NEVER Buy these 5 Types of Real Estate

welcome back to another meet Kevin or for today we're talking about five toxic types of real estate that you should never buy because after all these are videos that make you money and without further ado let's get right into the five types of real estate not to buy number one do not buy anything with rental restrictions here are a few examples number one there are a lot of co-ops in places like New York City Manhattan that will not allow you to rent out a property at all or if certain conditions are met you need to be aware of what those conditions are and obviously if they just straight up don't allow tenants you need to not buy those types of properties you should only ever buy real estate that you have the capability of renting out because otherwise if you have to move you are forced to sell the property and I never recommend selling there are also homeowners associations that you have to qualify and you have to make sure that they actually allow you to rent the property out and what kind of restrictions they have so even if you're not buying a co-op you have to watch out for associations and there are even certain types of communities that just straight-up ban on rentals and a common condition that you might want to look out for is known as a homeowner occupancy ratio this is where oftentimes as soon as there are more than 30 40 or 50% tenants to homeowners the HOA or whatever the governing body is will not allow more rental properties this is very very bad there are also other implications that come up - such as financing limitations for investors when neighborhoods have more than 50% tenants so a lot of considerations but anything that is going to restrict your ability to rent out the property is bad another bonus one you can get into certain types of downpayment assistance programs where you can actually buy real estate with no money down the government basically hands you free money to go buy real estate as long as you qualify income wise you just have to be very very very careful because some states will attach strings that say you're not allowed to rent the property out also very very bad so don't buy that type of real estate instead you should Natsumi and you should buy the real estate investing course where I teach you principles like this and many others or the real estate agent course where you can learn my philosophy of being a no-pressure agent who provides more value to their clients links down below you could also meet me in person in Miami in the next ten days Charlotte San Francisco and Vegas after that by the way the 22 percent off coupon code has been extended until October 4th that is my fault I made a mistake of this a weekend and I put the wrong code out in one of my best videos and I'm so sorry about that the second type of property I really don't like is well commercial real estate and not necessarily talking about larger apartment buildings even though technically once you have more than four units you're considered a commercial type of property I'm mostly referring to retail industrial and office it's not a space that I'm a big fan of mostly because a it's very difficult to get below market value purchases on commercial deals that's because you're oftentimes competing against larger syndications or funds who make profit off placing other people's money not necessarily on buying good deals that artificially drives the value of these up obviously you also have massive competition from online which has been a massive disrupter to the retail space beyond that you also have significant disruptions happening in the hotel industry with Airbnb and VRBO and in the office space even in the world of the we work a debacle that's going on we have a lot fewer people spending time in offices and companies are electing for smaller office spaces now I do like residential commercial real estate however you do also have a massive pitfall with commercial real estate in the financing department most commercial real estate requires anywhere between 35 to 55 percent down that means if you want to buy a five hundred thousand dollar deal you oftentimes need a somewhere between $175,000 to $250,000 to be able to buy a $500,000 deal whereas on a regular sort of one to four like single family duplex triplex four-plex you can get into a $500,000 deal for under $20,000 massive difference in the barriers to entry in addition to that in commercial financing there's no such thing as the 30-year or 15-year fixed-rate loan you're usually talking about prepayment penalties variable rate of financing and significantly shorter terms the third type of property that I would never ever ever ever touch and I have cautioned my own clients against buying her flicks unless the flip was done by a licensed contractor and permits were pulled on everything I mean I'm talking about permits being pulled on new ceiling fans windows the kitchen faucet every little minor detail I will not buy a flip now that might piss off a lot of people but the bottom line is flips and I hate to throw this in there but most turnkey real estate takes advantage of basically buying wedge deals or below market value deals which I teach you how to buy in the real estate investing course linked below they take advantage of buying these below market value deals and then they do only cosmetic updates to them oftentimes leaving intact not always so don't sue me bro but oftentimes leaving intact older electrical older plumbing and other latent issues that can mostly be concealed with pretty molding around windows and other issues that end up coming out to haunt future buyers down the road since most real estate transactions are as is you also usually don't get any kind of these contractor warranties passed on to you and the previous seller even though they could have done a crappy job because you signed a contract that says you're buying a property as is you might have very little recourse against the seller even if they did something straight-up mean now obviously that's different from doing something fraudulent but the last thing you want to do is get involved in an arbitration or legal dispute because a flipper screwed you now I'm not trying to say that all flippers are like this there are a lot of great high-quality flippers and home builders out there all I'm saying is in flips and turnkey real estate there's an incentive to only spend money on cosmetics and not on structural things because as we know Cosmetics drive value structural things generally don't even those structural things are the expensive stuff unfortunately that's the way the market works now the fourth type of property that I would never buy is a type of property that just by me mentioning it is going to really probably piss off my boy Kenny Robinson Kenny Robinson is actually as somebody who hunted me down at 1 a.m. in Idaho at a McDonald's to take a selfie because I posted an Instagram picture of me outside of that McDonald's Kenny then went on to make a YouTube channel and he has over 32,000 subscribers now you should definitely check him out he talks about this type of thing you shouldn't buy in my opinion and dividend stocks so the type of thing you should not buy or in my opinion mobile homes now Kenny does a great job at flipping mobile homes which flipping mobile homes is different from buying mobile homes to invest in in my opinion now you could go out and buy a mobile home park but that's different individual mobile homes however have some massive problems first of all the financing sucks you don't get that 30-year fixed-rate mortgage usually you're looking at a twenty five twenty or even 15-year fixed-rate mortgage if you're lucky the interest rates are also usually a lot higher and the qualifications you need in a down payment you need are a lot more stringent in addition to that mobile homes are technically personal property they're actually not really real estate unless they are manufactured homes and they have been permanently affixed to the foundation and then they usually have what's known as a 4-3-3 form which indicates that yes this property was officially fix the foundation and it's now sold with the land usually but that's only for manufactured homes that qualify for that and even those still have trouble with financing regular mobile homes though you don't own the land you're subject to space rent or space leases which can be very expensive there's oftentimes no rent control in terms of how much they can raise your land lease rent these properties generally go down in value over time that's why you see after a mobile home is somewhere around 30 to 40 years old rather than fix it up people just rip it out and put a new one in you don't see people doing that to 1970s houses that are stick built even though the manufacturing differences aren't that crazy different obviously they are in some parts you know mobile homes get a single wall construction but a lot of the building materials like the kitchen and the bathrooms can be the same as what you see in a house but because they go down in value they're usually just not worth fixing up and it's much easier to tear them out and throw in a new one also most parks prevent you from guess what being able to rent out a mobile home which to me is the number one type of property you should never buy so if you're interested in flippin mobile homes hey maybe that's something for you to look into but in terms of a regular investment not a fan the fifth type of property that I would never ever buy is the property I call the homeowner handyman special the homeowner handyman special is where you see and you walk through what looks like a beautiful house but then you do a home inspection and you realize well you know the homeowner put in the can lights but then we looked in the Attic and they're strung together like daisy chained with open wire splices and things look like a mess in the Attic and the homeowner also did the windows except one of the windows is already leaking and then you start picking apart Wow everything the homeowner has touched the homeowner handyman has either been half done or inappropriately done this is why my favorite type of property to buy is a type of property where the person who owned it only hired licensed contractors and they overspent on the improvements the handy person home owner is somebody who generally tries to make things look nice while spending as little money as possible and doing labor themselves on things they are not educated in and then they usually have to do the projects and they do a bad job but you usually have to go digging for those red flags and as with any type of real estate much like I teach in the real estate investing course a linked down below when you start seeing signs of red flags there are usually more where that one came from well there you have it folks feel free to follow me on instagram if you have any questions about the course please email me at kevin at me Kevin calm I could also hook you up with a plus one coupon to the in-person events like Miami San Francisco Charlotte or Vegas coming up you can also check out my Amazon a link down below so you can see what kind of books I recommend I'll constantly be updating those with new audible recommendations or reading recommendations and as always have a wonderful day and that's all next time [Music] [Applause] you [Music]

Channel: Meet Kevin

Views: 388,648

Keywords: real estate, investing, dumb, never buy

Id: pXKp__5s5pM

Length: 12min 36sec (756 seconds)

Published: Wed Oct 02 2019