All Forum Posts by: Joe Kim

I have a 1st position HELOC loan as my primary mortgage. It's a variable rate based on 1 month LIBOR. Unfortunately the rates are rising especially over the last 3 months.

I did something crazy and give up my  3.25% 15 year fixed to get a variable (currently 5.3%?). 

Why?   I wanted to get the BIGGEST line of credit possible so that i could get ready to buy home cheap in the next 2-4 years when the market dips (recession).  

It's really a no brainer if you have a 30year fixed loan.    With my low rate at 3.25% at 15 year fixed, it's unclear if I will save a lot of money on interest if Libor keeps going up.

But I'm not paying the full 5.3% interest.   I'm paying down principle much faster than I would with a 30 year fixed loan and slightly faster than a 15 year fixed loan.

It's a bit complicated to explain but you use this loan as your checking account.   You put ALL of your income to pay down the loan as fast as possible.   So how about paying bills?   You lend back to yourself with the line of credit you have.  

I'm not quite going all in like that but most of my salary does go directly to pay down the loan. (larger principal paydown each month).

Please don't PM me.    If you want to know more about the loan,  PM - albert bui who is on the thread who is the agent who gave me the loan.

I think the crash will not be like 2008-2009.   Largely because mortgages guidelines have been much tighter, people have equity in their homes, etc.. 

However, I think the biggest factor is going to be TWO big players  #1 Institutional investor (hedge funds) who invested in billions of dollars in real estate  #2  Foreign investors (namely Chinese but Australian, Canadian, European too) who bought a ton of US real estate.   This is particularly evident in California where Chinese buyers have bought up a lot of properties.   Now most of these investments are paid in cash with no leverage.   However, I think a domino affect can happen if prices start to fall and or there is a Chinese economic meltdown. 

Any region where there are large percentages of these two types of investors can see a bigger crash than the rest of the country.

I'm building up cash reserves right now (saved up in debt capital (lines of credit), equity in SFRs in markets not affected by foreign/institutional investors)

Hi!   it's tax season.  Every year I dread this time.   I'm terrible at bookkeeping and still struggling.   Every new year resolution is the same....need to do better bookkeeping.

here is my dilemma,   Everyone says, time>money.   sure that's true but If I was not doing some of these "menial" tasks, I may be surfing the web, watching youtube videos, watching netflix?   So time lost doing some menial tasks does NOT always mean opportunity to do HIGHER level work.   It may just mean less wasteful time.

Getting to my point.   I want to start quickbooks to help get organized (for LAST year 2017) and get it ready for my CPA.   how to get started?

I have a online book-keeper lined up who will charge me $30/hr (cheap!) to get started on quickbooks.   I looked up other bookkeepers including my own CPA who charges upwards of $60-75/hr.

But honestly real estate business (even ones like Airbnb with lots of tenants) and especially long-term buy/hold type business do not have that many transactions (only in spurts).    

If I could get started on a simple to use  alternative to Quickbooks, then i can do my bookkeeping once a month maybe for 1-2 hours?   Watch less netflix?  

Any ideas or help on which alternative is the easiest to use and still work well for CPAs?

Looking for rehabber in Indianapolis for help!   I have a bad eviction with lots of damage in my Indy home.

I'm going through 3 evictions in the last 3 months

#1 Chicago property 5bed/2ba, 2000sqft with about $4200 in repairs  - $3000 just for interior painting

#2 Indianapolis 4bed/2.5 ba, 1550 sqft home with estimates of $5000 by first property management and then I switched property management to find estimate balloon to $12,000+ for similar repairs.   Biggest cost is $4080 for interior pain on a 1550 sqft home

Paint job - old PM $1700,  current PM $4000+

replace window blinds - old PM $108, current PM $270

every comparison is the same, price is nearly double on every item with the new PM I just switched over to.

Does anyone have a recommendation for home flipper or rehab guy or general contractor who can make this disaster into something more reasonable?

thank you,

joe 

there is a huge flaw in your story.   How many orthopods make $350K/yr?   Try double that at 700K/yr for orthopedic surgeons.   

Kidding aside, I get your point.   I definitely agree the web designer is wealthier and in the long run, unless behaviors change will steadily grow their wealth. 

Turtle vs. Hare.    Turtle almost always wins.   Except if the hare doesn't take a nap and runs full speed the whole way which is very rare to see.

What the surgeon has is the ability to leverage at a much higher amount. So when the surgeon finally gets on BP and learns about REI and other techniques, they will out run the turtle in a short time.

Welcome to BP and REI. I started investing out of state in 2013 and bought 2 SFR, then expanded to 12 over 4 years and in the llast 12 months, I sold 4 out of 12. I have properties in 4 states. I have mixed feelings about SFR. I think to have 1 or 2 is risky because so many bad things can happen. But having 4+ is not great either. All this talk about cash flow is flawed in many ways if you are buying retail pricing (turnkey providers). Cash flow game is very tricky. Getting long term tenants while not incurring too many expenses is difficult to do with SFR; Much easier with multi-unit properties to cash flow.

And really the best game in town was the HOT markets that were appreciating because if you could have bought homes CHEAP/discountedin the 2009-2015 time period (or even now), then you can get both appreciation AND cash flow (due to super low interest rates) in these so called “hot” cyclical markets like California, Portland, Seattle, Austin – these are way better than the parts of the Midwest and south which had modest appreciation at best.

By advice is to get started as soon as possible but be cautious because prices are high. It’s really a tough game of splitting time vs money to maximize your returns but not spend too much time if you are working full time or want to limit your time commitment.  Also, look into syndications which is basically no time commitment with decent returns. 

I think the best returns are in Multi-family, mobile home parks >>4plex/3plex>SFR. I have yet to crack the 2nd/3rd tier yet myself. However, there is a NEW way to do REI- Airbnb and short-term rentals which maximizes cash flow. Instead of $200-$400/month you can triple or quadruple if you do it right. I just started my first one this month and doing well. However the time commitment is much higher but I like the feeling of control vs. the traditional rental which seems much more prone to luck or bad luck (aka bad tenants)

I just went BP  "PRO".....and yes the "sale" and time limit pushed me over.

I've been wanting to go PRO for a while and waiting for that right sale.   I'm glad to fork over some money to the BEST real estate site in the world!    

Also, looking to strengthen my networking and use the Marketplace too.

I have 4 properties, 3000 miles away that I manage myself.

I have help.  I use a real estate agent for listing the property when vacant but for day to day or month to month mangement I do it myself and so far saving about $6000 in PM costs annually.

it's not hard to find plumbers, electricians, any help via yelp, craigslist, or angieslist.

I have a very busy full time job - 60+ hours per week.   So it's doable.

My 4 other properties across several other states are managed by PMs.

Why did I move to this model?    PMs kill your cash flow.

I bought new homes in Atlanta and hand picked my own tenants.   Good homes + good tenants = easier property management.

I said "easier" ....not "free".    it takes time and effort to manage properties for sure.

My vote is for Atlanta.   Low cost of living out of the top cities, largest airport, good universities - Georgia Tech and Emory.

Located at the far side of the country compared to Seattle.  

Let me start by saying I made a decent return in turnkey investing.  But I think it was more timing than the "turnkey investing" that was what drove my double digit returns.

Majority of REI investors made money if you invested in 2009-2011 time period. You could have blindly picked homes and still made lots of money in highly appreciating markets.

I started in 2013 - 2 homes, 2014- 3 homes, 2015 - 1 home, 2016 - 3 homes (only 2 out of 3 were turnkey).   Finally in 2017 - I bought 3 homes but none of them were bought thru "turnkey providers".  My last 5 homes bought were NOT turnkey but homes I bought on my own using my own agent.

I think turnkey providers can be the "gateway" drug to REI. But 90%+ of the inventory sold by TK providers are not very good.

One of the BIGGEST drawbacks is the terrible cash flow from very poor property management that many of these turnkey providers give (and probably make a  big chunk of their profit by providing property management)

So if you are new and need to start, go buy from a TK provider so you can get your feet wet.

But here are some tips

#1 Spend a few months looking at their inventory.  Learn the market.  Know when a top 10% good deal (among the chaff) comes along and move quickly.   Leave 90% of the inventory given to you.

#2 Really scrutinize the PM (property management).   Bad tenants (selected by your PM), poor initial rehab (done by your TK provider), capital expenditures, maintenance costs will kill your cash flow

#3  Saving grace is appreciation.  But game is coming to an end or already over.

#4 Agree with previous poster that said, TK out of state investing is for doctors/dentist - high income people who have little time and some money. BRRR technique and house hacking is so much better but takes a lot more time.

#5 Last tip. Don't buy less than 100K or less than 150K. try to buy in the best neighborhood so that you can have the best chance at a good tenant. Bad tenants will kill your REI.

#6  Bonus.  Don't give up after your 1st bad deal.   Keep going.   I created a very nice portfolio in 4 years (largely thru turnkey but now I buy on my own).  I would never buy from TK providers again unless we have another MASSIVE recession like we did in 2008!

I sold 4 TK provider homes that I owned in the last 12 months and made good returns on average 10-15% annualized returns.  (1 out of 4 was a loser).  Currently have 8 doors left.