All Forum Posts by: Aaron Smith

@Dane Entze, @Jacob Cogswell put it correctly. We don't have enough to help you. Are you looking SFH (i assume you are), or MFH. Two different animals. It's best to have as many ducks lined up as possible, as I've learned, before you go for it. If you can get pre-approval, that makes your life that much easier. It gives a you a starting point.

Once you're pre-approved, then you can get in on the properties which are going fast. It may mean you miss out on one or two, but there will be more. 

And if you're putting cash on the table, you're probably going to have to prove you have those funds when you make the offer, and not tell the seller, "well, let me get back to you..." while you're waiting to gather said funds. 

You're on BP, so go here.... Hard Money Lenders. It's not the end-all, be-all list of hard money lenders, but BP has done some of the work for you. 

Good luck in 2017!

All the best,

Aaron

@Marcus Nickson I'm in Utah and looking out of state for MFH. People ask, why? Well, Utah's market is smoking right now. And CAP rates are low (5-6% along the Wasatch Front (SLC area)). I can't find the cash-flow I need here to meet my goals. So, I'm looking in MI and AZ. I've even found some good ones in Texas! I have NO problems having a mgmt company work my properties. It allows me to manage one entity instead of 8-10 individual ones :D There are, of course, arguments for managing your first property yourself. But to each his own. We all have different styles, and different ways of looking at things! As long as we ALL learn something from each other, we'll be the better for it!

Good luck, sir! Safe travels and I hope you have a successful 2017!

Aaron 

@casey (seems using mobile doesn't produce our name drop down box...)  by $100k do you mean offer $100k less or have him carry the $100k?

@jay that's a good point.  Thank you for that insight

@Steve as I'm still learning about REI, this is the only option I could think of 😀

@Natalie Smith Jake and Gino's "Wheel Barrow Profits" is a good one. It's an easy, simple read, but it covers the basics. The other two I like are, "Investing in Apartment Buildings" by Matthew Martinez, and "Multi-Family Millions" by David Lindahl. 

All the best in 2017! 

Aaron

@Justin LeGeune

When you apply for a commercial loan, try and get prequalified up front. I'm doing that now, as I'm looking to buy my first MFH property. Generally, you're going to fill out the credit app, as well as a financial statement laying out your net worth. You MUST have some down payment to show them you're serious. Yes, they're going to lend on the property's cash flow, but they need to know 1) You're serious 2)You're financially stable.

While I aspire to obtain a 92 unit complex within 10 years, having that be my first project... Even if you have it professionally managed, it's a LOT to bite off. Start small. I'm looking at 8 unit building, and even small mobile home parks. I have NO problem letting other people manage my property, because it means I just have to manage the manager. That's a lot easier than managing 8+ individual persons. 

Personally, I'm starting small because I want to get the experience and build that trust with the banker, allowing me to get bigger complexes down the road. 

Commercial real estate lenders are going to want you to put money down. Plain and simple. You could be making $10k a year, or $100k. If they see you're not committed, then they won't touch you. 

All the best, 

Aaron

Hi gang, 

I've found a mobile home park right up my alley. However, the owner wants $350k. My MAX loan in order to put down 25% with a bank is $260k. That would take ALL of my down money with nothing left for reserves. 

I wanted to offer $260k BUT have the owner carry an additional $50k note which I would pay back over 5 years. 

First, does this idea seem too far fetched? Second, has anyone done this? Last, how did you approach the owner about it? 

Thank you EVERYONE in advance for you help, and Happy New Year! 

All the best, 

Aaron

@Ethan S. SFR carries too much risk for one unit, for me, anyways. If you lose your tenant, and can't fill the house for say, three months, YOU'RE on the hook for the whole mortgage and utilities for those three months. Whereas MFH, if I lose one, I'm usually okay (I better be or else I did my numbers wrong) as the other tenants are still paying the mortgage plus the utilities. Plus, I don't have 10 other people trying to find the same great deal you're looking at when evaluating a SFR. I prefer to spread my risk over multiple sources rather than just keep it all in one basket.

The second reason is cash flow. I can generally find better cash flow with MFH. I'm looking at B-/C properties, so I know I'm not in the best areas, but that's okay. The more cash flow I have, the quicker I can get to my goals, and the sooner I can retire. 

Is there anything wrong with SFR? Absolutely not.

And you're in a major city, I GUARANTEE there is one somewhere nearby. Here's a link to the Lee County Realtors Association (or something like that...) Lee County Realtors. Contact an agent and ask them when the REI club meeting is. They'll ask you what your interests are (figure this out ahead of time by reading/research), when you want to invest, you know, the usual RE agent pitch, but eventually they'll tell you :)

But, first and foremost, figure out WHAT area you want to start in. That will take a bit, as you'll be reading a lot of articles. I THOUGHT I wanted to start in SFR, as I had one in Boise for a while. But then I started reading and realized I wanted to be in MFH. Here's the thing though. You can buy a 4-plex (4 units) and it's considered residential for investing purposes. So, you could house-hack and live in one unit, and rent out the other three.. thereby spreading the risk. There are TONS of ways to invest in RE, you just have to do the research to determine which one TRULY appeals to you.

Merry Christmas, 

Aaron

@Ethan S. What's your long term goal? Retire with the cash-flow from your REI? Buy 1 house in 2017? Have three wholesale deals in the next six months?

What area are you focusing on? THIS should be your first goal. Decide on which area you want to begin your journey. For me, MFH is where I'm going. For others, it's wholesaling. And for some, SFR is where they're headed.

Once you've decided which area truly peaks your interest, start reading. I've read more in the last four months than in the last two years. All of it on MFH. I've started working on my first deals, and hopefully in the next month, I'll finally have a deal in the works. 

Go to a couple of REI club meetings in your area. Talk to the people who are doing what you want to be doing. You may even find a mentor out of it!

Coming to BP is a good first step for sure! There are plenty of knowledgeable people here who either 1) know the answer, or 2) know where to find the answers. So ask all the questions you can think of to which you are unable to find the answer yourself. 

Good luck on your journey! 

Aaron

@Sam Levin you have to account for recapture as well. Cost segregation is awesome, but it's an expensive study depending the size of the property. I believe Amanda Han covered it a bit in her book. 

And if you can do this without a CPA.. you're a smart person :D Your CPA, if they're RE investors themselves, or specialize in accounting for REI's, will know someone who can conduct the study for you.

Thanks for posting about this though, as I think new investors would not think of this. 

All the best, and Happy Holidays to everyone here! 

Aaron

Congrats @Gregory Hall!! That's awesome! You'll find, after reading those two books, you won't stop. I've read seven others since those, since September! 

Congrats again, and remember, if you have a question, if someone on here doesn't know the answer, they probably know someone who does, so, don't be afraid to ask! 

All the best, and Happy Holidays!

Aaron