All Forum Posts by: Benjamin O'Brien

I have a different perspective than some. This is a conservative option (not considering using other peoples money or other creative investment strategies such as house hacking). 

If you are going to pay off $100,000 in 5 yrs that would be about $20,000-22,000 a year that you are paying to your loan. You are probably required to pay $300 or so a month to your loan anyway or $3600 a yr (estimates only of course). So that means you are going to pay about $16,000 to 18,000 or more extra a year to your loans. 

My preference would be to save the extra payment for 1 to 2 yrs and purchase an investment property. It will be a modest property but if you purchase right you should be able to cashflow $300 or so a month (at least that would be your goal, if you can cashflow more, great, if it wont cashflow that much it might not be the right investment). This can now covers your Loan payment. You continue to save the $16000 a year but now you also add the $3600  a year in loan payment you no longer have to make. In another year or 2 you buy another property. This is now cashflowing another $300 a month, which you can either pay to your loan or use towards your next investment.....you continue to repeat this process.

The difference in doing this vs just focusing on paying off your loans in the next 5 yrs and then starting to invest (It will be 7 yrs before you can start investing because after your loan is paid off you will then need to start saving for a down payment in order to be able to invest), is that it may be better to have 3 investment properties which are paying your student loans and providing some additional cashflow and still having your loans. Even if you have to keep paying your loan, your investment is taking care of it. All the while, your investment is increasing in value and your tenant is paying into your equity every month.

Even with a student loan like that, if you live frugally, you may be able to get conventional loans for your investment properties.

Waiting to by property is necessary sometimes. Buying property and then waiting is what I would recommend. Lets say your properties increase in value over the 5 years. You then have several options that you wont have if you just pay off your loan. 

The difference is 'reducing your expenses' vs 'increasing your cashflow'. If you have played Robert Kyiosaki's CASHFLOW board game you may have noticed that paying off your expenses wont get you out of the rat race.

Invest, and let your investment pay off your student loan. Or invest and let your investment pay for your Corvette or what ever luxury you want.....its the same concept.

What ever you decide, you will have some time to continue to learn. 

Best of luck.

My Investment properties are in 2 different LLCs. I have 10 in one and then started a new one. I know some advise to have an LLC for each property. My properties range in value from $70,000 to $130,000. I think if I were dealing with properties with a higher value I might consider one LLC per property. Each LLC has costs associated with it, so unless its necessary, my preference is to minimize expenditure. My legal advisor suggests keeping no more than $1 million worth of property per LLC. I am not sure what you do if your property is worth more than a million....

I have not used my LLC income yet to qualify for loans. I'm still figuring out how to do that. The LLC will need commercial loans which have less favorable rates and conditions than the conventional loans, but it is doable and others seem to be doing it to scale up their investments. It may be my next step. I do believe with commercial loans the income producing aspect of the property is what is considered, not your personal income.

I hope you have received answers to your questions. I have used 4 different companies.

I have had very good experiences with midsouthhomebuyers, a company out of Memphis. They do great renovations and have a philosophy I agree with (they provide a great product to tenants for a at or below market rent rate, and do not charge a rental application fee to prospective tenants). I have not had any vacancies yet (started purchasing with them 3 years ago) and they are able to meet and in most cases beat the 1% rule.

The other companies I have used have morphed over the last 7 yrs and I have decided not to continue investing with them because they can no longer meet my basic requirements for my investments (things like the 1% rule), but outside of this, there service has been good and I still own properties with them.

Of the Turnkey properties I own, only one has not made a profit (when considering cashflow only) and in retrospect, this could have been avoided if we had required a better rehab upfront. We just replaced its roof after owning it for 5 years and that was a $7000 hit (well less, insurance covered $2700 of it). When we compare the quality of Rehab that this home had vs what midsouthhomebuyers routinely does, there really is no comparison.

Because I still have properties being managed by the other companies, my preference is not to name them here. They are all good companies, but are no longer able to meet my investment needs, but this also may change.

My only issue with midsouthhomebuyers, which I think is a credit to them and an indication of how good they are, is they have such a long list of investors waiting to purchase their homes. It is about a 8 month + wait to be able to purchase a home at this point. As soon as I buy one I get right back on the list.  I believe this also reflects their preference to not vary from the systems they have in place to provide great properties with great returns.

When I started purchasing with them I could buy a home about every 2 months.

For this reason, I am also looking at other turnkey companies.

Best of Luck.

I am not an expert and I am still learning and growing. I have 14 homes. I started with my own personal home. Then I purchased 9 more using conventional mortgages. I purchased each of these homes in my own name and then quit claim deeded them into my LLC. Like I said, I'm not sure if this is the best move, but it is how I did it. I then used the income from the 9 homes to pay off mortgages and each time I pay off a mortgage I purchase a new home with a conventional loan.

I have not had an issue with having the mortgage in my name and the homes in the LLC, although I have heard that others have run into issues with this. At one point the mortgage company wanted to know why my name was not on the insurance policy for the homes (it was in the name of my LLC), and at that point I spoke with my insurance agent who added my name back to the policy along with the name of the LLC.

Best of Luck.

From the perspective of someone who has investments with Realtyshares, my experience has not been great. I have invested into 4 different investments with Realtyshares. All 4 investments ran into trouble, namely the borrower has stopped paying and gone into default. One of the investments finally paid out and return the principle with over 10% ROI (more than the projected 10%). The remaining 3 investments are now going through the process of foreclosure.

The foreclosure process can take many months. 2 of the investments are over 9 months past their projected Maturity/Exit date.

I would say that if you don't need the money, are extremely flexible as to when your principle investment will be returned, do not rely on monthly interest payments and are OK if your principle is never returned at all, than this might be an OK option.

For me, every time I listen to a BP podcast (I listen to all of them) and I hear that Realtyshares is sponsoring the show, I cringe, because it reminds me of the 3 nonperforming investments I still have remaining with them.

The story is not over of course. And I will be happy to update you as to the outcome of the remaining 3 investments....I just have no idea when this will be. I have found the updates that Realtyshares makes regarding these loans are sparse.