All Forum Posts by: Lee G.

This is a "depends" question.  If you are lucky enough to enjoy a job/ profession and have several years before retirement, I would argue to pay down the debt before purchasing the next property.  This is the Dave Ramsey way.  I think this can be successful and is less risky.  

I also believe if you buy right and in a lower price range, you would be amazed how fast you can pay off a mortgage if you really put your mind to it.  (Another Dave Ramsey point).  To me, taking your RE investing career one step at a time seems prudent and again, gives you time to get your feet under you by building a equity position.  

Most say location, location, location.  To dig deeper into that concept I look for at least 3-5 selling points for why  I like the location which can be for different reasons such as....being Close to a good school/ close to desirable locations such as shopping, sports arenas/Beautiful trees/ near transportation/ near hospital.  When it's time to sell, you want to have clear selling points and having several desirable points will protect your investment in the long run.  I believe the other factors will work themselves out in the long run if you have multiple location selling points.

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Frank,  

I wanted to ask you about the strategy of negotiating after being under contract.  I plan to get an inspection ASAP and I will have one month before the due diligence period runs out.

 Can you elaborate on what you said about waiting until the end of the due diligence period to negotiate?  I guess the worst thing that could happen would be they say no.  I do like the idea of putting pressure on them.  Plus, the sellers inherited the house and live on the other side of the country so they are motivated close.  How close to the deadline would you wait?  Any tips, I would greatly appreciate!

I found a single family property that I am interested in, however the HVAC is over 20 years old.   I was planning to live in it for 2 years and then turn it into a rental.  I've been through this before and would rather go ahead and have the new HVAC in place before turning it into a rental because I know first hand of the headaches of a dying HVAC unit.  

I'm estimating that the HVAC would cost between $6k-8k.  I would love to hear opinions on how you factor in aged HVAC into how much you would buy this property for.   This property has lots of upside potential and I'm thinking that the price that the sellers would agree on is $115,000.  My thinking is that this house will not need significant repairs for 10 years after the HVAC is replaced.   

Also, would it be a good negotiating strategy to get the house under contract and then after inspection ask for a price adjustment for the aged unit? 

I agree whole heartedly about these real estate books!  

I must say that one significantly understated factor of real estate investing is the tedium of closing deals once your get your offer under contract.   It's taken me every ounce of patience to deal with one situation after the next and then on top of that, to ponder the junk fees these morons are charging for remedial work.   I don't understand why this process has to be so tedious!!! As a result,  I will be in no hurry to jump into another investment property..I'll need 2 years to recover from this closing  colonoscopy!! 

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I agree with you on the cash on cash of 15% which how I assess multi-families.... So why do you think that Kellar included it in his book?  His book was supposed to be based on research of how successful investors "bought it right".

My counter argument would be that many people have limited capital to invest with so if they decide to deploy capital, they want to ensure that it will be as much of a "homerun" as possible.  If you can afford to buy one investment property a year, then this may not matter as much.   Just a thought.   I am still in the earlier stages of my investment career.

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It seems logical that this approach would work, however, is it difficult to find sellers willing to sell at such a deep discount?  Also, out of the properties you make offers on, what is your typical rejection rate?  Do you have to put in offers daily knowing you will have so many rejections just to meet this criteria? 

I'm amazed how this book glossed over this topic of  the "discount your require".  I would argue that its the most important concept to long term success!

After reading the Millionaire Real Estate Investor by Gary Keller, the one concept which I had not previously considered is "the discount you require" as one of the key factors in your buying criteria.   

I would appreciate other opinions on this concept of how to come up with a viable strategy applying the discount rate you require when making offers.  I'm not sure how realistic it is to say you expect a 20% discount.  However, in my mind, if you could achieve a 20% discount on every buy, it would almost be guaranteed success.  

My current approach to buying multi-families is that I run my numbers and once I am satisfied with the ROI/cash on cash metrics and that becomes my purchase price target. Should I be taking that calculation and reducing it by a discount rate??