All Forum Posts by: Andrew Freed

@Austin Williams - Leveraging a VA loan for a house hack is such low-hanging fruit for financial freedom. Naturally, a VA loan is an owner-occupied loan, so you do have to live in the property. If you're trying to utilize it without living there, that's simply not possible. Nonetheless, I highly recommend just sucking it up and moving into a property with a VA loan. It's an incredibly powerful way to get cash-flowing assets under your name with little to no funds out of pocket.

Trying to use it without being an owner-occupant is equivalent to wanting to have your cake and eat it too. Building wealth quickly is not an enjoyable experience—you have to go through some pain to experience the reward at the end.

Trust me, from personal experience: the quicker the wealth building = the more pain. That pain could take the form of working long hours, putting other aspects of your life aside for business, or uprooting your entire life for a short period to escape the rat race. It sure isn’t easy, but it’s definitely worth it once you make it there.

@Dan Shuder - I highly recommend you manage the prroperty you are leaving yourself. It will teach you how to effectively manage your own property giving you the tools and guidance to be able to manage a property manager down the road. At the end of the day, it's hard to judge someone else if you do not know what it takes to do a given task. Hence gaining real life experience property managing, even in the short term, will give you the tools to be a great asset manager. Just my two cents. Overall solid plan to get started and looking forward to seeing your empire grow! 

@Ryan Brown - I would definitely recommend giving their section 8 a call and advising of the issue. The last thing tenants want to do is lose their section 8 support, it takes years to be approved for it. Hence if the lease clearly has terms against this and section 8 is supporting the rent, that is your best bet to ensure the tenant complies with the lease. From my experience, section 8 tenants will go above and beyond to maintain their section 8 support if it becomes at risk. 

@Dhruvin Bhadani - At face value, these numbers make sense. Lenders usually determine whether properties are lendable based on the debt service coverage ratio. Lender's like to see that you are profiting at least 20-25% above the debt, e.g .a debt service coverage ratio of 1.2 - 1.25. Some lenders even do as high as 1.3. Based on the numbers you provided, these are well above the debt service coverage ratio of 1.25 hence from a lenders perspective, this is loanable. Additionally, based on your numbers, it should definitely cash flow. 

Regarding building the proprety for $700K, that is a challenge for sure. You also have to build in holding costs, investor capital, operating costs etc. Nonetheless if you can build a 7 plex for $700K (in my area, things are getting built for $200-300 a square foot), it definitely seems like a profitable endeavor. 

@Chris Magistrado - I think there is too much risk associated with remote flipping. Everyone in real estate will be incentivized to upcharge your friend along the process hurting profitiability. 

Regarding next steps, I agree that the best way to approach this would be to have one person act as boots on the ground and the other person handle the back office related items. Additionally, the boots on the ground partner has to be extremely trustworthy. I've heard situations like this go south way too many times. Good luck on your journey! 

Why are you setting up a LLC for an out of state entity? Normally if you own property in that given state, it is best practice to open up a LLC in the state the proprety is located.

Regarding banks, I recommend working with a national branch. Eastern Bank, Bank of America, TD Bank, those are some big ones. They operate across state lines. 

Nonetheless, small local credit unions and banks do normally expect the LLC to be set up in that given state. Happy to make some recomemdnations to some great small banks but the above would most likely apply.

@Nicholas Dillon - Wow I am impressed. One of the very few times I heard a financial advisor provide good advice. Yes, definitely open up a HELOC even if you don't plan on using it. It normally doesn't cost you any money to open and to be able to access that large amount of equity to buy or stabalize your current portfolio allows you so much more opportunity costs.

For instance, I took a $200K LOC out on my primary residence when I first started in real estate. It was on a 1 bedroom condo in Boston. I utilized those funds to purchase 18 rental units. HELOCs are interest only hence on that $200K, it was a monthly interest rate of $1,200. Given that I utilized that $200K to buy over 18 units, the cashflow I received from those units far exceeded the interest on the HELOC. And that is how I got my portfolio started. Fast forward to today, I have over 275 doors. HELOCs are one of the best ways to get started building a real estate portfolio in my opinion. Best of luck on your journey!

@Hai Le - Usually you have to provide written notice / 30 day notice if you decide to not renew their lease or even just asking a tenant to leave. It all depends on the state. Once the lease expires, they would turn to month to month tenants. A quick google search of your state indicates the following regaridng timeline to give notice:

• 30 daysFor tenants who have lived in the property for less than one year, or have a lease for less than one year
• 60 daysFor tenants who have lived in the property for more than one year but less than two years, or have a lease for more than one year but less than two years
• 90 daysFor tenants who have lived in the property for more than two years, or have a lease for at least two years

I'd definitely touch base with an eviction attorney in your state to ensure you are not missing any steps and to have the attorney as a backup option in case the tenant does not vacate easily. Best of luck! 

Good stuff @Jonathan Bombaci! 

@Jonathan Greene - Thanks for the plug. Yes, there are a ton of good meetups around Worcester. The Simplified REI brand (you can find it on facebook or BP) are some really good meetups. Also, white aces meetup in Framingham is good. Also Cocktails and Real Estate at Patriots place.

BP does have a local meetup section which usually has good local options. Meetup and eventbrite seem to be the other platforms that people post them in. Hope this helps and feel free to DM me if I can be of any assistance locally.