All Forum Posts by: Aron D.

I tried finding unsecured sources of funding for my flip projects.  Most of these companies just apply for a bunch of credit cards under your name in order to secure 0% interest for 12-18 months.  After they have secured these cards for you, they manipulate the system to get cash from these cards making it very high utilization on your card.  They also take a large fee for their services.  I am sure that it would result in a lot of inquiries on your credit report and a hammered score.  If you have no other options, then it might be good.  I think it is very high risk if you are not sure what you are doing or the market turns.  

As others have mentioned, do what fits your situation.  I invest in real estate, max out the 401K ($18.5k), and take loans against the 401K.  I asked my CPA if I should max out the RIRA and do minimal investments to the 401K, but she explained that every dollar that I contribute to the 401K helps reduce my tax liability.  Every dollar contributed equals 40-50% saved from Uncle Sam, depending on your tax bracket.  If I can use a combination of employer 401k, Solo 401k, and loans from both plans, then I can leverage it through real estate and get depreciation.  Eventually I want to learn about whole life policies to shelter more money for investing and leverage even more.  

If you dump $60k in rehab, then do you have comps/ARV that support enough profit for you to sell? Transaction costs in real estate can range from 8-10% and is a hurdle. If you bought for $275k and dump $60k in rehab, then what would be the ARV? If it would be worth $400k, then you would have $360k net and only be left with $25k for your efforts. I am not sure what taxes and fees you are charged in NJ. Good luck with whatever direction you decide to go.

I can picture timeshares, destination resorts, and locals being priced out of their own market.  Look at Hawaii and native Hawaiians.  They sold their land and got priced out of the land that was once their ancestors.  Chinese lease land to big developments in Waikiki on 50 year lease holds.  If the infrastructure, beauty, and tourism dollars start flowing into the region, then Puerto Rico will look drastically different than what it used to be.  I've never been to PR, but I did see St. Thomas and Antigua and everything is expensive.  If I had enough money to speculate, then I would buy up most or all the ocean front lots that my budget could afford.  

Most of the buyers for my flips can only afford an FHA 3.5% down loan and I always have to kick in 3-4% credit for closing credit to close a deal. I always wonder why they don't do 5% and get a conventional loan to lower fees. Most investors wouldn't get deals if buyers didn't get in over their head. The thing that most buyers don't realize is the 8-10% transaction cost if they were to try and sell a home through normal means. Most of the deals that go FHA or low down payment aren't really great deals in the first place. Investors pickup most deals with cash or 20-30% down or get creative with owner financing. 2 triplexes I just closed on require new roofs even though we got a roof cert. for 2 years. Cost is going to be $34-38k just for the roof replacement. If I started out investing and these were my first investments, then it would take a large chunk of my budget. It pays to have a significant rainy day fund for problems like these. I think most people and my coworkers want to buy the "American dream" and it quickly becomes a nightmare once these kinds of issues start to pop up.

I just did a cashout refi for a San Diego property and they allow 75% for SFR, condo and 70% for 2-4 unit properties. They stated 2-4 unit properties are more risky investment to a bank compared to a SFR, condo. It is less risky for me as an investor for a MFR compared to a SFR, but banks have a different perspective and guidelines.

Investing in the market that you have knowledge of and the economic factors that support it is necessary.  I personally leverage, but have a large rainy day fund.  I can't see how some investors cashflow just $100 per door in some markets.  It would be nice to cashflow that much with no money out of pocket, but everyone has their own strategy and circumstances.  I started out with little to nothing when I was in the Army and building up properties slowly.  Some properties appreciated double during this cycle and the rents still covered the mortgage after a cashout refi.  I put the cash from the refi back into more mutlifamily units that produce more rental income.  I like to stay in the working class areas as they make enough to pay the rent and bills, but don't have the financial discipline to save enough to purchase their own home.  Most of my renters are nurses, engineers, and tax payer funded employees (Government workers).  It amazes me the nice cars, clothes, and general stuff that my renters have compared to what I own.  I sacrifice today in order to reap the rewards in the future.  I can't work in a cubicle forever.  

I would price it out with various insurance agents.  I have Travelers on all rentals, autos, and umbrella.  Recently I picked up 2 triplexes and Travelers wouldn't insure and agent tried to use Foremost.  It was higher than I wanted and eventually settled with Farmers.  State Farm and other companies weren't close to quote.  Some insure replacement cost 2-3x what you purchase property for, but if it burns down, then you might want it.  Also make sure that you are insured against all perils and enough liability to put into your umbrella.  Some might provide just basic insurance.  

Look up member Sharad Mehta and his company RESimpli. He offers listsource and postcard, yellow letter services.  I just started today trying a mailing campaign using their recommend criteria or absentee owners.

Thanks for update.  It would be a bad thing for investors.