Ashley Kehr:
You’re ready to start investing, but the question is not always what deal should I buy? Sometimes it is how do I make an offer when I only have a little cash? Can I invest in the US from another country or am I too late if retirement is coming up?

Tony Robinson:
Today’s questions come straight from the BiggerPockets starting out for him, and they all come back to the same rookie skill. Slow down the decision, get the right information, and make a plan that fits your real.

Ashley Kehr:
This is the Real Estate Rookie Podcast. I’m Ashley Care. And

Tony Robinson:
I’m Tony J. Robinson. And with that, let’s get into our first question for today’s episode. So this question comes from Casey, and Casey says, “I’m in the middle of this deal.” He said he still has some money left on the mortgage. His price is $219,000. It’s a multifamily, and I only have 5K in capital, but he wants to get rid of it. He said his last statement to me was, “Just make me an offer and we’ll go from there. It generates 3,050 bucks a month in rent. What should I do? I’m excited and nervous.” I wrote him this. “Thanks. I appreciate that, and I’m definitely interested. Before I put an offer together, I just want to make sure that I structure it in a way that makes sense for both of us instead of throwing out numbers that may not make sense. Would you mind sharing a few things with me?
Approximately what is the current mortgage balance? What is the monthly payment, including taxes and insurance, if you know? The interest rate. Once I have that information, I’ll put together an offer for you to consider.” Casey finishes by saying, “Please help.” So again, first, Casey, congrats to you for jumping in and talking to sellers and trying to make some things happen. I think I’ll surface maybe my biggest concern before any of this is that you’re looking to buy a property for a couple hundred thousand dollars, multifamily, and you’ve only got 5K. I don’t know if that 5K is your entire life savings or if that’s just the 5K that you have allocated towards real estate. If the 5K is all that you have, I think my first advice is don’t do this deal. And I say that because what happens if on day number two, there’s a storm and you get Ashley’s biggest fear, your root blows away.
What happens if the HVAC system goes out? What happens if the main sewer line going out to the city sewer cracks and breaks? There’s a lot of different things that can happen. And I worry about buying a multifamily property with only having 5K to your name, that you might end up putting yourself in a position where you end up losing that property relatively quickly. So I think that’s my first statement. And if that is your only 5K, since you are negotiating on the deal, maybe bring in a partner who’s got a little bit more money in reserves and you can show them the deal and say, “Hey, look, this is a great deal, but I only got 5K and I don’t want to lose this. So can you come in with me to help me bring maybe some of the capital the seller might want and to also just kind of help us fund some reserves in the beginning so we can move things in the right direction?” So I think that would be my very first statement, Casey, is just like, let’s evaluate your financial situation to see if this actually makes sense for you.

Ashley Kehr:
Yeah. So it says the rent is $3,000 per month. Let’s say for our example, your expenses are $2,000 per month. That leaves a thousand for variable expenses and your cashflow. So conservatively, 2,000, which honestly, your expenses are probably more. I think it would be a great deal if you’re cash flowing $1,000 a month. But even if it was at 2,000 per month, which it possibly could be higher than that, your monthly expenses, we like to say three to six months for reserves. So if you’re doing the bare minimum of three months, that’s just $6,000 that you need. So you don’t even have the bare minimum for reserves. I started in real estate investing, bought my first property with only $5,000 in my savings account. And I did it the exact same way Tony recommended is you find a partner. I found a partner that had about, I don’t know, $80,000 in cash.
And we used 70,000 of that to purchase the property in cash. And then we still had his 10,000 in reserves and we had my 5,000 in reserves. And you know what happened right after closing? We found out the electric panel needed to be updated in order to add the split unit that we were already putting in. So we had budgeted for that split unit to be put in, but not to do all this electrical work and the panel upgrade. So guess where my $5,000 went that I had in reserves? It was literally gone within the first month because we had to do these repairs and these updates that weren’t expected, but we still had my partner’s money and as an additional reserve. So I think that it’s really important to be above. Even if you can get into a deal for $0, you get seller financing, you do some kind of creative structure, whatever it may be, you still should have those reserves in place.
And I think it’s worth, in this scenario, it’s worth waiting a couple more months until you can save up a little bit more to have that cushion financially because nothing will ruin your love for real estate investing or your excitement than having it bankrupt you or drown you having to take out credit card debt to stay afloat. So I think having those reserves in place is a really good idea. Okay, coming up, we have a BiggerPockets listener from Sweden who wants to invest in the US. So we’re going to talk about what it takes to invest from another country in the US. We’ll be right back.
All right, so we’ve talked about creative finance and when the deal is right in front of you. Now let’s talk about a rookie who wants to invest in the US from another country. Our second question comes from William. “Hi, I am 27 years old from Sweden and I’m a big fan of BiggerPockets. I’ve been researching and planning my first investment in real estate in the US. I would love to get in touch with people that have done this themselves out of country or out of the state to look for inspiration, but also for knowledge sharing and guidance. Okay. Tony and I do not have experience or a vast amount of knowledge living in another country and investing in the United States. I’m going to give this disclaimer, but we can guide you into how to find that information and find the people that you need to network and connect with to actually make that happen.
The first thing I am going to say is to contact a real estate attorney that handles international real estate sales. That is going to be your first step. Pay the consultation fee to be able to have them to give you an idea of what it’s going to take, what’s going to happen. So when someone decides they want to do a syndication, you contact a syndication attorney and they go through, they do a consultation with you and go through exactly everything you’re going to have to do, everything they will do on your behalf, and give you this kind of outline of it. And so you’re going to want to get something similar from a real estate attorney that actually does this. So that’s the first step is finding a real estate attorney. Start with Google, ask ChatGPT, but then your next step is going to be connecting with people in Sweden that have already invested in the US.
So from your country, I would start getting into Facebook groups. I would start posting in forums. If there’s any kind of a local real estate meetup, I would say there’s how many people will actually invest in the US could be very, very slim compared to investing in your own market, but going there. Then I would attend BPCon and come to the conference and connect and meet with everyone so that you can identify, help get yourself help identifying a market that you actually want to invest in, in the US. Because once you figure out how to invest, then you need to figure out what market or city you’re actually going to invest in as your next step.

Tony Robinson:
Yeah. I think another big piece too is sort of, I totally agree, Ashley, on the networking piece, but I think another element is figuring out the financing as well. There are a lot of loan products that as US citizens, we have access to that folks who are not citizens investing here don’t have access to. So I think just getting clarity on what does the actual loan product look like? Because that’ll really, I think, also help dictate how you execute your strategy. Because if you’re looking at a 30% down payment versus a 5% down payment, that’s a very, very big difference in terms of the types of deals you can go execute on. So I think understanding first your purchasing power here inside of the US, talking with the lender would be probably one of the first steps that I’d focus on.

Ashley Kehr:
Or just figure out what your purchasing power is in cash. So if you have a primary residence that you can maybe put a mortgage against to pull out more cash, if line of credits are available, get a line of credit, use that as cash or just cash that you have available as you’re purchasing power too.

Tony Robinson:
Yeah, we see that a lot. So in the neighborhood that I live in, there’s been a lot of Chinese investors who have purchased homes. They pay for them in cash and they buy in all these new subdivisions. They rent them out for a couple of years and then they sell them for double the price a few short years later. So if you do have enough cash, I actually think that’s a great strategy, actually just buying in cash in high appreciation markets maybe even, and kind of flipping them a few years later. I think the last piece that I’d also add is I’m big on remote investing. The first rental I ever bought was thousands of miles away from where I live. But doing it in a different country, I feel like I would need to get some eyes on the market before I actually pull the trigger.
So I think once you’ve spoken with the attorney and once you’ve spoken with the lender and you’ve kind of got your short list of markets, I would just take a trip, road trip around the different cities that you’re thinking about and really get some eyes, meet people, shake hands. Because I even think like working with a property manager, I think it’s lightly different if you’re just like a name on an email thread versus someone that they’ve shaken hands with. The handyman, the cleaners, if it’s a short-term rental, whoever you’re working with, if they can actually shake your hands, see you, meet you. I feel like it adds some depth to the relationship that’s hard to grasp if you’re just doing it all over email or virtual. So once you have your city selected, I take a road trip out or take a flight and then road trip through the United States.

Ashley Kehr:
And I guess another person to add on as a team member to consult with as a tax advisor as to what’s the tax implication of investing and owning real estate in the US and how is that rental income taxed to you? So even just, I have done some work for a company out of the country and even when I invoice them, there’s taxes taking out before I even get the money. I think, what is that? VAT, I think it’s called VAT. So I would be curious as to what the tax implications would be too, because you could analyze the deal, but not calculate in some of the taxes that you will accumulate and have to pay for, and that will end up coming out of your deals profit. All right

Tony Robinson:
Guys, we’re going to take a quick break, but when we’re back, a listener who’s 60 has savings and some home equity and wants to know whether real estate investing still makes sense before retirement. We’ll be right back after this. All right guys, welcome back. Our last question comes from Morris. And this is a question a lot of people have, but don’t always ask out loud. What if I did not start investing in my 20s, 30s, or 40s? All right. So Morris says, “I’m 60 and I will retire in 10 years on a salary of 120K. My wife makes 30K a year and we’ll retire 25 years from now. Only debt is 250K mortgage on a 500K house. We have 150K in savings. Just read Dave’s article on equity versus cashflow for retirement. What would a plan look like for me? Is it too late? Thank you.” All right, great question.
I think the first thing, just answer the question is that no, it’s not too late. Investing at any age I don’t think is too late because it’s an asset that’s going to continue to give you benefits that’ll continue on to your family members. And it’s hard to ever say that buying real estate is a bad thing. Now, I do think that the strategy at 60 is probably slightly different than what the strategy would be for someone who’s just graduating from college or even in their 30s. I think when I talk to a lot of folks now who are millennials, slightly younger, slightly older, a lot of times they can buy things where it’s like, “Hey, I’m buying for appreciation. I like my day job. I’m going to work my day job for another 30 years, and I just want to have five paid off rentals by the time I retire.” So they’re not as worried today about the cash flow that the units produce, and they’re more so focused on buying a good solid asset that’s going to appreciate over time.
I think investing at 60, assuming that you’re doing this for some additional income in retirement, I think investing at 60 when you’re 10 years away from retirement, could you potentially still buy for some appreciation play? Yes. But I think the strategy starts to shift a little bit more so toward stable income. And it’s almost like the stock market, right? And Ash, you can probably speak to this better than I can, but a lot of folks, when they’re younger, their stock portfolio might be a little bit more aggressive. And as they get older, their stock portfolio becomes a little less aggressive. And as they get closer to retirement, age becomes the least aggressive possible. Now they’re buying things like bonds, whatever it may be. So I think for real estate investing, we can take that same concept and apply it here. So Morris, if I’m you and I’m thinking about buying real estate, I’m probably going to really focus on for the next 10 years.
How can I focus on properties that will pound for pound produce the most meaningful cash flow for me as opposed to the 30-year play of like, “Hey, this is just a good property and a good location.” And just for context’s sake, you say that you’ll retire in 10 years on a salary of 120K. So I don’t know if I’m reading that as once you retire, you’ll have that amount or that’s the amount that you want to replace. That’s

Ashley Kehr:
What I was wondering too. Is it like a pension where he’s going to get 120K a year or if that’s just what his salary is now and he’s retiring with that and then to nothing? Because there’s not any mention of retirement. So I was just assuming that 120K is basically what his pension is going to be maybe. See,

Tony Robinson:
I was actually reading it the other way where it was like, “Hey, this is what I need to replace.” I’ll give my answer with my perspective, As maybe you give yours from your perspective. But if the goal is 120K and we have 10 years to get there, I think that is an aggressive timeline if we’re doing traditional, just like long-term rentals to replace 120K a year. I think what I would focus on, and there’s a few different ways that we can play this, right? But I think what I would focus on is for the asset that you already have, the house that you already have, can we turn that into a rental? I think a lot about our friend, Matt Krueger, who we interviewed, and this was his exact strategy. He did it over a decade, which is almost exactly what you have here, Morris.
But it was like every year for a decade, they would buy a new primary rental, turn the old one into a rental. So every year for 10 years, buy a new primary residence, turn your old primary residence into a rental. And could you at the end of 10 years have a pretty nice sized portfolio with very low down payment properties? Possibly. So in my mind, that’s probably one of the easier ways to kind of stack, aside from going after just higher cashflow type strategies, or again, short-term rentals, mid-term rentals, co-living, sober living, assisted living, all of those different strategies. But if we just want something that’s steady, easy for you to execute, a new primary every year for the next 10 years, turn the old one into a rental, that could be the simplest path.

Ashley Kehr:
So I really like that idea of turning that into a rental. And I’m not sure what his current mortgage payment is on the house, but assuming. I’m saying that if he does turn it into a rental, I would also look at decreasing the monthly payment by refinancing and changing the amortization so that he is cash flowing on the property. So if he refinanced that 250,000, let’s say an interest rate of 7%, because it’s still going to be his primary residence when he refinances. If he did a 10-year amortization, which is his retirement period, that would be a monthly payment of $2,902, not including property taxes and insurance. So I don’t know how that in compares to what his payment is now, but if it’s a $500,000 house, I’m not sure what he bought it for, what his mortgage payment would be. But if that is something that is already similar to what he’s paying, it may be worth it or less than what he’s paying, maybe worth it to go ahead and refinance it to try to get a lower payment and will be paid off in 10 years.
I’m not sure how many years he has left on the mortgage, all of those things. But that’s the first thing I would do is run the numbers on that. Is it worth refinancing to get into a lower payment, even if you extend the loan term to 20 years, to be able to make it cashflow now as a rental property? Then another thing that I looked at is, okay, the $150,000 he has in savings right now, is that in a high yield interest savings account? So say he just gets 3% over 10 years, that’s another $52,000 that’s added into his savings account. Or you could put some of that into the stock market, hopefully get a better return. But since you’re so close to retirement, I definitely wouldn’t put all of it in. I would not risk at all that all of a sudden in 10 years we have a huge stock market crash right when you are ready to retire.
But I really like the idea of renting out the house, moving into another property, and repeating that to accumulate because you can get better financing. You can build up appreciation in these properties, you can have mortgage pay down by the tenants, and then at the end of 10 years, have a really nice portfolio and hopefully even some equity. My portfolio over the course of 10 years, I’ve seen a lot of great equity build up in these properties just from 10 years. So I think that’s a huge wealth builder, not just the cashflow, but also being able to see how much your property is valued for and how much you could actually sell it for and cash out it. Thank you guys so much for joining us on this episode of Rookie Reply. I’m Ashley, he’s Tony, and we’ll see you guys on the next episode.