-family detached home, I will take the detached home every time.
My book, Build a Rental Property Empire, goes over my personal rental property strategy in depth. It covers how to find deals, finance rentals, manage them, and much more! It is available as a paperback and ebook on Amazon or as an audiobook on Audible.
Last Updated on February 25, 2022 by Mark Ferguson
I became a real estate agent when I was 22 years old. I was just out of college and did not know what to do with my life, but my father was an agent and I decided to try the business out. It was a great decision to get into real estate, but it took me a few years before I became successful in the business. Some might say my youth hurt me as an agent because people don’t want to work with young real estate agents. Honestly, I do not think my age had anything to do with my success. My attitude and focus were more at fault for not succeeding sooner, not people’s perception of my abilities because I was young.
I get many questions from young readers of the blog who want to become real agents but are worried they are too young to be taken seriously. Some of these readers are much younger than I was when I first started and I can see why they would be concerned. No one wants to begin a career where they have a huge disadvantage, because no one trusts them. Although I could see a few people being concerned with using a very young agent, I think most people are more concerned with an agent’s ability and not their age. I believe the self-confidence that you know what you are doing and you are working for your client’s best interests is much more important than how old you are. There are also advantages to being young as some buyers and sellers may feel a younger person has a better grasp on current technology and marketing trends.
How old do real estate agents have to be to legally sell real estate?
Every state has slightly different requirements on education needed and age requirements to become a real estate agent. Most states require people be at least 18 years old to get their real estate license. You can see the basic requirements of each state to get your real estate license here. While you have to be 18 in most states to get your real estate license, you may be able to take real estate classes and the test before you turn 18. Many of you may think becoming a real estate agent at 18 is not very likely, but I have met some very ambitious youths through this site.
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If you are interested in getting your real estate license, I recommend Real Estate Express, an online real estate school.
How hard is it to get your real estate license as an 18-year-old?
Getting a real estate license can be a very simple and quick process in some states with less 40 hours of education required or a painful and long process with 162 hours required (Colorado). Taking the real estate classes can be a boring and frustrating process, especially if you are taking them online. Passing the real estate agent licensing exam can also be difficult, especially if you aren’t used to tests where the main goal is to trick you into the wrong answers. With enough dedication, most people can pass the real estate tests and get through the classes.
The really hard part about becoming a real estate agent is learning how to sell houses and be your own boss. Most people are not self-motivating enough to put in the work and focus on the tasks that make money. While many may spend 40 hours a week or more working as an agent, they may not be working on the things that are actually going to sell houses. It is also important to know that real estate classes do not teach you how to sell houses and get clients. They teach you how to avoid going to jail for breaking the law and how to fill out a settlement sheet.
How can a younger person become a successful real estate agent?
A young person can be a great agent just like anyone else if they focus on the right things. The first thing and possibly the most important thing to do is to pick the right broker. Too many agents pick a broker that pays them the highest commission split and has the fewest costs. Unfortunately, this causes many agents to fail in the business because they get no training on how to sell houses. I always tell people a 100 percent commission split is not a good thing if you don’t sell any houses. Choose a broker that has the best training available and if possible has a mentoring program.
I know when I was young I thought I could do everything myself and I didn’t need anyone to teach me how to be successful. This was one of the biggest mistakes I made because no matter what you do, there is going to be someone who had already done it and been successful at it. It will reduce the learning curve and make you more successful much sooner than trying to do it all on your own. I run a real estate team of 9 and we have sold over 500 houses in the last three years. I still learn from real estate conferences and other agents how to do things better and become more successful. I also belong to coaching programs to keep me accountable and motivated.
Having goals and focus is also extremely important to all of us. Whether you are young or old, you need goals to show you where you want to be and to be able to plan the route that will get you there. I never had any goals when I was younger and that hurt my business a lot. Once I started creating goals my career took off. I also tried to be successful at multiple businesses at the same time when I started. This “scatter-brained” approach helped me become mediocre at many things. No one wants a mediocre agent who is also mediocre at five other things. They want an agent who is awesome at selling houses. Focus on being the best agent you can be and once you become an expert and set up your business you can branch out to other businesses.
Will people take me seriously as a real estate agent if I am super young?
I get asked this question all the time! People want to become real estate agents or even real estate investors, but they don’t think anyone will take them seriously if they are in their teens or early twenties. I think there may be some people who are put off by a young agent, but for the most part, I don’t think it will affect your business unless you let it. Most people who have bought or sold a house know many agents are not very good. They don’t answer their phone, they don’t return calls and they don’t follow up. If you can take care of your clients and do simple tasks like returning phone calls you will be better than most agents.
I think that most people are looking for an agent that is competent, will communicate well, and knows what they are doing. Agents can demonstrate all of these qualities early on and from that point forward, people won’t care how old you are. They may even be impressed that someone so young is so ambitious.
The biggest problem a young agent will have is if they believe their youth is a problem. Our mindset has a huge impact on how successful we are and if you believe no one wants to work with you because you are young, you might make that happen subconsciously. Believe in yourself and your abilities and people will overlook the age factor.
I go over everything it takes to become a real estate agent in my book How to Make it Big as a Real Estate Agent. How to get leads, how to find a broker, how much money you can make, how to make money, how to manage your time, and how to avoid the struggles many agents have. It is available on Amazon as a paperback or Kindle, and it is also on audible as an audio book!
What are the advantages of being a young real estate agent?
If you are a very young agent there are many advantages that I think out-weight the disadvantages.
Getting started young: The sooner you get started at anything, the better off you will be. There is no substitute for experience and learning by doing. The longer you are in the business the more clients and connections you will gain, which will make you more money. There is also a huge advantage to investing in real estate when you are young and being an agent gives you an advantage as an investor.
Technology: Many people have the perception that younger adults are better with technology. Whether this is true or not, young agents can use it to their advantage. Use technology to get more clients and market yourself to clients as being on tip of the latest marketing trends.
Influence your friends: The sooner you start investing the better. If you are young you probably have young friends. While many of your friends may not be ready to buy houses or invest, you can show them the benefits of rentals. Not only might you sell some houses, but you can help your friends create a better future for themselves.
Better to find out sooner rather than later: What happens if you become a real estate agent at 18, work in the business a year or two and hate it? I think you are better off learning you don’t like the business at 20 than figuring it out at 25 or 30. The sooner you start the business the more time you have to figure something else out if you don’t like it.
More time: Many times the younger you are the more time you have to dedicate to work. The older you get, the more responsibilities you have with family, friends, and life in general. As a young agent, you have more time to commit to your clients and can, therefore, do a better job than many older agents who don’t have any extra time.
Conclusion
Being a young agent does not have to be a disadvantage. Some clients may look at your youth and assume you don’t know what you are doing. However, if you are confident and competent you can show them you do know what you are doing and they may not see age as an issue. The biggest problems with being young are only problems if you believe they are and that affects your confidence and how you interact with people.
Houses that need repairs often can be bought below market value. I base my investing strategy on buying houses below market value and financing those properties, which is not always easy. When you buy a house that needs repairs, many lenders will not lend on that house if the repairs affect the livability of the home. Whether you are an investor or owner occupied buyer, repairs can cause a deal to fall apart. This is why cash offers are so attractive to many sellers who have a house that is in need of work. If you are an investor or an owner occupied buyer there are ways to get a loan on a property when it needs repairs; even extensive repairs.
Why can’t you get a loan on houses that need work?
Most lenders will use FHA guidelines to decide what condition a home needs to be in order to loan on it. That means all major systems like the plumbing, electrical and heating need to be in working order. The roof needs to be in good condition and there cannot be any holes in the walls or floors. FHA used to require flooring to be in good condition, but that is no longer the case. All the carpet can be missing from a home and it will still go FHA. The tricky part is that not all lenders go with exactly what FHA requires.
An FHA loan is federally insured by the government and is a big reason why owner occupants can buy homes with little money down. Conventional loans are loans that are not federally insured or sponsored by any government agency. There are many types of conventional loans and many different requirements on conventional loans depending on who the lender is. Some conventional loans will require everything FHA requires, some less and some more. My lender will not require any repairs to be made on homes that are in horrible condition. If you have one conventional lender that will not loan on a home, that doesn’t mean another conventional lender will have the same guidelines.
There are other loans that are sponsored by the government like VA and USDA. Different states also have loan programs that will have varying requirements. Most government loan programs will have the same or stricter requirements than FHA.
Loan options for different sellers
There are many options to work through lender required repairs. Your choices will differ depending on if you are an owner occupant or an investor. The first strategy is to ask the seller to make repairs so the home is in livable condition. What situations allow the seller to make repairs?
Traditional seller
If a seller is selling a home for retail value, they usually expect to make repairs if the lender requires them. To get top dollar for a house you have to have it in livable condition. For those of us that want a great deal, we are usually dealing with sellers that want to sell quickly without doing any repairs. The better deal you are getting, the lower the chance the seller will make any repairs.
REO properties:
REOs are foreclosures that are owned by the bank. Some REO sellers will make repairs and some will not. The decision to repair or not is usually made on a case by case situation based on how much work is needed. Many REO sellers will say a home is sold in as-is condition, which indicates they will not make repairs. However, some REO sellers will still make repairs if required by the lender.
HUD Homes:
HUD will not make any repairs under any circumstance for lender required items. HUD does have a program to allow FHA buyers that I will discuss later. If you are an investor and your lender requires repairs to be made, you will have to cancel the contract or find a new lender.
Short sales:
Most short sale sellers do not have a lot of money. If you know a short sale needs work and your lender will require things to be done before closing, there is a great chance the work cannot be done. The sellers are receiving no money in most short sales and they don’t want to spend any more money on the house.
Auction sales:
Don’t expect to have any repairs done on auction properties. Properties that are sold at auction are almost always sold in as is condition and will not be repaired.
Know what the bank requires before writing an offer on a house that needs repairs
When you are shopping for a house you should have already talked to a lender and you should know what condition they will require a home to be in. If you are using a conventional loan on a HUD home and the water can’t be turned on, but your lender requires the water to be turned on, guess what will happen? The contract will fail. If a short sale needs $10,000 in work for you to get a loan, the deal will probably never go through. On an REO or a traditional sale, repairs may or may not be made by the seller. Don’t expect HUD or an REO seller to make repairs because your lender requires it.
What if you will live in the house?
If an owner-occupant wants to get a loan on a house that needs repairs, but the seller won’t repair the home; the deal is not always over. HUD offers a program for FHA buyers that allows them to escrow for repairs and add the repairs into the buyer’s loan. HUD’s program is called the FHA 203b loan. It can only be used on HUD homes and the repairs are less than $5,000. This escrow cannot be used on any other type of loan like VA or conventional. For repairs over $5,000, there is an FHA 203k loan that can be used on any house. This loan can have an unlimited amount of repairs but will take more time to close and have more fees. FHA loans are only available for owner occupants.
What if you are an investor?
An FHA 203k rehab loan is not available to investors, which makes it harder for an investor to deal with homes that need repairs. That doesn’t mean investors are out of luck when buying homes that need work. I buy homes that need a lot of work all the time and I get loans on almost all of them.
I use a portfolio lender that does not have any repair requirements for homes that I buy. I can buy houses with bad roofs, bad heating, and my lender does not even require the utilities to be on. Not all portfolio lenders have the same requirements with repairs, but many will work with investors much more than the big banks. My portfolio lender has saved many deals for investors and owner-occupants whose original lenders would not lend on a house because it needed too much work.
It is sometimes possible to escrow repairs. In some cases, you can escrow the repairs so that they are done after closing as an investor. The terms and chances of this happening all depend on the lender. Usually, the lender will escrow for minor repairs but may be hesitant to escrow for major repairs.
There is also a Homestyle Fannie Mae Renovation loan that investors can use to repair houses after they close. This loan is like the FHA 203k loan but meant for investors.
If you are an investor and your lender will not loan on a house that needs repairs and the seller will not make repairs; don’t give up. Search for a local portfolio lender who might have different guidelines and will give you a loan.
Hard money lenders
Another option for investors besides portfolio lenders is hard money lenders. Hard money lenders will be much more expensive than conventional lenders and they offer short-term loans; usually less than one-year terms. Hard money usually works better for fix and flips, because of the short loan term. Hard money lenders may be a decent short-term solution for rental properties, but you will have to refinance the loan very quickly.
Conclusion
Getting a loan on houses that need work is tough, but it is not impossible. An owner-occupant has many more options to buy houses in need of repairs, but an investor should be able to work around repair issues as well. Buying houses that need repairs is one of the best ways to get a great deal on an investment property.
My book Build a Rental Property Empire, goes over the BRRRR method, and, more specifically, financing properties that need repairs. It also covers how to find deals, finance rentals, manage them, and much more! It is available as a paperback and ebook on Amazon or as an audiobook on Audible.
Many people want to buy investment properties because of the fantastic returns they can provide. However, many people do not have the 20 percent down payment (or more) that most banks require. There are ways to buy an investment property with little money down. The easiest way to buy an investment property with less than 20 percent down is to buy as an owner-occupant and later rent out the house, but there are many other options for investors as well. Using a line of credit, refinancing your home, house hacking, the BRRRR method, or even credit cards can provide ways to buy investment properties for less money. Seller financing is a great way to put less money down on a rental property if you can find sellers who are willing. A more advanced technique is to use hard-money financing that you can refinance into a conventional loan. Whatever way you choose to buy a rental property, research the method to make sure that it is legal in your state, your lender approves it, and that you are not stretching your finances too thin.
How much money down do most banks require?
An investor will have to put down at least 20 percent to buy a property from a typical bank. If you own more than four properties, that figure can increase to 25 percent down, providing that they are even willing to finance more than four properties. On top of the down payment, an investor will have to pay closing costs, which can range from two to four percent of the loan amount. It is very expensive to buy an investment property using financing from a typical bank. I have found a great portfolio lender who will finance as many properties as I want with 20 percent down, but they are not easy to find. Once you factor in repairs, carrying costs, down payment, and closing costs it can cost as much as $30,000 to buy a $100,000 rental property.
The video below goes over ways to buy with little money down as well:
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How to buy as an owner-occupant
The easiest way to buy an investment property with little money down is to buy as an owner-occupant, satisfy your loan requirements, rent out the property, and keep it as an investment. Most owner-occupant loans require the buyer to occupy the home for at least a year. Once that year is up, you can rent out the house and turn it into an investment property. There are many owner-occupied loans available, with down payments ranging from 0 to 5 percent down. You can put as much money down as you want if you want to put 20 percent down or even 50 percent down. USDA and VA have great no-money-down programs and little to no mortgage insurance, which will save an investor a lot of money each month. You will have more costs with little money down loans because mortgage insurance is required. Mortgage insurance can add hundreds of dollars to your house payment and eat away at your cash flow. The process of buying as an owner-occupant and then turning the house into an investment property is as follows:
1. Buy a house as an owner occupant, which will cash flow when you rent it out.
2. Move into the house and live there for at least a year.
After the year is up, find another house that will cash flow and purchase that home as an owner-occupant.
4. Move out of the first house and keep it as a rental. Move into the new house and repeat the process every year!
Eventually, you will be building up equity and extra cash flow, which will enable you to buy properties with a 20 percent down payment. Repeating this process 10 times would be an excellent way to get started, but no one wants to move ten times in ten years. It can also be tough to convince your family to live in a home that would be a great rental.
Low down payment owner occupant loans
If you are going the owner-occupant route there are many loans available that have from very little to nothing down required.
FHA loan
FHA loans are government-insured loans that can be obtained with as little as 3.5 percent down. You can only have one FHA loan at a time unless you have extenuating circumstances like a job relocation. You do have to pay mortgage insurance on FHA loans, which I will discuss later in this article. There are limits to the amount an FHA mortgage can be, which varies by state and even city.
USDA loan
USDA is a loan that can be used in rural areas and small towns. The loan can’t be used in medium-sized towns or large towns/metro areas. The loan is a fantastic loan for those that qualify and want to buy a home in the designated areas. USDA loans can be had with no money down, but do have mortgage insurance as well.
VA loans
VA loans are run through the United States Veterans Administration. You have to be a veteran to qualify for the loan, but they also can be had with no money down and no mortgage insurance! VA is a great option for those that qualify because the costs are so much less without mortgage insurance.
Down payment assistance programs
Many states have down payment assistance programs. In Colorado, we have a program called CHFA. The program helps buyers get into owner-occupied homes with very little money down. CHFA actually uses an FHA loan but allows for less than a 3.5 percent down payment. Check with lenders on your state to see if you have any programs that help with down payment assistance.
Conventional mortgages
Even conventional mortgages have low down payment loans available for owner-occupants. For owner-occupants, conventional loans have down payments as low as 3 percent. You will most certainly have to pay mortgage insurance with any conventional loan that has less than 20 percent down. Unlike some of the other loan options available, you can have as many conventional mortgages in your name as you want as an owner occupant.
FHA 203K Rehab loan
An FHA 203K rehab loan allows the borrower to finance the house they are buying and repairs they would like to complete after closing. This is a great loan for homes that need work, but the buyer has limited funds to repair a home. There are more costs associated with this loan upfront because two appraisals are needed and lenders have higher fees for 203K loans.
NACA Loans
NACA is a non-profit program with:
No down payment
No closing costs
No points or fees
No credit score consideration
Below market 30-year and 15-year fixed-rate loans
This sounds like it is too good to be true, and it is a great program. However, you do not simply apply for the loan and hope the lender approves you. You must take classes, and even host classes when in the loan program.
More details are on the NACA site.
What loan costs does a buyer need to consider besides the down payment?
On almost any loan you will have more costs than just the down payment. The lender will charge an origination fee, appraisal fee, prepaid interest, prepaid insurance and possibly prepaid mortgage insurance. Plus you may have more costs the title company charges like a closing fee, recording fees, and possibly title insurance. In most cases, the seller pays for title insurance, but with HUD and VA foreclosures the buyer has to pay for title insurance. These costs can add up to another 3.5 percent of the mortgage amount or sometimes more. When you talk to a lender they can give you an estimate of exactly how much these costs will be before you get your loan.
Can you ask the seller to pay closing costs?
Even though the lenders and title company will charge you more fees than just the down payment, that does not mean you have to pay that upfront. You can ask the seller to pay closing costs for you. If you can get the seller to pay your closing costs for you, loans like VA and USDA may be obtained with no out-of-pocket cash. You may still have to put down an earnest money deposit, but that can be refunded at closing in some cases. When you ask the seller to pay closing costs, it reduces the amount of money they are getting from the sale so you might actually be paying more for the home than if you didn’t ask for closing costs. But in my mind paying a little more for the house and financing those costs to save cash is better than paying more money out-of-pocket for a little cheaper home.
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House Hacking
House hacking is when you buy as an owner-occupant but you buy a multifamily property instead of a house. By purchasing a multifamily property you can live in one unit while you rent out the other units. This strategy allows you to rent the property faster, which may mean the bank will be more willing to give you a new loan as soon as you are ready to move out. You will also have help from the other tenants to pay your mortgage. In some cases, you may be able to live for free while you own the house because the other rent covers your costs.
Virtual real estate
Yes, you can now buy virtual real estate! This is land in the metaverse that only exists digitally. Some pieces of virtual real estate have sold for millions of dollars and others can be bought for almost nothing. Here is some more information on getting started!
BRRRR Method
BRRRR stands for buy, repair, rent, refinance, and repeat. It is a great way to get into rentals with less money down. You will need to get an awesome deal to make this strategy work, but you may be able to get all of your money back. You buy a house that is an amazing deal, fix it up, rent the property, and then refinance it. Once the refinance is done you repeat over and over! The key to making this strategy work is getting an awesome deal with plenty of equity. You also need to be prepared if things do not go perfectly. Appraisals can come in low, the banks may not want to finance you, you may not get the property rented or repaired as fast as hoped, etc.
Hard money loans
Using hard money can save you a ton of cash in the short-term, but it is more expensive in the end. Fannie Mae lending guidelines, allow you to refinance a home with no seasoning period, which means you do not have to wait six months or a year after you purchase a home, to refinance at a higher value than what you bought it for. Fannie Mae guidelines base the refinance amount on a new appraisal, and they will allow a 75 percent loan-to-value ratio. Fannie Mae guidelines do not allow a cash-out refinance, but they do allow the refinance to pay off any existing loans. Many hard money lenders will allow a buyer to borrow up to 100 percent of the purchase price and to finance repairs as well.
Since Fannie Mae guidelines allow a 75 percent loan-to-value refinance, theoretically an investor could buy a home for $100,000 and get a loan with a hard money lender for $100,000 plus $30,000 in repairs for a total loan amount of $130,000. The investor could refinance the home for as much as 75 percent of a new appraisal. If the appraisal came in at $180,000, then 75 percent loan-to-value would allow a refinance of $135,000. Fannie will not allow a cash-out refinance, but the investor could refinance the full $130,000 loan amount. This strategy can be costly due to hard money fees, but it allows the investor to refinance the entire purchase price and repairs!
This strategy can also be very risky because you are depending on a high appraisal to get your money out. Most hard money loans are only one year and you must pay off the loan after that year. Refinance appraisals are not always as high as we would like them to be. Make sure you have an exit strategy if the appraisal comes in lower than you expect.
Private money loans
One legitimate way to buy real estate with no money down is to use private money. Private money is from a private investor, friend, or family member. The private investor will give you money at a certain interest rate to buy a flip or rental property. Private money rates can vary from very cheap to very expensive depending on the relationship, investment, and terms of the loan. I use private money from my sister for my fix and flips. She charges me six percent interest. It is a great way to reduce the amount of cash I have into the properties.
I have used private money to buy commercial rentals and then refinance into a long-term loan with a local bank.
Can being a real estate agent help?
There are many advantages to having your real estate license, but the biggest benefit is you can keep your commission on almost every house you buy. On a $100,000 house, your commission could be $3,000 dollars or more. Here is an article that details why it is an advantage to become a real estate agent if you are an investor. Being a real estate agent also gives me an advantage in finding and purchasing great deals. I detail how hard it is to get your real estate license here. I saved more than $270,000 a year on commissions by being a real estate agent. That does not include the money I made on deals that I got because I was an agent.
Turnkey rentals
A new trend in the US is buying turnkey rental properties that are purchased, repaired, rented, and managed by a turnkey provider. Turnkey properties are a great opportunity for investors to buy rental properties out-of-state when homes are too expensive in their area. There are turnkey providers who offer as little as 5 percent down for investors, but they tend to have very high-interest rates. Here is a great article about turnkey providers or send me a request here for turnkey providers I know of. I bought a turnkey rental in Cleveland a few years ago.
Line of credit
I have had many lines of credit in my career. I have had lines of credit against my personal house (the house I live in) and my investment properties. It is much easier to get a line of credit against your personal house and some banks will not even offer lines of credit on investment properties. A line of credit is basically a loan against a home, but you do not have to use the money all the time. If you do not need the money you can pay it back to the bank and not be charged interest on it. When you need the money again, you can borrow it very quickly as long as the line is open.
Off-market properties
Off-market properties are purchased through direct marketing or by word of mouth. Buying off-market usually means less expensive properties and in some cases, owners with flexible terms such as owner financing. Many investors wholesale off-market properties, which you can purchase with no down payment. Wholesaling is a process of buying and selling properties very quickly. The properties must be very good deals and are usually found by direct marketing for properties. Many investors make a great living by only wholesaling properties to other investors.
Seller financing
Some sellers may be willing to finance the house they are selling or finance a second loan on a home that allows a buyer to put less than 20 percent down. If your bank is willing to offer 80 percent loan-to-value, the seller may offer to loan the other 20 percent, which would amount to no money down for the buyer. The seller may also offer a number of other loan-to-value percentages to help a buyer get into a home for less than 20 percent down.
Finding seller-financed properties is the tricky part. Most sellers are not looking to finance a loan when they sell. To find seller financed listings, look for homes that have no loans against them or an MLS listing description that say seller financing is available. The seller’s terms can vary greatly depending on how desperate they are to sell and what exactly they are looking to get out of the deal. Do not expect to pay four percent interest on a seller-financed loan; they will want a premium on any money they lend. It is also harder to find great deals with seller financing, which is key to my strategy.
There are many new restrictions on financing thanks to the recent Dodd-Frank Act.
Refinance
In most areas of the country, home values are rising and interest rates are at record lows. You may be able to refinance your home and get enough money to buy an investment property. Once you are able to buy an investment property, you can refinance it in one year (sometimes less with the right bank). With rates as low as they are, if you bought the home below market value, you should be able to take out as much as you put into the house and still cash flow. I use this refinance technique all the time. Getting lenders to do a refinance is tricky when you own multiple investment properties. I use a portfolio lender who has allowed me to use a cash-out refinance on as many properties as I want.
Below is a property I refinanced:
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Move in ready Houses
A move-in ready property means all the repairs are completed and it is ready to rent as soon as you buy the home. There can be many advantages to buying a nice home. The biggest advantage is you do not have to pay for repairs. You also do not have to spend time waiting for repairs to be done, which saves money on mortgage payments, utilities, and other carrying costs. The downside of a move-in ready property is that it is usually more expensive and provides less cash flow than a home that needs work.
Credit cards
A few other ways to get quick cash can be very expensive and are usually reserved for people looking to do a quick flip. If you have a killer deal you cannot pass up, you may want to consider these options, but I do not recommend using them unless it is necessary. The easiest way to get quick cash is with credit cards. You can get a cash advance or pay for repairs using your credit card. If you use a credit card to finance your down payment or repairs and cannot pay it off right away, do not pay the 17 percent interest rate. Do your best to get another card that will allow a balance transfer. Many times, you can transfer all of your balance and pay little to no interest for up to a year. That may give you enough time to pay off the card and not to be stuck with a high-interest rate eating all of your profits. I also suggest using a rewards card for repairs on your investment properties. If you pay the balance off every month, this is a great way to make a little extra money.
Self-directed IRA
If you have money invested in an IRA, you are not limited to investing in stocks or mutual funds. There are special self-directed IRAs that you can use to purchase an investment property. You can use your IRA for down payments and repairs and then collect rent in the IRA.
401K
Some 401ks allow an investor to take out a loan against them. You usually have to pay back the loan relatively quickly and pay interest on the loan. You have to be very careful when borrowing from a 401k because the money you borrow is no longer earning interest or growing in your retirement fund. If you lose your job, you also may be required to pay back the loan within 60 days or pay a 10 percent penalty and income tax on the loan.
Subject to loans
With a subject to loan, you buy a house without paying off the previous owner’s mortgage. This is another tricky situation; investors must be very careful with it. Most bank mortgages are not assumable; when the homeowner sells the house, they have to pay the loan in full. The bank most likely will have a due-on-sale clause that says the loans must be paid in full, once the property transfers ownership. With subject to loans the new investor buys a house subject to an old mortgage and does not pay off the loan. There is a chance that the bank will require the loan to be paid off if they find out that the home has been sold.
Investors buy homes subject to a mortgage so that they do not have to get a new loan. It may be hard for the investor to qualify for a mortgage or they may be maxed out on being able to get new loans. If you buy a home for $80,000 that has a $75,000 mortgage in place, the investor would only need $5,000 to buy the house instead of the normal 20 percent or more.
Fannie Mae Homepath program
The Fannie Mae Homepath program on their REO properties allows investors to put only 10 percent down and allows up to 20 financed loans in one person’s name, which is also a huge bonus. It is very difficult for many investors to get loans on more than four properties.
This program has been discontinued.
Conclusion
Rental properties can be expensive, but there are ways to purchase them with less than 20 percent down. If you are short on cash, buying properties with little money down can accelerate the purchasing schedule and increase your returns. However, you will most likely make less money on each property, because borrowing that last 20 percent can be much more expensive than the first 80 percent.
My book Build a Rental Property Empire, goes over how to buy investment properties with little money down. It also covers how to find deals, finance rentals, manage them, and much more! It is available as a paperback and ebook on Amazon or as an audiobook on Audible.