All Forum Posts by: Adrien C.

Hi Rob- welcome to BP. I'm in Dyer. 

 Fully agree- when they say skin in the game, I can say I have double. I'd be more concerned about losing their money vs mine. I'm leaning towards the first 2 options as they are in my comfort zone. Less returns but less risk. A couple of quick flips could change the situation quickly. 

Thanks Vincent- I'm a tightass and did most of my initial numbers using 4%. I figured I'd be a little more generous and up it a little for them. 

House hacking is not an option. I have a primary residence (which isn't the big issue), a wife, and 3 kids (the bigger issue). If I was single or married without kids, I'd do it in a heartbeat. If I could find a large enough duplex- I'd consider it now. 

Thanks Mike- in my market (specifically 1 town) condos are not a bad market. They are 1/3-1/2 the cost of a SFH but can fetch rents in the $1000-1500 range. We get a huge influx of IL folks crossing the border because of the school system and cost of living. The HOAs do eat into the NOI but I look at that as a CapEx expense since it takes care of the big maintenance issues (roofs, H2O, etc). One should look at these as cash flowing properties ($250-400/door monthly) and not appreciation properties; although my condo has jumped 30% in last 3yrs and are back to 2006 values.

Agree on assessment of #4. Not sure how he's getting $5K cash down payments on houses in Gary. It's appealing to the owner because he sells them at 75-80% of ARV but they get them As-Is. Plus he'll have to deal with foreclosing as well on some.

The company in #1 is essentially a giant wholeselling company. They buy houses in 3 states, mark up a bit, and resell quickly. At times, they'll flip and sell as turn key or as lease option. They are looking for outside capital. I've seen several of their houses and the numbers work well for a flipper- a quick $15-25K profit in most houses and occasionally a beauty of a flip. 

I'm in a unique position as far as REI: lots of head knowledge from reading and some real experience with 1 SFR. My long term goals are to grow a business with enough passive income to live on comfortably. Currently, I don't have enough extra cash to do anything else. My SFR is at 90% LTV and is still recovering from the crash. My short term goal is to accumulate cash as quickly as possible.

My parents sold some family property and are ok letting the money sit in the bank at 0.1% interest. I asked to "borrow" $60K because I know I can get them more and help myself at the same time.  We've discussed 6% interest only loan. 

I've thought up 4 options and I'll list them from less risk to most risk (and/or experience) 

1) Invest money in an REI company. They give 12% paid monthly. My 6% is $3600.

2) Purchase a condo. I can find 2/1 condos or town homes for $60K that need minimal work. I can get $1200/m or more (my condo is a 2/1.75 and 1250 sq ft and I get $1300/m now). Estimated NOI is $3000 using the 50% rule. This is consevative since expenses are limited to inside the unit. A NOI of $4500 is more realistic. This area rents quickly; in the past 48 months at my other condo, I've had 3 tenants and haven't missed a month. This is the low end side of an A area.

3) Purchase a MFH. In this price range, I'm looking at C areas (one with promise as 2 large 500 employee companies are relocating there in the next 3 yrs.). Again using the 50% rule, I'm looking at NOI between $7000-15,000. Factors include if I use a property manager and 4 or 5 unit buildings.

4) I have an acquaintance who just shared with me his current investment strategy. He buys $10,000 bank owned houses (mostly in Gary) and does minimal work if any. He turns around and sells them with owner financing ($5K down and 10% over 10yrs). Assuming they pay over the 10yrs, his profit per house is $40K. He only does 3 per year per Frank-Dodd. 

Thoughts on those 4 options and/or other options I'm missing.  I'm thought of flipping (I'm good at it and enjoy it but I make too much at my career to take the time off to do it) 

Thanks 

 Exactly- leave the Indiana deals to us :) 

I'd move to Sicily to do it but not Gary, In. Lol 

Welcome from NWI