All Forum Posts by: Adam Anderson

As many in NJ have said there are opportunities but you can't just buy retail. I have been achieving solid returns and monthly cashflow by buying distressed properties, fixing, then renting. In most cases almost all the cash I put in can get refinanced out when it's complete and rented. Dispite the high taxes I still get cashflow and a great ROI because my loans are at 70% LTV or less with very little cash in. If I had to pay the market price for the exact same property it would lose money every month.

I sugest focusing on foreclosures & distressed or value add properties. If you are willing to do the work you can do pretty well in most areas of the state.

I personally don't think I'd raise the rent right now in this case. I would however let them know what comparable units are renting for. I have a long time Tennant that is now about $100 below market rent too. They wanted to go month to month but told them I'd keep the rent the same if they renewed their lease for another year. They agreed. Are both townhouses identical? I don't see why you can't raise one and not the other. If they are similar units with the same size and finish maybe you can justify it with having them sign a longer lease. Do you pay for any utilities or garbage? If so maybe you can start to charge these back to help boosts your return.

I agree with @Gary Harris advice here in northern nj. If you have the ability to privately fund your flips with a private investor it might be cheaper but hard money could be the way to go. I personally was afraid of using hard money at first due to the cost and guidelines, but now that I've done a few deals with my lender it's pretty easy and turn key. It's just a cost of doing business that you will incur unless you pay cash with your own money. Also, a good experienced hard money lender will act as a second pair of eyes to help you analyze the deal in their underwriting, they won't want to invest in your flip unless it's a good deal! I'd be happy to provide the contact info for my lender if you email me. The rates are about 12% with 90% of purchase and 100% of construction up to 70% of ARV. I haven't been able to find better terms.

I recommend getting your financing in order first so you can act quickly and aggressively when you find a good deal

Welcome! There's so much to help you  with your career on BP! Be sure to tune into the podcasts, they are great!

Adam

Sounds like you did the right thing! Overtime it will become much eaiser to walk away form a failed deal, just move onto the next one!  On a side note, it couldn't hurt to keep your eye on that property.... You may just get the opportunity to get it again at a lower for favorable price in a few months.  I just finished the rehab on one that fell apart almost 2 years ago. I ended up buying it out of foreclosure in January for $30k less.

Sounds about right to me.  I usually find I'll get 15-20 inquires to show my places 5-7 times.  You may want to do some prescreening on the phone so you don't wast your time showing to people you wouldn't rent to.  Take your time and don't make the mistake of signing with just anyone. It's a landlords market out there, you should be able to pick from a few solid applicants. 

I'd also sugest picking 2 days in the near future to show it and schedule everyone in 15-30 increments so the prospects see there is competition. This will help the most motivated people act quickly and make the best use of your time!

Good luck!

Adam 

Sounds like you might simply be speaking with the wrong banks. I've have much better luck with the smaller banks that have a portfolio loan they hold. Try Boiling Springs, First Hope Bank, Investors Bank, and Lakeland Bank. You may need to use a commercial loan take may adjust after 5-7 years but they should be able to put more weight on the property's financials and accept your income.

Adam

Hi Kelley,

Welcome to BP!  We have similar professional backgrounds and I could not be more passionate about investing in real estate either. I wish more CFPs would take a closer look at the asset class!

Adam

The Self Directed IRA is a good way to go, just make sure you seek the advice of an expert as well as a custodian that will help you along the way. There are a number of strict rules you must follow with self directed IRAs.

Another option, and maybe your best option if you are still employed by the company that sponsors your 401(k) plan, would be to take a loan. Generally you can take a tax-free loan of 50% of your balance to do whatever you want with. 

I would not recommend subjecting yourself to the taxes and early distribution penalties of making a pre-mature withdrawal

Adam

There is no right or wrong way to structure the deal or the terms of the private money. You should really have a detailed discussion with your investor to see what's attractive for him.  He may or may not be interested in equity.  Personally I think 8-10% is an attractive rate to start with, and I personally would want payment terms that allowed the property to cashflow at least a little bit to me.