All Forum Posts by: Blake Ramsey

I have had this happen several times without issue for my properties in Colorado Springs. 

One couple was making 400K/year and just didn't want to deal with paying monthly (they did break the lease early and we refunded the remaining months)

Anther was a lady getting out of a divorce, had cash excess cash but normally would not have qualified because her income was under 3X

Recently another couple paid 1 year upfront because they sold their house upon relocation. Income was slightly under 3X.

So far no issues to report. That said, we still expected good credit, clean background, great rental reference and only used that if their income was slightly under 3X. 

I also forgot, asking your then GF and now fiance to become a property manager of a 150k+ revenue producing business is one of the hardest stresses on a relationship.

I bought a turn key $850,000 duplex in D.C with an FHA loan ($35,000) down with the intent to live in the basement unit and airbnb the top unit (house hack). However due to life changes, I was quickly forced to airbnb both units. The house was flipped with new appliances, granite counter tops, jacuzzi tub in master etc. The problem was all the other items were done as cheaply as possible and mostly glossed over in the inspection. I mostly blame my naiveness in humanity and eagerness to get the project going.. here are many of the items (not all):

• All 3 HVAC units went out in the first 3 months
• Both "high end" endless water heaters died within 6 months
• The 1918  LEAD pipe entering the home burst
• Some lighting was found to be battery operated instead of electric
• Unfortunately a rock from DC water entered the piping which resulted in multiple cancelations and major repairs
• No insulation between the upper and lower unit resulting in numerous noise complaints
• Pitch incorrect in back yard which results in flooding
• Plumbing piping incorrectly sized throughout home
• All gas lines removed and everything replaced with electric to pass city inspection easier (only house on the st without gas)

Oh yeah, furnishing a two units that can sleep a total of 16 people is not easy nor cheap (especially with a puppy). Little did we know DC a year later banned full time Airbnb rentals.... i still own the home, get a pit in my stomach every time it rains, it is cashflow neutral and am open to sell lol. That said, this property taught me more than any course or book in the world. I now have 13 SFHs valued at $5.7M and am thankful this home taught so many hard lessons early. 

My main lesson: Find your own inspector and hire experts especially on older homes or flips :)

-Blake

Update:

My business partner got an offer accepted on the 6th house but traditional financing is not willing to approve him. I guess 6 houses in less than one year raises some flags. This means the 6 house will be purchased in my name but I don't exactly have the 60k needed and I cannot accept gifts. Here are the two options we have thought of:

1) I liquidate my self directed Roth from my previous employer (~40k) which i was reading is an acceptable investment and would not result in any early withdrawal penalties. Then finance the rest through my personal and business checking accounts. (I am checking with my tax adviser to ensure what I said is correct and that is a viable option).

2) My business partner pays down the mortgage on our first property and we do a cash out refinance which would allow me to access those funds for this purchase since I have a 50/50 stake in the LLC. Then I would take a private loan from my business partner at 6% for 50/50 ownership and deed the property to our LLC.

Any thoughts out there?

@Llewelyn A.

I apologize for the late response. You're approach makes a ton of sense because as a generalist you are able to hedge your bets through diversification. I guess at age 25 I am all in on RI because it obviously allows me to use leverage and scale at a faster pace. I think once we hit around 8 houses and it is harder to get loans, I will see an opportunity to invest heavier in stocks. 

I'm not going to lie though...2 revenue streams (work and real estate) take a lot of time. Three seems like a 24/7 operation to do it correctly. I invest in small cap stocks and it takes forever to do proper analysis on a single investment.

@Colin Smith That is great advice. I think at this point, mixing business other than a 50/50 structure isn't wise. Plus it keeps me focused on my career and only on real estate when I have a significant stake in the property.

@Llewelyn A. 

I really love your approach and hope to achieve similar results. One thing you mentioned was success in trading stocks and real estate but the problem i find is both require capital. I too enjoy trading small cap stocks but when push comes to shove, I tend to choose real estate. 

I guess you are using private money in real estate allow you to do both? Also, why not specialize in one or the other?

Llewelyn A. Thanks for sharing! Just curious, it seems like you are successful with real estate. Are you still trying to expand? Why start another business?

Chris Martin thanks for the post! Your assumptions are all correct. I don't have experience in property management and don't want to take on more than I have to. Ideally I would like to make real estate investing my career which is why I am pumping all my savings into houses to start scaling now.

Obi E. he isn't on BP yet but we are great friends and I haven't said anything that isn't truthful or we haven't already discussed. I might actually have him read this to see everyone's thoughts to help us in the future!