All Forum Posts by: Bernie Tobin

Thanks, Steven.  Another variable is that I have a partner.  He may be willing to lend me the money for another rental, and once I am moved into a new house, then I can refinance and pay him back my half.

Your advice has been helpful!

As an update on our first property:

 - Total investment was right around $29,000 as expected (lucky guess for first timers???)

 - The area we purchased the property in is a bit depressed, but we are getting $875 per month and have a renter moved in and paying (on time, too!)

I do have a question....

What now???  My wife wants us to buy a new house soon, which I am saving a down payment for.  We currently live in an owner occupied duplex.  At the same time, I want to pull equity out of our property that this article is based on and buy another rental.  This creates a problem... obviously the wife must be happy.  The issue is that if I pull out more equity, my dept to income ratio will not be attractive to the banks.  Any advice?

Thanks to all...

Vince.  Congrats!  Sounds like a great deal.

 You are right on the numbers... We consider it a steal.  I've posted a teaser ad and have already received interest in renting it at $1100... We will see how it goes after we finish rehab.

Thanks for the idea on the fence... Perhaps we can remove the barb wire section and place new caps on it.

My partner and I began discussing Real Estate early this summer.  Originally, I became interested in RE after hearing about friends who were successful.  My first "Youtube" search led me here, to Bigger Pockets.  After finding this site, I became addicted.  I've been "lurking" and reading your posts, and listening to the podcasts daily.

Both my partner and I took out HELOCs on our current homes (mine is an owner occupied duplex that I rent to my brother... another story for another time). We have an LLC in place, our EIN set up, a bank account, and an operating agreement. While working on these items, we have been searching for homes to purchase. We tried "driving for dollars" a couple times and actually had decent leads come out of it, but did not end up making a purchase as the numbers did not fit. We have been monitoring auction websites and this is where our first deal came from.

Here is the break-down:

• 3 bed, 2 bath vacant home
• Located in a fairly remote location, however there is significant employment within 20 miles
• Manufactured home on a foundation
• Repairs needed are mainly cosmetic... some flooring and paint and a little work in the bathroom.  Landscaping, and there is a massive barb-wire fence around it we need to remove.
• We found comps in the area for around $60,000-$80,000 (we are newbs so it was difficult to pinpoint exactly where we should be... we played it safe)
• Our plan is to rehab and rent
• We believe we can rent this for at least $900 per month.  There is nothing available to rent within 20-30 miles of the home... We are going to pre-market this at $1100 per month and see what happens
• Our max price we were willing to go at auction was $34,000 (based on 60,000 * .7, - 8K estimated repairs), ($900 rent*50 = $45,000 - $8k = $37,000)... We landed on $34,000 because there are some unknowns
• We won the house for just over $21,000... We consider this an immediate $13,000 profit!

We are hoping to close this week (as soon as possible) and get into the house to put together a good scope of work and get this house cash-flowing as soon as possible. Once the house is in good condition, we will take out a HELOC on it and do it again!

BONUS:  While bidding, we noticed that the house comes with two identical lots next to it... We are considering removing trees, installing well and septic, and placing manufactured or mobiles homes on these for rent as well.  Thoughts?

Any feedback or words of caution are greatly appreciated.  We are excited to finally have our "feet wet"

Bernie Tobin

Great Lakes Real Estate and Rentals, LLC

Thank you all for the input! We set up a normal LLC to get started.

I've found my first deal and I have two partners to go in on it with me (it's a mobile home park that looks to be a great deal).

I've been approved for a home equity loan and will likely get $50,000 on a line of credit.  It looks like we will each go in for about $100,000, which leaves me short.

I know people that are willing to invest... I just need to know how to best do this.  Is 9% typically a good return?  What is the best way to pay them back within a year knowing that the cash flow from the MHP will likely not be enough.  Perhaps a 3 year note for 6%?

Also, how do I have a note made up?  Lawyer?

Thanks for the advice!

My business partner and I are structuring our new business here in Michigan.  I've listened to the podcast on limiting liability, which was awesome, but I have a couple questions.

• Is it possible to set up a series LLC in Michigan?
• Is a series LLC the best choice for Michigan?
• If possible, how?

I know that at some point I will need a lawyer, but this will help us build our business plan...

Thanks in advance for any help!

As a newbie investor, I love "stalking" these posts.  Thank you all for the input.  It looks like pulling permits is worth the time for anyone interested in mitigating risks, which is the category I fall under.  

This may sound a bit funny, but I had no idea permits were required for the type of work outlined above.

Thanks again, everyone.

 Thanks, Mike!  This does help.  I think I am safe as my job is very stable and I am in very good standing where I work.  My wife will finish school soon and her income should improve significantly.  Thinking about this... I am at least 2-3 years out from buy our "nice house", so I may as well start building my snowball now.  Thanks for the advice!