All Forum Posts by: Brian Schmelzlen

Austin, I think it is a good idea to treat contributing to your savings/investments as a mandatory thing rather than something optional that you will do "when you have enough money".  It creates good financial discipline for you, and will quickly build up your net worth.

Hi @Yeng Hawj,

Are you primarily interested in buy and hold or fix and flip (or a different real estate strategy)?  Also, are you investing in the Elk Grove/ Sacramento area, more coastal, or out of state?

I appreciate your ambition.

What you want to do can be done, but it will take work.  First, there is finding a property that is a good investment, but I am going to assume that you can do that.  Second, you will need to find a seller willing to do seller financing.  There are a lot of good reasons for sellers to finance the deal themselves, but if they don't already know them you will need to be able to sell the idea.  This can be difficult because even though it may be to their benefit to seller finance a lot of people would rather just take their money and run.  Finally, even if you find someone willing to do seller financing, you will need to find someone who is willing to finance YOU.  If you don't have a lot of money or any experience, this will be a very tough sell.  The seller needs to be convinced that you can handle it (essentially that you can protect their investment).  It can be done, but you are going to need to be very convincing.

My advice would be to get a job while looking for your first deal.  That way you can start to build up some of your cash, and hopefully gain experience that will help you convince a seller that you are worth betting on.

Alternatively, find an experienced investor to partner with.  Be prepared to do most of the work finding and putting together the deal, and have the partner there to help prevent mistakes and make sellers more comfortable with the idea of financing you.

I like the idea of house hacking so that you are essentially living for free.  In terms of what you should do with your profits/additional savings, there is a pure math answer and an emotional answer.

The pure math answer is to do whatever makes/saves you the most money.  You have a blended interest rate of about 6.6%, so if investing the additional money into more real estate will provide you a greater return than 6.6% you should do that.  If your investment will not get you that return, pay down the debt.  I think in most cases your real estate investments should do better than that, but obviously that depends on what investment you are looking at.

For the emotional answer, it is how does the debt affect you and your fiance emotionally.  Does it cause you any stress or anxiety, or is it just another bill that needs to be paid?  If having the debt affects either of your quality of life (not for any rational reason, but simply because having debt makes either of you feel less secure), then that has to be factored in.

Hi @Khaled Fawzy,

It seems like the seller has something to hide if he/she does not want to provide you with a real appraisal.

The income valuation approach is useful for determining what a building is worth now, but yes you obviously have to factor in other variables.  Current tenants leaving when their lease expires (i.e. not renewing) is always a risk, but one that you may be able to address if you are allowed to talk to the current tenants.  While you obviously won't be getting a guarantee that they will renew, you can at least find out if they are happy with the building and are planning on renewing.

The income valuation approach is also only as good as the numbers going into it. Before finalizing any deal, not only will you need to make sure that the NOI is accurate but that the assumed cap rate makes sense for the market.

Hi Charletta.  Welcome to BiggerPockets, and congratulations on finishing up your college degree.

Wholesaling seems like a tough business, but hopefully with your background you will find success with it.

I don't know if it is a scam, but what you described makes me very nervous.

First, you should do some research into him.  There are often warning signs online if someone is a con artist (other people complaining, etc.).

If enough of your concerns are addressed that you decide to move forward, I would not be paying a 1% origination fee in cash.  IMO, it should come out of the money he is lending you (e.g. if he is lending you $100,000 he should only give you $99,000; you should not be paying anything up front).

Welcome to BiggerPockets, and congratulations on your great reviews.  Clearly you are doing something right if your vacation renters love you.

Do you have a business entity?  If the van is only used for business purposes, it may make sense to have it be owned by the business entity.  It makes it much cleaning to deduct all of the cash expenses (interest, gas, repairs, registration) and to depreciate it.  As a cargo van, special accelerated depreciation rules may apply.  This is not to say that any of this cannot be done if you own the van personally.

Sorry to revive an old thread, but I am curious if anyone's opinions about PPR has changed?

More importantly, have the funds continued to make the monthly distributions every month without fail?