All Forum Posts by: Andrew Flora

Hi Nick,

I invest in small multi-family. Looking to scale, I want to go BIG!

Thanks for the reply Jay.  I’m certainly not a big fish but at 22 doors I’m certainly not a beginner either.  I primarily buy and hold, I typically don’t flip and when I do I refinance to hold it long term. 

My biggest frustration is the scammers. I've sorted through hundreds of "private lenders" which I quickly realize they aren't real lenders. The few I have spoken to that seem legit don't seem very motivated to do business. I understand that they have every right to have their guard up when speaking to a stranger online, but I'm offering them the exact returns they say they'd are looking for(or better). I spend hours of time proving my experience, net worth, offering memorandum, etc for them to slowly disappear. I think a lot of people online like to state they have millions for the attention when in reality they don't have funds to provide at all. I've yet to find a privately money lender or JV partner that can show proof of funds to move forward with the deal. They all like the deal until it's time to put the money up then they turn into a ghost and disappear.

Very frustrating, but part of the process for now.  I want to scale quicker by buying larger assets, but that takes capital.  For now I will continue buying two or three 1-4 unit rentals every year until I can scale differently.  I might eventually attempt to sell off a few to 1031 if I can get everything to fall into place.

I love the community here, but I would like BP to put more focus on utilizing the “references” section on user profiles.  That would certainly help vet the real investors from the scam artists and the liars.

@Matthew Nixon I would advise you not to flip when you are starting out. Flipping holds a lot of risk and really isn't that profitable for a lot of people unless everything goes perfectly, which it never does.

Your wife has a lower risk tolerance so make sure to account for that when investing because you guys are a team and need to find middle ground.

For your first deal buy a single family home or duplex that just needs some cosmetic upgrades like paint and flooring. Make sure the roof and hvac is in good shape. Make sure you get a really good deal when you buy so you start with some easy equity.

Since your wife has a lower risk tolerance pay 40-50% down to lower the risk and increase the cash flow renting it out long term. Put the numbers in a BP rental property calculator and show her the numbers.

Use a few small rentals as a proof of concept and to hone in your landlord skills, systems, and to get a team in place. Then if she is confident at that point you can scale up.

I've seen a lot of people jump straight into flipping and go bankrupt. Flipping is a risky way to invest in real estate, I understand your wifes concern.

The “best” thing to do will vary from person to person.  If I were you this is what I would do:

1. Cancel all the cards except the one you have had the longest(this will keep you from damaging your credit age) and give that last card to your husband and let him lock it away somewhere. 

2.  Refinance the primary, I’ve seen these rates under 4% recently at local banks, use this money to pay off your CC debt only.  Do not use it for anything else.  

3.  Do not pay for your child’s education.  Encourage your child to apply for hundreds of scholarships and seek cheaper education, if the child needs a student loan he/she can get one but teach them a valuable lesson about money and debt and encourage them to avoid unnecessary student loan debt.  Chances are, if they put in the work they can go to school for free.

4.  Make a budget and a plan that includes paying down that refinanced primary.  Make a goal and be very serious about putting money towards that goal every month until you have achieved it.  You must be very serious about your budget, if you do not take this seriously you will relapse.

5.  Find some close friends or people that have beaten gambling addiction and meet with them bi-weekly at the least.  Hold each other accountable, if you feel weak lean on them for help.

No matter how long you are clean you can not get lazy with addiction.  It lives inside of you forever.  If you slip up once you will completely relapse.  Find healthy hobbies so you have something positive to get addicted to. Get addicted to analyzing properties, reading books, jogging, yoga, gardening, cooking, etc.  You will be able to find something positive to fill the void. 

You’re doing the right thing by talking about it.

Jerry, 

Only 1 door has conventional financing. 15 were acquired with seller financing(1st position secured note), and the rest are free and clear except for a 50% LTV HELOC I have on one.

Hi, I'm an Indiana based buy and hold Investor with 22 doors. I need financing for a SFH. Purchase price is $59,900, rent will be $750. No repairs needed. I currently used a large chunk of my capital to acquire a 9 unit portfolio and a different SFH. I'm usually a cash buyer but don't want to touch my reserves set aside for rainy days and put most of my working capital in 10 other doors. I have $10-15k to put down and great credit.

Ideally I would like to find a private investor that would like to fund this small deal so we can build a business relationship for funding larger deals in the future.  I’m also open to conventional financing if there is a bank here that handles small loans.

If I can’t get it done here I’ll just pay cash for it, but thought this would be a good opportunity to begin a relationship with a private money lender.

Thanks

I would buy a lightly distressed(just needing paint, flooring, cabinets, etc) duplex in a good neighborhood in the Midwest for $50-80k.   Eventually Put $5-8k in each side with the cash flow.  After your light rehab is complete and rents are up to market it look into refinancing to pull your money back out to do another one.  Or depending on your risk tolerance hold it for a few years and pay it off then save cash to buy the next one.  Free and clear properties aren’t the fastest way to scale but the cash flow is sweet and they can retire you very quickly and safely.

An example deal just sold in my turf, unfortunately my offer didn’t get accepted, but I wasn’t willing to over pay.

B- Duplex in the Midwest 2 bed/1 bath on each side

Sold for $78k (I wanted it around $70k)

Currently rents for $500 per side to long term tenants 

Rehab needed $12k-16k (3 floor joists and could use a new roof, could use some cosmetic upgrades but long term tenants wouldn’t require it but I would have done these upgrades in the future during tenant turnovers)

Rent potential $675-700 per side

ARV $130k

These deals come up fairly often just need to look constantly and analyze deals like crazy until you find one.

I absolutely would not.   I like to be diversified.  If your real estate fails you, you will still be able to retire with your retirement accounts, if you put it all in real estate and fail you have no plan b.  When you turn 60 you could withdraw some to buy a couple properties but I would never advise anyone to do what you are considering.  Fund real estate and your Roth both aggressively and you will be rich.

would I do it? Yes, because I have a pile of cash reserves in the bank to get me through rainy days.  I’m also young, and still have a w2 income, if it goes bad I can likely absorb it, if I can’t absorb it I’m young enough to recover from it.

This all depends on your income, cash reserves, and age.

If you think you will break even plan to lose $5k-10k per year for the first 3-5 years.  If you don’t have an extra $5k-10k per year in your budget you need to walk away.

Plan to refinance this property as soon as possible to become cash flow positive.  This is a risky amount of leverage, you must work rapidly to get to a 30-40% equity position to minimize risk.

This deal will be a game changer for you if you do it, it will make you wealthier or make you bankrupt.  Be smart with your decision.  Overestimate all expenses and underestimate all income, plan for the worst strive for the best.

First step would be to do open house style showings.  I advertise for about a week to gain interested parties, then I host one open house for 2 hours.  I do not meet individuals for single showings.  

Best step would be to post the application online.  Screen applications and only show it to those who meet your minimum requirements.

If you still have an overwhelming amount of applicants, your price is low and you need to raise rents up to market average.

If you do all this and are still overwhelmed just be blessed that your rental is very sought after, that should give you some peace of mind.  Consider hiring a leasing agent to show it and screen tenants for you.