All Forum Posts by: Bob Smith

@Wojciech Mroczkowski

NC currently is a great state for rental properties! I am not too familiar with New Jersey but what part of the state?

The Charlotte region (includes Matthews) is projected to continue to grow. It is geographically located to take advantage of all The deep water ports being constructed in the southeast. Transportation, manufacturing and warehousing continue to thrive in our area.

Depending on where you buy, exactly, you can expect high appreciation. Rents have continued to rise but no one can predict when they will lwvel off. We are in the midst of a national housing shortage. Charlotte is feeling this shortage acutely because folks like you are moving down.

I do not see this trend continuing. Can you say the same about where you currently live?

Sounds like your aware of the tax law about not paying for gain on personal residence. However, if you can sell today and reposition the cash into a substantially better environment, why would you wait?

You are free to pick my brain about the region. I am a broker, investor and house flipper. Just like you, i am trying to make the best geographic decisions. Fortunately, i think i live in the best place for long term growth.

Bob

For first deal, cash is better. My guess is that you will make mistakes and take more time. When using leverage time is the enemy.

David, cudos to you for learning about the brrrr method. I am still trying to Perfect the method. Since I have owned property, developed property, flipped and held property for long enough to tell a great story, I have friends who lend me money based on my experience. I say this more to contrast what I am doing with what your trying to do. For me, I borrow 100% of the purchase price from private money. Then, I make the repairs and rent the property. For me, refinancing opportunities are changing in that I can get a commercial bank loan 5.75% with 20 yr amort and 80% of the appraised value. You should be able to use Visio or limaone, etc. For the refi, they will lend 70% of appraised value on a 30 yr amort. Your rate will be about 7% And you will need a debt service coverage of 1.25 or so. For this to work, you need to Richard at 70% of current value and then make improvements which should add $3.00 in value for every $1.00 spent. Additionally, if you cannot promise the investor that you can get the refi, then you will probably need to sell the property to someone who can. Your investor should not care whether you sell or flip. Hope this helps

$700k is alot or a little relative to your risk tolerance. Have you thought about how much risk your willing to take? Also, how passive do you want to be? Passive residential real estate earns about 10% or so per year. You can get a little higher yield in apartments or commercial space. If I had $700,000 cash, i would buy a small commercial property for approx $2,000,000. In the Charlotte, NC marketplace that would get you a 10,000 - 15,000 foot well located strip center. On a passive level, you would make $120,000 per year while buying down your mortgage. Residentially, if you asked, there are lots of guys who have 8-12 houses that they would sell and then manage for you while looking for others to round out your portfolio. The important thing is to know what you want. This is a good forum and opportunities abound. Good luck.

Danielle,

Please let me know how to purchase this property from you.

I would like to start with a tour.  I use hard money to purchase.

Bob smith

Brian,

Your teaser has me interested.  Please tell me the sales price, the terms of the loan, existing in place rent stream, etc.  When you mention a cap rate, what exactly do you mean?  People toss that term around a bit.  I am used to it being defined as the Net Operating Income divided by the asking price.

This would mean the existing rent less operating expenses (including management), less repairs which would amount to Net Rent or Net Operating Income.  This net rent would be divided into the asking price which would equal the capitalization rate.

Is this how you are deriving a 15% cap rate?

I would follow Brendon's advice. Take your time. As new investors we all want to rush in and make a quick buck. Sometimes we neglect to see the risks we are taking. If you get problem tenants out, your life gets easier! If you live in your worst unit, you will reap the benefits of getting top rents for the other 2. What would be the problem with then trying to refi. Take your time rehabbing. The year will go by quickly. If your anxious during your year wait, take the advice of finding a great deal with better cash flows. If you find it, the financing will follow. Take your time. Measure twice, cut once. You will sleep better knowing that you are slowly and steadily following your plan. If your plan is uncertain, take more time to learn, grow and develop your plan.

Try Makings rings around downtown. East Gaston County is a shorter drive than Ballantyne. It gets a bad rap but as Charlotte grows, this is the logical next up and coming area.

Frederic, Welcome to Bigger Pockets and the US. Let's talk more about your situation. My understanding of the investment visa is that you will need a company set up to invest into. I know I can help with the operations component if you are thinking of establishing a real estate business. We will need professional help in determining and following the investment visa rules. I do not think that simply owning rental property will qualify but having a small fully integrated real estate re-development business probably does. Please message me so that we can arrange a time to dig deeper into your personal situation.

Haley, Let's take a minute to understand foreclosure. When a home is foreclosed, it typically goes up for auction to the highest bidder. Since the bank is owed x on the property, they are usually the first bidder. They typically bid what is owed on the mortgage (plus legal). If no one else bids, the the bank has ownership of the property. This foreclosure process is how a lender becomes an owner when the borrower does not pay. If the market value of the property is higher than the bank's first bid, typically, an investor would outbid the bank. Since no one outbid the bank, it's a first sign that the initial bid was higher than the properties market value (considering any repairs). So , the correct offer to the bank is as follows: market price less renovation cost, less profit, less a big margin of error since its your first time and we have not even talked about carrying costs of tax, utilities and insurance. Good luck. Keep searching.