All Forum Posts by: Abe Osman

@Alex Tillman the turn keys that are in the $30-40k range, what kind of rents and tenants will you get? Will you have to chase those tenants? Thats what always worries me on the properties below 50k. I am in contract on a really really well kept SFR in the Detroit Suburbs and even that has be slightly worried on vacancy/tenant quality.

Im dont mean to sound impolite, I am merely curious as to the true quality of tenants. Thanks! 

@Lindsey Maroun Interesting situation... I just bought 2 SFR's in Bakersfield. While I am aware that the town is dependent on the oil industry, I do also know that dependency to be cyclical. The question is, how many years apart. For example, rumors have it that the Chevron plant laid off a very large portion of its workers recently. Will this have an impact on my 2 rentals? Probably. Can I adjust by slightly lower rents until the jobs return? Remains to be seen.

In your experience, is there a mass exodus from Bakersfield at the moment, and if so, where are all the oil workers going? Gulf coast? 

The calculations dont allow for, nor use any factor of appreciation rate? 

I can see how there would be an issue after the 10th mortgage you have limited options. 

1) Pay off one of the loans because they wont give you an 11th loan 

2) Sell off a few to buy MFR/Apartment Building and get more doors under 1 loan

3) Find a portfolio lender (this is harder to find than you guys make it seem.) Multiple emails to credit unions I sent were never replied to, and from my research on this forum, they want to be in the properties like 60-65% LTV which has significantly lower returns than being able to leverage at 75%

Yes agreed 100%. These deals are just significantly harder to find. I used an ARV of 105k because in my experience, the appraiser NEVER agrees with what I know the property to be worth. One of my houses, I know for a fact the house was worth $450k at the time. The house NEXT DOOR sold for $430k and much smaller with no back yard vs mine. Just one example of many, but the appraiser came back at 400k. I hate appraisers (sorry to all appraisers reading this).

So I used a very low ARV so I can take my lumps up front and not stress when it comes in low.

I could have spent another 6 months hunting for a better deal, or take these now and build the portfolio. I didnt want to get stuck in analysis paralysis as you guys call it :) 

Hello all, I hope I selected the right sub-forum! 

Im happy to report that within 2 months of starting my REI search, I will hopefully be adding 3 more investment properties to my portfolio within the next 30 days. I must like the stress, because I keep adding more when I get bored!

I need help analyzing something. Its something that goes against my own beliefs up until now, but the numbers just dont lie. The epiphany is that using a 30 year term for an investment deal is a far better way to go than ever paying cash for the deal, even if you can, and what strikes me as most interesting, even when compared to a 15 year term. I am a HUGE believer that a 15 year mortgage for my own personal residence is the only way to go, but this steadfast belief in the shorter term has been shaken when comparing investment deals. 

The long and short of it is that an investment property must be viewed as a business. And any successful business owner will tell you that the key to long term success is to lower overhead. The only way to lower overhead in REI is to take the longer term. So I put together the data below, using one of my pending deals. Its nothing to write home about, just a standard 100k house that rents for 1k a month, SFR, Etc. For simplicity sake, my calculations exclude vacancy and some other monthly calculations, and they are irrelevant to this discussion so please ignore that.

This is not a question that has been asked many times here before, Cash, 15 or 30. This is me asking you, WHY would anyone NOT use a 30 given that the returns are so much higher in almost every way. Convince me to pay cash for this property or do a 15 year term, show me what I have missed? 

It takes me 11 years to get my investment back if I pay all cash, approximately the same on a 15 year. But only 6 years to get back the outlay on a 30 year. For the returns on the 15 year to catch up to the returns on the 30 year, you have to hold the property for 21 years! 

Assuming that flipping the property is not the goal, but to hold it for 5-7 years and then sell in favor of bigger and better, what have I missed? My data: 

Thank for you in advance for any insight! 

Abe 
Los Angeles, CA 

Finally a post that I can help in! 

I had a VERY recent experience with them so I think I can give you some real world feedback. 

For a Refi? I suspect they would do just fine. For a purchase? I would (and did) hesitate to use them 

I recently purchased an SFR and only had ~22 days left to close. Sebonic offered a great rate, better than anywhere else thats for dang sure. However, I needed an ASSURANCE that we would close within the 22 day deadline. The way the company works is that they have you make initial contact with basically a salesman, and he promises you the moon, but then you get handed off to other departments that drop the ball left and right. Anyway, back to my story, I emailed the salesman a set of 3 simple questions which he did initially reply to right away. Then my follow up questions were ignored for days. I got some questions from their processing team 4 days later, now having only 18 days left to close. With this kind of delay at the onset of our relationship, I decided against Sebonic and went with the more expensive but proven route (my usual loan broker).

My friend stuck with them and closed in ~50 days when he only had 30, and I could not afford those kind of delays. 

Hope this helps someone! 

@Randall Pomeroy

Hello! Interesting we are at the same age, same location, same basic situation. I wonder, have you looked into connecting with any local wholesalers, if they even exist here in LA? We are at the same crossroads, would love to keep in touch to see what routes we can come up with. 

Hey Chris!

Thanks for the reply. Yes I know of shorter term loans, and yes I actually have my 15 year loans set to pay off in approximately 7-11 years. 

I suppose its a personal decision between equity and cash flow, whichever one values most? Because you cant have both, I guess I need to sit down and create a road map to my goals. I dont really NEED the ~$200-300/mo cash flow that most properties seem to generate after the mortgage expenses, but not getting that return and possibly having the property go down in value later makes the whole thing a moot point as well. 

These are the decisions that need to be made! 

Hello All! 

Glad to have found this forum. Ive built my life based on things I've learned from the internet, and looking forward to the next chapter in RE. Ill give a little background and then I have some questions that have been on my mind. Any help would be appreciated! 

My wife and I have built multiple businesses together, we currently own a used car dealership here in the Los Angeles area and are doing well. Although the business is doing very well, I know that it is a matter of time until I burn out of the business as it is a 8 day a week type of job, but the returns are certainly nothing to complain about. Basically .. I see it as a means to an end, and that end is certainly in RE. 

We own 3 houses locally, we started just like many others here, buying, rehabbing, renting out and moving on to bigger and better. The 2 rentals have great tenants and our current home just finished a massive reno and we will be here a while. So the owner-occupied investment tactic has come to an end (for now). I have a good deal of experience with renovations, loans, use of hard money, access to MLS, knowledge of my local market, etc

That being said, I am excited to begin investing in RE but here are my challenges.. 

1) I am a HUGE believer in 15 year mortgages. A 30 year note basically has you paying for the house 1.75x and paying that kind of interest over the term just doesnt sit well with me. Our 2 investment properties are cash flow neutral AND on a 15 year note which no longer seems possible in todays market (they were bought in 2011 and 2013). The only way to be cash flow positive is to go 30 years and that just burns me up. Is that what you all are doing to be positive, 30 year terms? I see a lot of posts about being cash flow positive, but no details were given on the deal structure. For example, its easy to be CF+ if you are putting 50% down and doing 30 years, but that isnt always the best idea...

2) I read many many posts about some of you guys buying 12-15 (or more!) properties a year. How the heck do you come up with the down payments for all these? Even if they were an average of $100k each, at 20% down plus closing and reno, you're looking at $300k+ in cash outlay for that one year alone, and thats assuming the properties are 'only' 100k. Is there some secret magic I am missing or have yet to learn? Like I said, our other business does well, but not that well! I am assuming it is through the use of private capital or pooled funds but even solo investors are posting about buying 1 house a month and I not only see how that is difficult from a cash outlay perspective, but how does one get that many properties on a mortgage, by having a portfolio loan setup with a local CU? This is perhaps my most important lesson I have yet to learn. 

I have many other questions but this post is long enough, so I will end it here! Thanks again and looking forward to learning from you all. 

All the best!
Abe from Los Angeles