All Forum Posts by: Aaron Kaminer

Quote from @Shawn Parsh:

Aaron, 

I agree with Ken. I would list them as Rent to Own (more people understand that language then lease option). Collect a non Refundable lease option down payment and charge enough rent to cover your cost and more if possible. 

 Hi Shawn. Thank you for clarifying. I wasn't exactly sure what Ken was suggesting. In order to list as a Rent To Own I first need to refi a long term mortgage right? I will run into a cash issue trying to close on the refi in that case. 

Quote from @Robin Simon:

Quote from @Aaron Kaminer:

Hello all, 

We are in the Oklahoma City market (and some surrounding markets) and we are currently sitting on 4 renovated/listed properties. We have never had to hold properties as long as we are now. 

The problem we face concerns cashflow. We have interest only loans on all 4 properties. Totaling roughly $12k a month in interest payments. As the months go by, we are running low on cash. We have roughly 18-20% equity in each property but no way to access it and no other means of raising capital that we can think of. 

Are there any clever financial instruments or maneuvers that could help alleviate this $12k/month interest payment sum? 

Things we have considered:

- Put a standard mortgage on them and rent them until the market improves.. I don't need to profit.. I just need to significantly reduce the net loss each month.  But I would need cash at closing presumably... 

- Reaching out to our lender to see about relief programs or deferments and such. No luck. Our lender offers nothing. Just foreclosure. 

- Consolidating at a lower rate. Not sure this would help very much. I need the monthly net loss to go down a lot. Plus there would be closing costs again.

We are open minded about solutions. 

What is the rate/structure of the loans on them - is this Hard Money - high rates? Have you looked into DSCR Loans that are "Partial IO" ? Could be a good solution here - you can refinance into a 30-year loan with the first 10 years IO (essentially IO since you will likely be able to sell or refi within 10 years) and should generate some cash flow/breakeven and less stress on the financing side

Hi Robin. 
Its 4 loans totaling roughly 1M @ 10.25%. IO payments. I was hoping to find some sort of refi with payment deferments but it looks like the programs require more equity that I have. I also looked into longer term refi and rental but the closing costs are significant and we are too low on cash to do it. 



 

Quote from @Bill B.:

Is it a $1M loan at 14.4% or a $2M loan at 7.2%?  This will tell us how much money you can save with a refi. Or selling one property. Discount them all 10% or 20% and once you have 1 under contract take the othe 3 off the market. 

 Hi Bill. Its 4 loans totaling roughly 1M @ 10.25%. I was hoping to find some sort of refi with payment deferments but it looks like the programs require more equity that I have.

Quote from @Rhett Tullis:

if you have another investment opportunity ahead then why not cut your losses, sell for what you can and move on to the next opportunity?  otherwise I would refi and rent then until the market improves.

 Hi Rhett. Thanks for the advice. The problem is, we are almost out of cash. So refi as a rental is difficult because itll be $60k+ in closing. 

Quote from @Account Closed:

Quote from @Aaron Kaminer:

Hello all, 

We are in the Oklahoma City market (and some surrounding markets) and we are currently sitting on 4 renovated/listed properties. We have never had to hold properties as long as we are now. 

The problem we face concerns cashflow. We have interest only loans on all 4 properties. Totaling roughly $12k a month in interest payments. As the months go by, we are running low on cash. We have roughly 18-20% equity in each property but no way to access it and no other means of raising capital that we can think of. 

Are there any clever financial instruments or maneuvers that could help alleviate this $12k/month interest payment sum? 

Things we have considered:

- Put a standard mortgage on them and rent them until the market improves.. I don't need to profit.. I just need to significantly reduce the net loss each month.  But I would need cash at closing presumably... 

- Reaching out to our lender to see about relief programs or deferments and such. No luck. Our lender offers nothing. Just foreclosure. 

- Consolidating at a lower rate. Not sure this would help very much. I need the monthly net loss to go down a lot. Plus there would be closing costs again.

We are open minded about solutions. 

Refinance, the sell on Lease Option getinng 10% down as an option fee and cash flow the properties.

 Hi Ken, thanks for replying. Im not 100% sure what you are suggesting. Can you break it down a bit for me?

Hello all, 

We are in the Oklahoma City market (and some surrounding markets) and we are currently sitting on 4 renovated/listed properties. We have never had to hold properties as long as we are now. 

The problem we face concerns cashflow. We have interest only loans on all 4 properties. Totaling roughly $12k a month in interest payments. As the months go by, we are running low on cash. We have roughly 18-20% equity in each property but no way to access it and no other means of raising capital that we can think of. 

Are there any clever financial instruments or maneuvers that could help alleviate this $12k/month interest payment sum? 

Things we have considered:

- Put a standard mortgage on them and rent them until the market improves.. I don't need to profit.. I just need to significantly reduce the net loss each month.  But I would need cash at closing presumably... 

- Reaching out to our lender to see about relief programs or deferments and such. No luck. Our lender offers nothing. Just foreclosure. 

- Consolidating at a lower rate. Not sure this would help very much. I need the monthly net loss to go down a lot. Plus there would be closing costs again.

We are open minded about solutions. 

@Rhett Tullis and @Landon Whitt, thank you for your replies. We have great GCs that we work with. They have proven to be very reliable, competent and trustworthy. 

Hello all, 

I am a real estate investor and business owner (of KL Property Group) operating out of Oklahoma. I have a successful and lucrative career in tech., which I plan to eventually replace with full time real estate investment and business ownership.

Currently, my real estate business initiative is to replace my current career’s active income stream with a house flipping active income stream.

The next milestone would be to begin building a rental portfolio for a relatively passive revenue stream and long term wealth building.

Current initiative goals: (24 month goals - Starting 01/2023 and ending 01/2025 )

- Revolving 30 property/year flip routine.

- $1Mil Cash on hand. (Mostly used to reinvest and avoid debt payments, loan origination fees, etc.)

- Quit career job.

In our first 12 months (started in 08/22 and ending in 08/23) we will have flipped 9 properties. I have logged our first 2 completed flips in the 'investments' section of my profile and we have 7 more in the rehab phase right now. These 7 should all be sold before our first 12 month deadline, or close to it. We aim to flip at least 20 in the next 12 month period.

All of my deals are $0 cash-down deals. I only pay out-of-pocket for the initial inspection (I always have one, at least), earnest money, and holding costs. Even the loan origination fee is financed. (I know, interest on a lender fee... its just the way we do it for now while we build up some cash reserves.) We reinvest our cash into future deals, reducing the financing costs with each deal as we grow. This will also allows us to grow faster since we will be able to land better deals (competitive cash offers) and eliminate lender ceilings of various sorts. We outsource as much of the process as possible. We use licensed GCs, designers (if/when needed), staging (if/when needed) and the typical Real Estate professionals that aid in acquisition and disposition of the properties. 

Regarding my business goals, I am curious if anyone in OK has already achieved similar results in our market and wouldn't mind raising a hand or speaking up. Maybe share some of your successes with us all? I'd love to connect with you, trade ideas and knowledge, and grow! 

Quote from @Rhett Tullis:

I have a client doing number 1 here in okc.  He is at around 330 homes currently.  While I am not a fan of his plan he seems to think it is the way to go.  With this market we are in today i see this option getting more and more difficult to pull off.  

Option 2 would be a bit difficult in okc as there are not many apartment complexes on the market here on a regular basis.  It may take just as long to grow to your goal that route as well.  also I always tell folks that apartments are a different animal for sure it is not the same as just 50 houses on one lot.  I am a partner on a 70 unit complex here and it is good but it has its own issues.

330 properties? Impressive. I am curious, why are you not a fan of this plan?

Also, I dont mean to overstep, but I am curous how your apartment partership performs. Does it produce significant cashflow? What metrics do you use to guage the success of that investment? What were your success criteria/goals, prior to investing in that particular deal? 

Thank you all for commenting on this thread. Lots of great ideas and advice being shared here.

Currently, it seems obvious that commercial is a strong contender for best way to achieve large monthy cashflow.  

That said, purchasing commercial is expensive unless you have a network of private lenders or going the syndication route perhaps. While I am not opposed, this isnt currently the case for me. 

In my case, I was planning to spend a year or two building up a portfolio of SFHs. (Maybe 30 or so properties.) Though the cashflow isnt significant (relatively speaking) the equity build up is. Because of that equity build up.. I am effectively fund raising large amounts of money that can then be leveraged in order to purchase commercial cashflowing properties in a couple of years. In this case, I am generating wealth now and using it to invest in cashflowing vehicles later.  

Basically.. allow my portfolio of BRRRR SFHs to fund my cashflow investments (commercial.) This is not radically different from simply flipping SFHs for funds to invest in commercial, however, holding the properties (instead of flipping) allows me to capitalize on tax benefits, loan paydown, and appreciation - these things, in aggregate, are significant.. even over a short period of time.

I'd love to hear more ideas. In particular, has anyone achieved exactly this? Does anyone see a reason that this wouldn't work?