All Forum Posts by: Ben Firstenberg

The implications are all about where the money gets paid out to in the event of an insurance claim. The bank is concerned that the money could get paid to you and then you could run away with it and not put it towards the property. If the insurance is in your name, you don't HAVE to use it for the property necessarily, you could use it for whatever. If the insurance is in the LLC's name, you still don't HAVE to use it for the property, but you can't really use it for anything else.

The bank is just covering their downside in case they have to foreclose. Let's say the property burns down and you just take the money and run. Now the bank is hosed. 

I'd do what the bank says and have the insurance company change it. Likely, there's a clause in your loan docs saying this is an instance of default. In which case they could possibly call the loan and force you to sell. 

I don't think there's any downside to switching. End of the day, I assume you're a good guy and would do the right thing anyways.

BTW, not a lawyer nor an expert on this subject. This is just speculation. You could call the bank and ask for more details/explanation or consult a lawyer for a more accurate response. 

Love your plan and love your attitude my friend. Others have given some great advise here, just want to add a few things I wish I'd known at 17/18

- Read about all kinds of stuff. Try to build some kind of intellectual base. Doesn't matter what it is, as long as it interests you. Luckily in real estate, you don't really NEED to be smart but it sure does help. For young people especially, I recommend philosophy as this is the time in your life when you're starting to figure out how you want to live, which is a really hard question to answer. 

- Don't stop training sports. I'd highly recommend martial arts, specifically Brazilian jiu jitsu to anyone but especially young adults. The mental strength that comes from training is extremely important. Martial arts in particular offer an amazing blend of tenacity, confidence, capability and ego control. Also it's super fun!

- "Don't reject the idea that you could have something to contribute to this world, and that the world would be worse off if not for that contribution." -- Quote from a somewhat controversial character so I won't say their name, but I think the message is valid. If what you want is to house hack and invest in real estate so you can f*** off and retire at 30, that's great. But if you're doing it because you don't see anything else out there... don't be so sure.

- Don't wait for "someday". Don't say "I'll do all this work now and then I'll be able to do whatever I want" or "If I just get $X then I'll be happy" or anything like that. I played that game for a long time and it never ends. Find ways to be happy now. Do what you want now and adjust course along the way. There is no someday. "Someday is a disease that will take your dreams to the grave with you" -- Tim Ferriss

The road we're taking is long, lonely and challenging. But immensely rewarding. Best of luck, we're all rooting for you

The BRRRR Method is more about the principle than the actual details.

Buy an asset, add value, borrow based on the higher value. 

The specifics and the efficiency of the process depend on the nature of the market and the quality of the deal. It doesn't need to be a "perfect" BRRRR in order to be a success, just like house hacks don't need to be perfect in order to be a success.

Hey Mackey, great to meet you! What in particular are you looking to do? Is there a particular investment strategy you're looking at?

Based on those criteria, your best bet is probably Decatur. There are places where the prices are too high, but there are also some areas where it's not too bad. It depends a little bit on the returns you expect. If you're willing to put in some month every month, you can probably find something. But if you want to live for free, you're probably not going to find that north of 154, east of 75/85 and ITP.

There are a lot of great house hacking locations OTP as well. You might have more success there, if the initial search doesn't go well. 

The in-law suite strategy is a good idea. That's where I've seen people have the most success with house hacking recently. 

Best of luck!

There's definitely a more limited exit strategy. Such communities are also much more mgmt intensive, since you’re expected to provide additional amenities. Lenders won't like these properties as much, since it's harder to underwrite the income. And of course your renter pool is much smaller. 

The advantage is you can charge a serious rent premium compared to non age restricted rentals. It's not unusual for 55+ communities to exceed the market by $500-1000+ in rent PER MONTH. I once saw a 55+ community in California (about an hour north of LA) that was renting 1 beds for $5-6k. I forget what the market rate was, but it wasn't nearly that high! But like I said, that comes with much more serious amenities.

Not sure how much this helps, but a good rule of thumb is adding SQFT is typically about $100/SF. A bedroom and half bath might be around 500 SF (for easy math) so that's $50,000 for the addition. And a full gut rehab could easily be another $100K+. Very broad numbers here, could range dramatically. 

What area in particular? 

Henry, this is a super interesting deal! Just sent you a message

Quote from @Chris Seveney:

@Nathan Phan

Because if you look at the sponsors of many fractional real estate companies they come from a tech background and not real estate and it’s much easier to buy a single family property than a commercial one.

I cannot comment on the companies you mentioned but also do your due diligence on every sponsor and their experience. You will be very surprised what information you can find out

Exactly. It's not that easy to buy big commercial real estate. It's very much a "boy's club" if you will. Lenders at that level want you to have 10+ years of experience. Commercial lenders also hate this model, because in the event of default they'd have to foreclose on all of the investors which would be a massive hassle and potentially create massive problems. Not to mention, you need solid brokerage connections to even source the deals to begin with. 

If you want to invest in commercial without much money/experience, I think REITs are a great way to go. I know it's not a very satisfying answer, but REIT investing can actually be very complex. All of the properties they own are public information, so you can really dig into their strategy and assess for yourself if you like the assets/business plan. 

Hope that helps!

A big key for me is having activities that demand 100% of your focus. Exercise is a great example. When you're in the middle of a workout that you're really enjoying, you're not thinking about issues with work or that one guy who was mean to you or whatever. Exercise, meditation, cold showers and saunas are great examples but there are lots more. 

I assume you've heard Brandon Turner talk about Jiu Jitsu? I don't know if HE likes it for that reason, but lots of people love it because you can't afford to give less than 100% focus and attention to it. All of your problems melt away when you're training jiu jitsu. Again, just for an example. 

I also find reading philosophy to be a great way to stabilize my mind when I need it. Meditations by Marcus Aurelius is a great place to start.