79: The Hidden Housing Costs Almost Every New Investor Overlooks

On The Market

BiggerPockets

Business, News, Education, Investing

4.8 • 859 Ratings

🗓️ 17 February 2023

⏱️ 47 minutes

🔗️ Recording | iTunes | RSS

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Summary

Your real estate investment’s returns could be ruined by a few hidden costs that you don’t know about. For the rookie real estate investor, it seems like every investment has the same type of expenses; mortgage, taxes, insurance, repairs, and property management. And while these surface-level expenses are almost always present in a real estate deal, NUMEROUS extra expenses could sink your ship if you don’t include them in your deal analysis. So, stick around, or you might get burnt on your next real estate deal! To walk us through the different types of deals and the expenses that come with them, we’ve got Henry Washington, James Dainard, and Kathy Fettke on the show. Henry, a buy and hold investor, knows that the “cash flow” new investors are calculating is far from reality. He highlights the exact expenses it takes to run a rental property portfolio and why those counting on self-management could be making a MASSIVE mistake. Next, James talks about the often over-glamorized world of flipping houses and the massive haircut investors take when they don’t account for closing, construction, and tricky lending fees. Finally, for our passive investor, Kathy goes into the world of real estate syndications, defining the numerous fees many “mailbox money” investors overlook. In fact, investors in these passive deals often don’t know when (or how) they’re getting paid. You DO NOT want to make this mistake! Stick around to hear it all, so you don’t make these beginner blunders next time you get a deal done! In This Episode We Cover The “hidden” fix and flip, buy and hold, and real estate syndication costs Lending fees, penalties, and the BIG cost of borrowing money Seller concessions and what to expect in a buyer's market like 2023 Raising rent and why not doing so could be a huge mistake when building a portfolio Self-management vs. third-party property management and why you ALWAYS need to factor in a fee Real estate syndication payments explained and why so many investors get it wrong The “4-4-4” housing market prediction and whether it could really come true And So Much More! Links from the Show Find an Investor-Friendly Real Estate Agent BiggerPockets Forums BiggerPockets Agent BiggerPockets Bootcamps Join BiggerPockets for FREE On The Market Join the Future of Real Estate Investing with Fundrise Connect with Other Investors in the “On The Market” Forums Subscribe to The “On The Market” YouTube Channel Dave’s BiggerPockets Profile Dave’s Instagram Henry's BiggerPockets Profile Henry's Instagram James's BiggerPockets Profile James' Instagram Kathy's BiggerPockets Profle Kathy's Insatgram Books Mentioned in the Show The Book on Estimating Rehab Costs by J Scott The Book on Managing Rental Properties by Brandon and Heather Turner The Hands-Off Investor by Brian Burke Check the full show notes here: https://www.biggerpockets.com/blog/on-the-market-79 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	In a frequently shifting market, deciding how to invest can be overwhelming.
0:03.8	You need a partner that has a proven track record, BAM Capital.
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0:15.2	Bam Capital is a trusted multifamily syndicator with over $1.3 billion in transactions.
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0:22.4	targets cash flow stability, capital preservation, long-term appreciation, and accelerated tax
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0:44.4	Buy low, sell high. Very easy to say, but not always so easy to do. For example, high interest rates are hurting the real estate market right now. Demand is dropping and prices in a lot of
0:49.4	markets are falling, even for many of the best assets. So it's no wonder the Fundrise Flagship Fund
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