All Forum Posts by: Ben Durwood

Honestly, if I'm looking for a conventional loan, I've found that Costco's network of lenders can have very good rates and many of them are national lenders.  If you google 'Costco mortgage services' you'll be able to find it.  If you enter the property value, current loan amount, property address, etc., Costco will show you the rates of all the lenders in their network.  

Part time investor and full time CPA on this end, too.  To me, being a disciplined investor means buying properties that are cash flow positive or neutral and avoiding properties that cash flow negatively.  When I hear someone buying a $500K property that leases for $2,300/month and nets them negative $400 in cash flow, that raises a big red flag.  In a market like this where values keep going up, you can do okay on a property like that with all the appreciation.  But, if/ when there's a down turn, those negative cash flow properties are really going to hurt.  

That's true - the properties will show on your tax return. If you prove that the properties are in the LLC and not your personal name, I've had lenders be fine with it. It's not that they are ignoring the properties - it's that their policy is that if the properties are in an LLC, then they don't count against the 10 financed properties. I'm not sure it's the correct interpretation of the 10 property rule, but that's their decision.

Also, it may be a good idea to reach out to the conventional lenders you've worked with to see what they look for.

I've run into this issue myself, and I've found that different conventional lenders have different interpretations of the 10 property rule. If you have 9 properties financed by conventional loans and an additional 5 properties financed by a portfolio loan in an LLC that do not show on your credit report, I bet you can find a conventional lender out there that will finance that 10th property. Some will, some won't. Some lenders are more detailed and risk averse and others are more focused on just closing the deal.

I've never heard of someone creating a separate s or c corporation like that, but I'd be curious to hear if others have.  

I'm also interested in investing in syndications and have recently started researching syndicators to invest with.  For me, the biggest concern or risk is the possibility of investing with the next Bernie Madoff.  I know there have been recommendations on this forum to call and screen the syndicator before you invest, network with other investors and get referrals, only invest with reputable companies, etc.  

But, until everything went south, Bernie Madoff had a good reputation too and plenty of investors were referring him to others.  And, I'm sure that when he was getting on calls with potential investors that he was good at smooth talking them and addressing their concerns.

So, how can an investor in a syndication really be sure they're not investing in the next fraudulent ponzi scheme?  Do most syndicator's funds have audited financials?  

Any advice is appreciated, thanks!

I just read through this thread after recently starting to research syndications myself.  I'm curious - did you end up pulling the trigger on any syndications?  If so, were there any lessons learned or tips you can share?  Thanks

@Ben Kniesly, is doing cash out refi's on your existing properties with 30 year fixed rate mortgages an option?  Those 30 year fixed rate Fannie/ Freddie mortgages have the best rates you can find, and you have enough equity in those properties that you should be able to take plenty of cash out.  If you want to increase your leverage, that may be the cheapest way to do it.  Portfolio loans and lines of credit will likely have much higher rates.

I know there are plenty of investors on Biggerpockets who advocate for the yellow letter strategy, and I'm sure it works in some cases, but I've never been a fan myself.  It's just spamming real estate owners trying to find someone who wants to sell, but for whatever reason is too lazy to call an agent and list their property on the open market.  As an investor myself, I also don't particularly like having yellow letters fill up my mailbox or having spam calls/ texts from investors blow up my phone.

How about reaching out to some local agents or brokers and discussing the type of properties you're looking for? Or, search the MLS/ Loopnet. Or, attend some local real estate events and network.

@Gabriel Krut - first off, good for you for getting started investing in real estate early in life.

I actually also live in SD and invest in Grand Rapids, and have few thoughts on your analysis:

In GR, landlords typically pay for water.  This will cost you about $50 - $75/ month and should be included in your analysis unless you think you can get $1,800 in rents while having the tenant pay for water.  

Also, landlords typically pay for landscaping and snow removal in GR.  That will run you about $100/month and should be included in your analysis.  

You've got management fees of 10%, but will your manager also take a commission for signing a new lease?  Many managers do (it can be 50% of first month's rent), and I would include that in your cash flow analysis too if your manager will charge that.  

Is electric split so that each tenant pays their electric bill directly, or does the landlord have to pay for electric?

Are these units currently leased?  If not, how much will you have to spend to get the units rent ready?  

Hi @Jeff Fortuna - I'm also an investor in SFH in the Grand Rapids area. How did you finance the 47 SFH? I know you can use traditional 30 year fixed mortgages for the first 10, but I'm curious how you handled the financing after that. Also, what's the reason that you're not looking in West Michigan for the 50 - 100 unit property? Thanks.