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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.

Build a Rental Property Empire

Categories Rental Properties

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Maybe you just graduated college, or you scored your first “grown-up” job, and now you’re looking for a car that suits your transportation needs. Whatever your situation is, there are a lot of factors to think about before purchasing your first car — the most important one being your budget. Be sure to consider these five things to help you decide whether you can fit the cost of a car into your new monthly budget.

1. Your income

The most important factor that affects your bottom line when it comes to purchasing your first car is your monthly income — especially if you’re buying a brand-new ride. Car payments can be pretty hefty, and if you’re not sure about what you can foot out of pocket each month, it can spell trouble down the line.

It’s a good idea to pay as large a down payment as you can comfortably afford so that you can score lower monthly payments. Experts recommend a down payment of at least 20 percent of the vehicle’s total cost.

Before you head to the dealership, think hard about how much you can realistically budget for your car payment each month, in addition to how much you can set aside for routine maintenance and repairs. Even if you’re buying an older, inexpensive car without a monthly payment, it’s still imperative to have some savings in case issues crop up.

2. Your credit score

If you’re new to this whole “being an adult” thing, you might not have much credit. But establishing a solid credit score is crucial to your car budget, since it directly affects your interest rates when financing your first vehicle. Scoring a good interest rate can save you hundreds — if not thousands — of dollars.

If you don’t have any credit, or you have a credit score that needs some improvement, be wary of dealership salespeople who may try to talk you into a longer financing term. You’ll end up paying significantly more interest over the course of the term, which can negatively impact your future finances.

3. Your financing options

If you’re not purchasing your first car outright, you’ll have to finance it in some way. It might seem strange to shop for loans before you go car shopping, but it’ll give you a better idea of what kind of interest rate and loan amount you can expect once the time comes to secure a financing option.

Compare rates from your bank or credit union to other lenders to see who offers the best option for you. If possible, it’s smart to get pre-approved for financing before you walk into the dealership — that way, you know the cards are stacked in your favor.

If you have little or no credit, you may find that it’s best to wait on your car purchase until you’ve improved your score so that you can get a better interest rate. You’ll be able to better afford your vehicle in the long-term.

4. Your research

While researching cars that you’d like to take a look at and test drive, it’s wise to focus on practicality versus the latest sports car. In other words, prioritize what you absolutely need out of a vehicle rather than what you want. This keeps your car payments lower and helps reduce other ownership costs, such as routine maintenance, repairs and fuel expenses.

Look for vehicles that have a solid track record of safety, reliability and inexpensive maintenance. Reference trustworthy sources, such as Edmunds.com, Kelley Blue Book, J.D. Power and Consumer Reports, to find honest reviews and helpful information.

Make sure you also compare prices across multiple dealerships for each vehicle you’ve got your eye on to ensure you get the most bang for your buck.

5. Insurance rates

Once you’ve narrowed down a list of vehicles to shop around for, call around or go online to compare car insurance quotes for each one. It’s key to incorporate your monthly insurance cost into your budget. Not only is liability insurance required in the vast majority of states, but most lenders also require that you carry comprehensive and collision coverages (a.k.a. “full coverage”) for the life of the loan.

To get the most accurate auto insurance quotes, there are a few pieces of information you should have handy:

  • Year, make and model of each vehicle you’re getting quotes for
  • Your social security number, which allows insurers to pull your credit-based insurance score
  • Your driving record and insurance history (if you have one)
  • Your coverage and deductible needs, plus any optional coverages you’d like to carry
  • Purpose of the purchase — whether you’ll be using the car for business, commuting or pleasure
  • Safety and security features on each vehicle, which can score you discounts
  • Vehicle identification numbers (VINs), if possible
  • Address where you’ll be garaging the car (usually your home address)

Though this may seem like a lot to consider when deciding how to include your new car purchase in your monthly budget, it’s best to think about these things ahead of time. You’ll be sound in your purchasing decision and sound with your finances — a win-win!

Haden Kirkpatrick is the director of marketing strategy and innovation at Esurance, where he is responsible for all initiatives related to product and service innovation. He manages the annual planning processes for the marketing and service business units. Haden is an innovator who is constantly thinking about how IoT, blockchain and machine learning will impact the insurance industry. He is also a mobile guru, aspiring yogi and mixed martial artist.

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Is Facebook the IPO of a generation? The much-anticipated initial public offering of the world’s most popular social networking site, Facebook, took place this morning on the NASDAQ. With it, the dreams and technologies of the millenial generation have taken root as a core part not only of American society – but of its formal economy.

Already, Facebook bears the distinction of having the largest market valuation of any US company at IPO at $104.1 Bn. That’s no small feat for a company that didn’t even exist eight years ago. The offering, which was originally priced at $38 per share, has “popped” to over $42/share as of the time of writing, creating over $16 Bn in value for the company. That could grow to $18.4 Bn, making it also the largest initial share offering in US history.

But all these big numbers aside, the Facebook IPO is also the hallmark of the new economy. Facebook doesn’t make anything, and its users aren’t even buying any products or servics (with the exception of some gaming functions), but most people still believe it has great value. The power of connectedness – and the technologies that enable us to share and display information across our network – has now taken root.

That, some analysts say, explains in part the $1 Bn Facebook paid for photo-sharing startup, Instagram last month: Sure, Facebook could’ve created a competitor, but Instagram was already growing to be hugely popular – and it’s a bit harder to convince an existing social network to migrate. It also helps explain the company’s big gains in advertising revenue (and its price to earnings value). It’s the network itself, that has value. Advertisers can use it to pinpoint people based on preferences in a more targeted fashion. It’s also a place where people are more tuned in; people care more about their friends’ lives than tv, and the power of social networking holds values for individuals and companies, alike. Ever heard of the term “going viral”?

In the end, we’re all part of social networks, whether we use applications like Facebook, or not. But it took a Harvard student in his dorm room to harness that power for the market.

What’s your take? Is Facebook the IPO of a generation? Will you “like” the social network by investing in its stock?

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One of the subjects we talk about most frequently on The Financial Diet, and have been hearing about at every stop of our book tour with Mint, is dealing with debt. It’s one of those things that can loom over a person like a sad, dark cloud from a ‘60s comic strip, making everything they do feel like more of a challenge (and more of an obligation), even things which the debt doesn’t technically effect. We recently heard from a viewer on our YouTube channel, who wrote in asking for advice in dealing with her massive student debt from an emotional perspective. (It weighs on her so heavily that she panicked in the middle of an otherwise-great date, overrun with the fear that he would find out that she is basically strapped with a mortgage-worth of loans and no clear way to pay it off before she’s near retirement age.) It’s one of those questions that doesn’t just remind you of how all-consuming debt can be, but shows that the real issue for most people day-to-day is the emotional side of it: the anxiety, the shame, the guilt when doing anything that feels “frivolous,” which, when you’re paying off six figures of debt, can entail essentially anything else in life.

TFD is a place where the personal side of money is always explored first, and debt feels like one of the most crucial places to speak with a much more emotionally nuanced language. Because ultimately, if we don’t look at these decisions in terms of their human meaning — if we don’t think about what each dollar means to us in terms of joy, future value, and peace of mind — the numbers on a loan statement or in our bank accounts can start to feel simultaneously overwhelming and meaningless. When I asked TFD readers for their debt stories (both living with it and repaying it), one reader wrote to me,

“I used to think of my debt in terms of ‘the biggest mistake I ever made.’ I’m one of those sad statistics: someone who got a really expensive graduate degree and basically doesn’t use it. I was on several different debt repayment plans throughout my 20s that made me feel hopeless, and because of the field I work in, I knew that there wasn’t going to be a light at the end of the tunnel in terms of having more money for basically the rest of my young adult life. I watched all these big dreams I’d always had — a house, kids, semi-frequent travel — go Slam! Slam! Slam! Like doors in the hallway of my life.

When my dad died, I went to a therapist for the first time in my life to talk about my relationship with my mother, because I wanted it to improve in his absence. We ended up talking primarily about my debt, and working with [my therapist] was the first thing that really changed my view on it. She taught me that rather than constantly beating myself up about having made that choice at 21 is pointless, and that I should look at it as an Value-Neutral Truth of my Life. I owe money, but it is not who I am. The money I spend repaying it is not money I am robbing myself of, it was never mine to begin with.”

And maybe that’s one of the most key elements of the “getting out of debt” equation: realizing that, ultimately, this money you owe is totally value-neutral. No matter your individual strategy to pay off what you owe, the endeavor can’t be an emotionally-loaded one. When I finally paid off the credit card debt that had tanked my credit at 18 years old and haunted me for several years after, I was only able to do it because I’d stopped running from it, and stopped fearing it. I’d stopped dodging the collection calls, stopped feeling an acute feeling of embarrassment any time a remotely financial subject arose, stopped thinking of all the things I was excluded from doing because of my absurdly-low credit score. I became cold about it, because ultimately, a few numbers on a sheet of paper are a cold thing. I made a conscious choice that “freedom from this debt, and a rehabilitated credit score, are more important to me than this other stuff I’d like to buy with the money I’m using to pay it off.”

But part of that becoming “neutral,” emotionally, about your debt, is realizing that the life you might be constantly (even unconsciously) reaching for — the life of someone at your income level, but without your level of debt — is something you can’t constantly be fighting against. If your taste level is somewhere you can’t afford, and your brain is perpetually convincing you that you “deserve” the things that will cost you debt repayment, you are destined to feel deprived and bitter. One of the readers who wrote about her personal repayment story put it this way,

“We poured nearly all of our expendable cash made into our debt (while setting aside some for an emergency fund). This strategy contrasted pretty heavily with all of our peers who, for instance, were enjoying $500 dinners at Alinea and purchasing extravagant handbags to celebrate their new jobs. This extends beyond just controlling spending to also adjusting our standard-of-living – our housing situation is fairly low key and costs well below our means. But hey, as of today, we are actually an entire year debt-free!

Our strategy was far from perfect and had a lot of drawbacks. We were cash-poor for that period of time in which we were working shiny new jobs, and we of course wanted to celebrate that as much as the next person. So it required real discipline on the spending front. But overall, I am really proud of our work. Now we now feel incredibly free to leave our high-paying but extremely time-intensive and, let’s be real, boring, jobs and can pursue things we find interesting.”

Making the choice to live below your means requires an active rewiring in your mind, a resolution that where you are living is not “below” anything at all, but rather exactly where you need to be to accomplish what you want (in this case, getting rid of your debt). And while that approach might feel cold or detached on its surface, it’s really just an acknowledgement of all the fraught emotion that is usually such a huge part of this process, and actively deciding to reject it. (Similarly, the hit that Lauren and I took when we left our stable, decent-paying jobs and decided to start a business required a recalibration of what we felt our lives should look like.) But getting steadfast about that shift means that you don’t have to live under its thumb in terms of guilt, shame, or resentment. Living with your parents to maximize debt repayment, or going to community college to save money (raises hand!), or making any other decision that someone might judge on its surface but which is deeply right for you is the only way to live. Because you are ultimately the person who needs to live in your life, with your bank account, and within your day-to-day budget. Debt does not have to be that dark cloud, but in order to blow it away, you have to acknowledge it for what it is, head-on. You have to look in the face of all that fraught emotion, choose to laugh at it, and choose to move forward with your life.

Chelsea is the co-founder of The Financial Diet, a media company for women who want to talk about money. She tweets.

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Recently on the mint.com Facebook page, a reader asked a common question:

Any investments for people with very little money to invest?

Normally, my response to this is the one nobody wants to hear: put the money in a savings account or savings bond, check out a book about investing from the library, save more money while you read the book, and start investing once you have the $1000 minimum to open an account at a big mutual fund house like Schwab or Vanguard.

I stand by that advice. (My favorite introductory investing book is Elements of Investing, by Malkiel and Ellis.) But it doesn’t actually answer the question, does it? Maybe a kid wants to invest a $100 birthday check from Grandma, or maybe you want to get started on retirement savings right this second, before you change your mind.

Those are good reasons. Twenty years ago, the answer would have been depressing: you could buy a couple of shares of stock in a company or two, and pay a hefty brokerage fee for the privilege. You’d be down a few bucks from day one (thanks to the fee) and dangerously undiversified.

Technology and years of brokerage price wars have changed all that, to the point where, for less than fifty bucks, you can buy a fully diversified portfolio of thousands of stocks and pay pennies in expenses. So I went looking for an online brokerage that treats the low-dollar investor right. These were my criteria:

  • No minimum opening balance—in fact, no minimum balance, period.
  • Access to diversified, low-cost, commission-free stock and bond ETFs. (“Commission-free” means you can buy and sell them without paying a fee.)
  • No other fees. If you’re investing $100 and get slapped with an $8 fee, you’ve just lost 8% of your portfolio.
  • Choice of IRA, Roth IRA, or taxable account.

This is a pretty strict list of demands. There are a lot of discount brokerages out there, but this narrows them down to two. This is not to say these are the best brokerages overall, just that they’ll take you in and treat you right if you only have a single Benjamin.

Let’s go investment shopping

The two finalists are:

TD Ameritrade. Offers over 100 commission-free ETFs including top brands like iShares and Vanguard. For $100 you can buy two shares of Vanguard Total World StockETF (VT). When you buy a share of this ETF, you literally own a tiny slice of over 3500 stocks from companies the world over.

Want to add bonds? TD offers plenty of good bond funds, too, like iShares Treasury Inflation-Protected Securities ETF (TIP) and Vanguard Total Bond ETF (BND). Bond funds tend to cost a little more per share than stock funds, but still, for under $200, you could buy (prices as of May 2, 2012):

VT (2 shares): $95.40
BND (1 share): $83.69
Total: $179.09 (53% stocks/47% bonds)

It would be hard to come up with a much better portfolio than that, even if you were investing a million dollars.

Firstrade. Offers 10 commission-free ETFs. Sure, TD has ten times as many free ETFs. But it only takes a couple of good ETFs to build a solid starter portfolio. Among Firstrade’s offerings, I like the iShares S&P 500 ETF (IVV), which holds the 500 biggest US companies, and the Vanguard Intermediate-Term Bond ETF (BIV), which invests in high-quality corporate and US government bonds.

Unfortunately, the iShares ETF breaks the bank: its share price is over $100. My second choice is the Vanguard Dividend Appreciation ETF (VIG). At only 134 stocks, it’s not as diversified as the iShares fund, but your portfolio isn’t going to be stuck at $100 forever, and VIG is a perfectly respectable introduction to the ups and downs of stock market investing.

One warning: when you buy a commission-free ETF at TD or Firstrade, you have to hold it for 30 days before selling or pay a hefty fee. Since you’re putting this money away for the future, and “the future” isn’t going to be here two weeks from now, I trust this won’t be a problem.

What are you waiting for?

You hear people complain that the deck is stacked against the small individual investor. Well, there has never before been a time when the small investor could get into a fully diversified portfolio for under $200 without paying a dime in brokerage fees. Plus, you can do it all in a few minutes in your pajamas.

Guess it’s time for me to update my advice.

Do you have a question for one of the MintLife experts? Head over to the mint.com Facebook page and ask away!

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.

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Last Updated on March 29, 2023 by Mark Ferguson

I have many big goals for 2017, and I had a very eventful and exciting 2016. I made many big goals for 2016, some I reached and some I did not. I never get disappointed when I do not reach my goals, because I know I do better with big goals, rather than easy goals. I also know I have to adapt and change my goals as the year progresses, because things happen I cannot predict. Goals have been a huge part of my success and what propelled my career as an agent and investor about ten years ago. Every year I write a post about my goals for the new year, and how I did in the previous year. This helps me be accountable and more successful.

My goal articles for other years

How did I accidentally start making goals in 2006?

I made a whopping $28,000 in 2006 as an agent and flipping houses with my dad. It was not a good year for me for a number of reasons. That year I decided to do much of the work myself on a flip, which was a huge mistake. When I did that flip it was incredibly stressful and ended up costing me money because it took so long. I was too busy to sell houses or finding new houses for us to flip. I had a lot of credit card debt and I knew something had to change. I decided to write a letter to my dad who ran our team, which detailed why my pay structure was not fair. I ran a bunch of numbers showing how many houses I would have to sell to make as much money as other people on our team, and how ridiculous it was. At the time I was selling less than 15 houses a year, and my letter explained I would need to sell over 100 houses to make the money I thought I was worth.

My dad was not very impressed with my letter, but writing it put a plan in my head.  I wondered if I could sell that many houses. What if I stopped depending on others to make me successful, and did it myself? I had accidentally created goals for myself, even though in the past I had always resisted setting any goals (most likely because I was afraid I would not achieve them). Shortly after writing that letter I decided to become an REO agent. I sold 50 houses two years later, and a few years after that sold 200 houses. Because of the money I made in REO, I was able to buy 16 rentals, flip many more houses, and buy out the real estate team from my dad. I also learned how important it was to set goals, be positive, relax, and plan my life. I wrote a book that goes over everything I do to be successful: How to Change Your Mindset to Achieve Huge Success: Why your attitude and daily habits have more to do with making more money and having more freedom than anything else.

What were my real estate goals for 2016?

Below are summaries of my 2016 goals.

  • Rental property goal: Buy 10 rental properties in 2016.
    • Refinance 8 of my rentals.
    • Find a new portfolio lender.
    • Find a new market to invest in.
  • Fix and flip goal: Flip 20 houses in 2016.
    • More financing options from private money and lenders.
    • Refine the repair process.
    • Find more houses to buy.
  • Real estate team goals: Sell 200 houses in 2016.
    • Get more leads from our website.
    • Hire at least one new awesome agent.
    • Use Facebook more to generate leads.
    • Generate more leads through house flips.
  • Blog goals in 2016: Increase traffic and publish a new book.
    • Focus on how I can help people the most.
    • Create a paperback book on rental properties.
    • Get more focused on core activities.
  • Personal goals: I had some personal goals not specific to 2016.
    • Buy an Aston Martin V8.
    • Buy an old plantation and fix it up.
    • Start a car dealership.

How did I do on my rental property goal for 2016?

I bought zero rental properties in 2016! I wanted to buy 10 rentals in 2016 to catch up on my goal to buy 100 rentals by 2023. However, buying rentals in Colorado has become impossible if I want to come close to cash flowing as I did in the past. I did look at buying rentals in another state and even went to Florida to check out a couple of markets. I liked the markets but never bought anything in the area. I have developed some new goals that involve local investing in Colorado, but not with single-family rentals. I do not feel bad for missing my goal by so much, because I did not want to force bad investments. I even sold a couple of rentals that I thought were not performing as they should. I have some new and exciting plans regarding rentals for 2017 that involve local investing again.

How did I do with my fix and flipping goals for 2016?

I sold 18 flips in 2016, which was just shy of my goal to sell 20. I am very happy with that result as it almost doubled what I did in 2015. I love coming up just short of my goals because I am pushed to work hard until the very end of the year to achieve them. I never feel bad for not reaching a goal, because I know I do better with goals than without them. The ultimate point of a goal is to do as good as you possibly can, not to achieve that goal.

  • I found more financing in the form of new private lenders and a new local bank.
  • I have a much better repair process in place and even hired a full-time handyman. Nikki True became my project manager and has done an awesome job. I hired a project manager in 2015, who did not do an awesome job and really set me back.
  • I found a local wholesaler to buy houses from and bought a house from the local foreclosure sale, which I had not done in years.

How did I do on my goals with the real estate team?

My real estate team did not sell 200 houses in 2016, we sold about half that. Again, I am not disappointed, because the average dollar amount of the houses we sold went up. Colorado also has an incredibly hot market causing HUD homes and REO properties to virtually disappear. When I sold 200 houses a few years ago, I sold those almost all myself. It was a lot of work, but now my team sells almost every house freeing up my time. Justin Gesso has done an awesome job managing the team. We also have the lowest inventory of houses for sale we have ever had in our market. It is hard to sell many houses when there are no houses for sale! I also made progress on my other goals with our team.

  • We are getting many more leads from our website for our agents. We have not been able to get much traffic from Google searches, but we have done great with Facebook advertising.
  • We hired a new agent, who did not do very well. We hired another agent who has been doing amazing. We also have another new agent joining our team this month, who I think will do very well.
  • My agents sold a few of my flips in 2016 as well, which made them money and made me more money. We have been doing a great job of generating leads with the flips before and after they are listed for sale.

Did I reach any of my goals with my blog?

I did not reach my traffic goal with my blog, but I was not spending as much time on the blog this last year as I planned too. The flipping business required a lot of my time, but I did still reach some goals. I was able to publish: Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely. The book did incredibly well, was an Amazon best-seller, one of the top ten Amazon real estate books most of the year, was published in paperback, and as an audiobook. I also published three other books in paperback and wrote another book on the attitude and mindset that I mentioned earlier. I have been less scattered with the blog.

How did I do on my personal goals?

I did not reach any of my personal goals that I posted last year. I did not buy any new cars, a plantation, or start a car dealership. However I reached some personal goals that are too personal to post online, and I have some big plans for the next year!

What are my real estate goals for 2017?

I had some really big ideas in 2016 that I think will make me much happier and more successful in the coming years. I have done well with the flips, but I think they can do even better. I have done poorly with the rentals, but I know I can change that. My team can make some big improvements as well with the blog.

Rental property goals for 2017

I do not have any specific goals for the number of properties I want to buy in 2017. I have changed my strategy, and want to buy a large commercial/industrial building in my area. I may still invest out-of-state in the future, but for now, I am focusing on a new strategy. I want to buy a 50,000 square foot or larger building that I can split into 5 units or more. I can rent out those units, have space for my own cars and building supplies, and add value through improvements and increased rents. I have looked at many buildings already, and I feel this is the best option for rentals at the moment.

Fix and flip goals for 2017

I want to sell 30 flips in 2017, which would be 12 more than I flipped in 2016. This may seem like a huge jump, but I have 16 flips in my inventory right now. I should have all of those properties sold by July, which means I won’t have that far to go the second half of the year. I have the money lined up, I have been able to find that many properties, and I have my repair process in place to flip 30 houses or more a year.

Real estate team goals for 2017

I keep making a goal to sell 200 houses with my team and coming up way short. I still think we can sell that many houses, and we have the team in place to do it. We are also adding at least one more agent at the beginning of the year. My goal again is to sell 200 houses in 2017 and one of these years I will hit it! I have some other really big goals and ideas for my team, which I cannot share publicly yet.

Blog goals for 2017

For the blog I want my traffic to increase, but I am not focused on that this year. There are so many things out of my control with Google, and that is where most of my traffic comes from. I really like writing books, even though it takes a lot of work and time. When I write a book, it is very similar to a rental property the way it produces passive income. While I did not buy any rentals in 2016, I increased my passive income greatly with my books. I am writing another book on the basics of buying and selling houses, which hopefully will be out in the next couple of months. I am still working on another book with a partner, which will be out this year. I want to hire some more people to help with the blog so it is not taking up quite as much of my time. I will continue to write, but I want someone else to handle some of the other aspects.

Personal goals for 2017

I still want to buy an Aston Martin V8, but they have shot up in price like my Diablo. I also want to buy a Countach, a Mercedes SLS, a Ford GT, and many other cars! I cannot buy everything or anything at the moment, because I am out of garage space. I also have some big ideas regarding my personal goals, and the big building I want to buy. I cannot disclose them all right now, but hopefully, I can shed some more light on them later in the year. The good news is that values on some cars are starting to decrease a little, but I do not want to make a goal to buy one in 2017, because of so many other things going on.

Conclusion

2016 was an exciting and fun year, even if not exactly as I planned. I hope to continue much of the projects I started in 2016, and start some brand new ventures. I know I was not as detailed about my goals for 2017, but I can talk more about them as the year progresses. If things go as planned, it will be an awesome 2017!

Remember to set big goals for yourself, and not to be afraid of missing them. Goals are there to motivate us and keep our minds focused on what is really important.

Build a Rental Property Empire

Categories Money

Source: investfourmore.com

Apache is functioning normally

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Whether you’re getting married, putting your teen behind the wheel for the first time, or buying your first home, a big life change can have a ripple effect on your finances.

While it might not be top of mind, one of those effects could be your car insurance. There’s a lot more that goes into calculating your rates than the standard questions about age, gender, and driving record. When you hit a major milestone in life, your new status can impact those rates in unexpected ways.

Here are five events that might trigger a change in your insurance.

1. Getting Married

Good news for honeymooners: in most cases, being married will lower your car insurance rates! Adding a partner to your insurance could spell savings for your household, especially for younger couples. It turns out that married people are less likely than single people to get into accidents. Ah, the perks of true love.

2. Buying a Home

One of the biggest milestones in life is buying your first home. While homeowners coverage is a must, becoming a homeowner might actually affect your car insurance, too.

Like married people, homeowners tend to see better rates on car insurance. Those savings could be even higher when you bundle your auto and homeowners policies with the same insurer (not to mention more convenient).

Buying a home also means that you might want to take a look at boosting your auto coverage. Look for polices that protect your assets and take care of legal costs-bodily injury, uninsured/underinsured motorist bodily injury and property damage are your best options. As you build up equity in your home, you’ll want to make sure your investment is safe, no matter what happens.

3. Adding a Teen Driver

As nervous as you may be to see your teenage child in the driver’s seat for the first time, you’ll feel better when they’re protected under your insurance policy.

Teen drivers need to be covered as soon as that driver’s license is in their hands. Your rates will probably increase, because this age group has much higher accident rates than older drivers, which makes them riskier to insure.

However, there are a few things you can do to help keep your rates low. For instance, when you add your teen to your policy, check to see if you qualify for a multi-driver discount. Likewise, if your teen has his or her own car, you could get the multi-car discount. Good students can help lighten the load as well. Many insurers offer discounts to young drivers who keep their grades up.

4. Getting Divorced

If you and your spouse are parting ways, it’s important to make sure both of you-and any dependents you might have-are still covered.

Once you’ve divvied up the cars, you and your ex will need to get separate policies. The change in circumstances makes this a good time to comparison shop, especially because you may be losing out on discounts you enjoyed as a married couple (for instance, a multi-car discount).

If you’ll be sharing custody of teen drivers, check with your insurance company to find out whether you both need to list your teen on your policy-and factor that into any quotes you get.

5. Getting a Raise

Now that you’ve got a little extra cash in your pocket (and perhaps some financial benefits, like stock), it’s time to take another look at your policy. Consider upping some of your coverages, like bodily injury and property damage, to make sure that if an accident happens, your income (and growing savings) will be protected. These policies cover medical bills as well as legal fees if someone involved decides to sue. Putting a little extra money toward your premium today can pay off big time down the road.

During a major life event, there’s a lot to think about. If you need help figuring out how to handle the big changes (insurance-wise, that is), talk to your insurer to make sure you’re adequately protected-and getting the best deal possible.

Eric Madia is Vice President of Product Design at Esurance, where he is responsible for designing the company’s personal lines products. Eric has 23 years of experience in the industry, focused primarily on underwriting, pricing, and product innovation. You can follow him on twitter @Erictheactuary.

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Apache is functioning normally

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Once a month, I meet up with some smart people in my neighborhood to drink coffee and try to stave off mental decline by talking about hard financial topics: macroeconomics, taxation, and sometimes even something useful, like investing. It’s like Facebook chat, only you can smell the other participants.

At our last meeting, the topic was active vs. passive investing. Before we could get into that debate, however, we had to define our terms. I was arguing the passive investing side, which meant I had to come up with a definition of passive investing. This proved to be a lot trickier than I thought, and more fun.

I’m not going to get into the passive vs. active debate in this column. I just want to see if I can figure out what we’re talking about before I wade into that debate in the near future.

“What is passive investing?” may seem like an arcane question that nobody but latte-fueled intellectuals should care about. On the contrary, pal: if you’re saving money for the future, deciding whether to take an active or passive approach is among the most important decisions you’ll make.

Who’s active?

Active investing, as I define it, means trying to beat the market over a particular time period using one or both of the following strategies:

Security selection. This is a fancy term for buying the right stocks (or bonds, or funds, or any other asset) and avoiding the wrong ones. It means having the foresight to buy Apple in the pre-iPod days and not to buy Netflix on the day after its IPO.

Market timing. Markets gyrate. If you can correctly predict those gyrations ahead of time, you can make a lot of money—or avoid losing it.

Passive investing means doing neither of those things. It means diversifying as much as possible by buying broad market index funds. It means owning the next Apple, but also the next Groupon. And it means not trying to time the market. That means staying in when stocks take a dive five days—or months, or years—in a row.

Passive investing also means making portfolio decisions based on personal circumstances, not on headlines or research.

Who’s passive?

With that definition in mind, let’s cook up a couple of hypothetical investors and see who’s passive and who’s active. (Aren’t these terms a little judgmental, by the way? That’s why MintLife columnist Dan Solin likes to refer to passive investing as “smart investing.”) This is my column, so I get to be the judge and jury. We’ll start out easy.

Alice owns a bunch of individual stocks and bonds and trades them regularly.

Verdict:Active.

Bob owns no individual stocks or bonds, only low-cost ETFs, but he trades them regularly in response to perceived market trends.

Verdict: Active.

Charlie buys mutual funds, holds them, and never trades. However, his mutual funds are actively managed, so the fund manager may be trading stocks within Charlie’s funds.

Verdict: Active.

Donna buys diversified index funds or ETFs, holds them, and never trades.

Verdict: Passive.

Rick Ferri, in his book The Power of Passive Investing, puts these four investors into a handy chart, which I’m going to simplify and reproduce here.

Uses actively managed funds or individual stocks Uses index funds or ETFs
Trades Alice Bob
Doesn’t trade Charlie Donna

As you can see, only Donna meets Ferri’s (and my) definition of passive investing.

The hard cases

Now, let’s ask some tougher questions.

Emily owns only index funds and ETFs, but she has decided on a 50% stock/50% bond portfolio.

Verdict: Not enough information.

If Emily has chosen a 50/50 portfolio because it’s in line with her risk tolerance, she’s passive. If she believes this portfolio looks like a winner for the moment but intends to change it later when stocks look like a better bet, she’s active.

Frank owns only index funds and ETFs in a 50/50 stock/bond portfolio, but he trades once a year or more to bring his portfolio back in line with its original allocation. That is, if bonds go up and stocks go down, he sells off some bonds to buy more stocks until he’s back to 50/50. This is called rebalancing.

Verdict: Passive.

Rebalancing is about keeping your portfolio risk under control; it’s not about trying to time the market.

Gene used to have a portfolio of 75% stocks/25% bonds. Recently he received an inheritance. He checked his retirement savings calculator and found that with the new infusion of cash, he could take less stock market risk and still have an excellent chance of reaching his savings goal, so he switched his allocation to 50/50.

Verdict: Passive.

Gene is changing his portfolio based on a change in his circumstances, not anything to do with market trends.

Hailey is a buy/hold/rebalance type like Frank. A couple of years ago, however, during the financial crisis, she noticed that prices on certain bonds had plummeted. She took the opportunity to buy some highly-rated bonds at bargain prices and permanently reduced her allocation to stocks.

Verdict: Hmmm.

I’m not sure. It smells like market timing, but is it?

Get your Team Alice t-shirts here

Alice, our pure active investor, works hard at investing. She is up on the latest IPOs, valuations, interest rates, and market trends. She has a whole folder of investing apps on her phone.

Meanwhile, Frank, our passive buy/hold/rebalance guy, doesn’t know anything about any of that stuff, and he spends a few minutes a year managing his portfolio.

You can probably guess whose team I’m on, but let’s talk about you: are you an Alice or a Frank or someone else from our cast of characters? And why?

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.

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Last Updated on February 25, 2022 by Mark Ferguson

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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.

Build a Rental Property Empire

Categories Real Estate Agent

Source: investfourmore.com