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A properly written commercial lease has the landlord responsible for the walls and roof with the tenant covering everything else. Residential, not so much.
At times improvements are needed that the owner will need to pay for in both commercial and residential. When the commercial properties are at a point of low demand and you have space sit empty for some time you may make the decision to do the $10,000 remodel to get someone in the space. If in high demand you may require the lessee to pay for any remodeling they want. It all depends on the current market.
I have also had residential leases where the tenants were responsible for repairs up to a certain amount so on an older home I did not have to pay for any repairs over almost a 2 year span. They even had to cover a $4000 a/c repair. Of course the monthly rent was below the norm but it worked out good for me.
Too many variables and this is why I suggested the OP invest in a REIT when he does get the money rather than trying to be a landlord without any education on the subject.
I have also had residential leases where the tenants were responsible for repairs up to a certain amount so on an older home I did not have to pay for any repairs over almost a 2 year span.
Well, its good and not so good. The good news they wont call you for a leaking toilet, etc. Bad news is, they might not repair anything and let the toilet leak for a year. And not do any other repairs either. You gotta stay on top of this stuff to protect your investment.
Why don't you just shadow someone who is doing what you want to do/be? You can absorb the good, discard the bad, and then either invest your $$ in these buildings and it works out for you or, you can just drop the $$ down the first manhole you see and it all works out the same? Ever heard the old adage "a fool and his money are soon parted?"
Financing a real estate project always requires a cash contribution, as 100% financing is not realistic in today's market. Your investment scheme is really appreciable but makes it more clear and precise………
OP - business plans, as well as dreams, must start somewhere. Keep dreaming and keep asking. You are already ahead of the game - you're finding the questions you didn't know to ask.
There are so many that never even dare to speak aloud about their aspirations.
There are so many that never even dare to speak aloud about their aspirations.
And so many more to cut you down.
Looking back at 2012, the date of this thread, if the OP wasn't still in school, and earning their claimed 500k a year, they could have bought a building, have 20% appreciation, sold, and made 50% on their money.
OP, the people who become successful real estate investors are primarily those who have, say, $600K to lose, not $600K that represents a good portion of their total wealth. The former will be able to ride out rough patches when their investments are under water. Leveraging yourself with the scheme you mention will leave you very vulnerable to unforeseen circumstances (a tenant injures him/herself and sues you; the pipes freeze and plumbing needs to be replaced; a big tree falls on the building) that insurance will not cover adequately. The big boys also can avoid paying top $ for mortgage loans. You can't.
It is possible to be successful, but you have to be a little smart, be able to do all the basic repairs/maintenance yourself (e.g., YOU clean the gutters), and be lucky. I had an acquaintance several years ago who bought a 4 unit apartment building while he was in grad school. This guy was not the brightest LED in the panel (didn't understand that there was an adjustable thermostat on the water heater so that the water didn't have to be scalding hot all the time, for instance ) but he happened to buy the place right before the big runup in RE prices. He sold in 2005 just before the market tanked and said he made about $90K, but I don't know whether he subtracted his expenses from that. He was pretty naive. He did say he would have gotten more if the building didn't have some serious code and structural problems he didn't know how to fix.
If you really want to do this for a living, protect yourself and start with one property. If it works out for you, then go for more. Personally, I'm leasing a property out now and can't wait to be done with it. The tiny amount I end up with in profit doesn't nearly compensate for the aggravation.
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) but he happened to buy the place right before the big runup in RE prices. He sold in 2005 just before the market tanked and said he made about $90K, but I don't know whether he subtracted his expenses from that. He was pretty naive. He did say he would have gotten more if the building didn't have some serious code and structural problems he didn't know how to fix.
