All Forum Posts by: Phillip Rhegness

I whipped up a quick and simple Excel worksheet to help me work through various scenarios of how to make an apartment building have a positive cashflow. It isn't impressive but I thought I would share it with those of you on here who want to quickly run some numbers.

If you see something it is lacking let me know.

You are right, it is a time consuming process to filter through so many requests to find one you like.

Your posts about the limit on how much a borrower can receive is a problem I see as well. You can only help someone who wants to do very minor repairs to a flip. I also think it would be more advantageous to allow the borrower to get their hands on more funds allowing more possibilities. But it is probably limited to minimize the risks, as you said.

The default rate, according to the site history in incredibly low. Surprisingly low. I don't know if the stats are skewed to reflect that or if that many borrowers using Prosper actually do come through with their payments.

Besides, I think it is kinda fun to look through when I find the free time. Just to see what people are thinking and what scheme they can come up with.

all cash, that IS the answer I want to hear. I don't know what I am doing and I am learning as I go. I do move slowly, think about my plan, and modify it constantly trying to do what is best.

The property only used a small portion of the equity in my home, so it is not hurting us financially. The only reason I used my home's equity is because it only cost me about $175 to close the deal v/s all the closing costs associated with a commercial loan.

Our home is currently on the market (for about a week now) and the sell will pay the mortgage off, the equity line, and leave plenty of cash for a nice down payment in the next home as well as pay off a lot of other debt.

The property has only been ready to lease for a couple of weeks now. It was tied up in bankruptcy court for years before being released to me. (the closing took six months!) Before that is was the property owner's personal business for many years so there is no rental history to compare with.

There is a shortage of industrial property here in the city where I live. I was told by three commercial developers/investors to not take less than $2500/mth for the open storage and one of the buildings. I thought if I got it appraised I could base the rental amount on the estimated value.

I have not advertised the property very much. I was talking with the power company about leasing it but I am still working my way up the chain. The holiday week last week took some people out of their offices.

I placed an ad in the nearest big city paper and will place one here in the local paper this week.

So, you say the property has zero equity? Even though I purchased it way under value? Why would that be? I am not seeing it in that perspective but want to understand what you are saying.

I feel confident enough in their process, well, as confident as you can seeing as it is such a high risk investment.

The tools offered to research the potential borrower are satisfying, for me, and I feel I am given control over where my money goes and to whom, much like buying stock in a company.

I am only testing the waters and don't have too much tied up in the site right now. I see some "lenders" who have several thousand dollars invested there. If it continues to prove to be a "safe" high risk investment I will certainly open more funds to invest.

23% return is just hard to walk away from... :wink:

Do you dabble in Prosper?

I am learning about the "proper" way to take advantage of leveraging equity using rentals/apartments/leases and holding the properties for an extended period of time, i.e. for years.

I have an industrial property I purchased using some of the equity in my home. So the property has no lien on it. I will be getting it appraised after I figure out what I will purchase next and how I will be using the equity in the industrial property.

A conservative guess is $80-100,000 in borrowable equity in the property (taking 80% of the appraised or FMV).

What is the better way to utilize this equity (or cash) that I have? Leverage out all $80,000 ? Or use only $20-30,000 of it the first time out?

Also, I have the industrial property advertised for lease for $1800 to $2200, depending upon use. I have had three offers at $800 but that is way too low and those were not the type of tenants I am looking for anyways.

When it leases I will have it appraised once again to reflect the value in the lease agreement. I want to have a second property by then so I can capture a total value of assets own by the LLC I have.

So my question is, after all the rambling, What is the proper way to make use of your equity through leveraging? Use all of it on a single, large purchase or spread it across as many properties as possible?

Flip-it, you still watching this thread?

Why choose to go with a private investor on the home? Trying to get a lower interest rate than what lenders are willing to give you?

If bad credit or no credit is the reason, try something like prosper.com. I have used this site to lend money to others but I have not borrowed money there.

John, I plan to sit on the property until my son is ready for college and sell it then to pay for his education. He is only nine now so I have plenty of time for it to appreciate further.

It is in the city limits and I spoke several times with city planning about future growth in the area, which business are slated to purchase the surrounding property, and things like that. City planning warned me that when I bought it (and I told them how much I was offering) I would be offered $100,000. They advised not to take any offers right away no matter how tempting they were.

I see the big payoff coming through leasing the property right now and selling it for several hundred thousand dollars (or more) in ten years. An enormous amount of growth is planned for this area in that time frame.

And it is only costing me about $300 a month. Cool.

I am interested in what wakefield is planning with his apartment building. There is an eight-unit for sale here and a quad for sale in a small city about 20 minutes away. I ran the numbers copying his format and found the absolute maximum I can purchase the property for and still have positive cashflow. Thanks!

I am going to really enjoy learning from all the great advice that is shared on here.

I just discovered this forum and have begun trying to read most of the posts before I begin asking my own questions.

As for your comment on not being able to find the fantastic deals straight out of the MLS, I do think there are some in there. Look at the oldest listings.

I purchased my first investment property less then two months ago and it came straight out of the MLS and local free buyer's guide. It had been on the market well over a year. Industrial zoned property with a new 3000 SQFT warehouse and an old 2000 SQFT building on 2.5 acres half a mile from the interstate. Started out at $179,000 and I offered $58,000. My offer wasn't taken and a month later I offered $45,000. It was accepted then.

Nobody wanted the property until someone showed interest in it. I was offered $55,000 two days later after placing my offer. After I closed I was offered $90,000. Strange. Why didn't these people make their offers while it was sitting on the market?

I think the reason is they forgot about the property. It had been for sale for so long that it became ignored. I reminded everyone it was there by purchasing it.

So look at those ancient listings on the MLS. Find the seller who has been pushed to the side and is finally become desperate to sell. So desperate that he is willing to accept the next offer the walks in.