All Forum Posts by: Aron D.

You can always try Wells Fargo. They sent me a letter with preapproved business line of credit and wanted tax returns for proof of income. They also offered business credit cards at 0% for 12 months. The line of credit is also 3.9% for 12 months. They gave me more credit for the cards and less line of credit, but I prefer getting more at 0%.

I have no experience with those turnkey providers, but suggest you use your money and knowledge to invest locally if at all possible.  Create a solid network and leverage based on your comfort level.  The more properties, equity, and rents that you can collect; the easier it should be if you have a hiccup in your operations.  When you invest in turnkey providers, I would imagine that they are inflating the numbers on the purchase price, repairs, or management fees. 

I can imagine the returns are greater for cash on cash returns in the Midwest, but I prefer to keep my money in CA.  The buyers that you mention are probably having to identify opportunities for 1031 exchange.  If you sell high, then most likely you will buy high in CA.  I know investors in CA that have seen their investments double, triple, and quadruple over the past 5-10 years.  Some choose to sell and invest in lower cost areas.  They may be trying to preserve their wealth through solid cash on cash returns.  The tax rates also are more favorable than CA as state taxes are 10% in addition to federal tax rates.  Every dollar that we earn in CA is hit with 40-50% (Fed, State, Medicare, SS) tax.  If people from all over the country and internationally didn't move to CA, then we wouldn't have such a housing shortage.   

Not sure why your interest rate is so high.  I am purchasing 2 triplexes and getting 4.25%, but I locked at the beginning of the month and paying $1k for lower rate.  It must be due to lower loan value, or it could be the result of the higher rate is paying down your closing costs.  Are you receiving credits?  As others pointed out your title fees seem low.  I also think the appraisal is high.  It costs $705 for me to get an appraisal with rent survey for a triplex. 

Being nervous is ok.  It just means that you are going out of your comfort zone.  As long as the actual numbers look right (not proforma), then take action.  Not every deal is going to make you wealthy overnight.  It starts with the first property and it can help propel you into future deals.  I get anxious with every new deal and flip.  Good luck in whatever you decide!

I’ve read and personally leverage as much as possible with a 30 year.  If you can arbitrage and make more money than what you are paying, then take the lower interest rate for the longest period.  Use OPM to generate more money for you.  It helps you scale.  If you have any hiccups in your operation I would rather make the lower payment on a 30, than be committed to the higher 15 year payment.

The only thing I am wondering is why you are investing in a 15 yr. mortgage, yet only generate $100 per month cash flow. Hopefully it takes into account capex and maintenance. What is your ROI or cash on cash return? If those numbers are greater than your interest payment, then you are good. I have met investors that only pay cash, while others are highly leveraged. Everyone has their own scenario they must be comfortable with as their strategy. I personally hate to see dead equity not working.

Thanks for sharing your story!  I haven't done a commercial deal, but most that I find offer owner financing.  I will research this more for future investments.

Inventory is low and demand is high in CA.  The only thing that could sink this ship is employment.  If companies starting leaving CA to cheaper places (TX, NV, etc.), then I can see markets declining, but the larger markets (LA, SD, Bay Area) are also getting foreign money and investors that are parking cash from their corrupt governments.  Every time I visit SD, I see more foreigners moving into once rough areas.  These places are gentrifying and creating increased appreciation.  Our liberal state creates more headaches and costs of doing business for builders so it increases the cost for new construction.  The increased costs of doing business in CA has created less inventory and resulted in more appreciation.  New home build prices are outrageous.  They come out with new requirements every year like fire suppression systems.  HI is also in a similar situation.  I was losing money on a condo I was renting out, but someone bought it and that market is also still appreciating.  More inventory would solve this situation of affordable housing, but we have all the environmental concerns in this state.  CA is also the 6th largest economy in the world.

http://www.politifact.com/california/statements/2016/jul/26/kevin-de-leon/does-california-really-have-sixth-largest-economy-/

I setup business credit with WF and business credit cards with 0% teaser rates.  I was only able to obtain this financing and credit through submitting my tax returns showing profitability from the business.  They provide a certain amount of credit line or credit card based on the income you are able to provide as documentation.  The lines of credit and 0% business cards have helped to complete more projects, but as always it can come back to bite you if things go sideways. 

I still have a normal job, but making efforts everyday to learn and grow my real estate portfolio and hit my financial freedom number. I try to explain the concepts of leverage and OPM to my coworkers and their mind is not ready for growth/learning. They are still in the mindset of Dave Ramsey of paying everything in cash and consumer mentality of buying things for themselves. I told them that the ability to save and invest is more powerful than the next vehicle mod, vacation, etc. Their response to trying to get into the market is that they don't want the phone calls or the hassles of owning rental property or investing in RE. One coworker even made a joke that one day when they are both old working at the office in their cubicles, they would ask about whatever happened to me (coworker that spoke to them about REI and sitting on the beach somewhere on a Monday morning). His comments made me chuckle inside, but also makes me sad when people that you care about don't take action.

I don't want to be in my 60s with failing health and having to work for someone else in order to meet my monthly obligations.  The more people that don't take action, the better for investors as less competition for deals.  I plan to retire overseas and be mobile and let my real estate portfolio pay for my living expenses/travel.