All Forum Posts by: CJ Witmer

I'll be very up front, I don't have any experience with mobile homes besides what I've listened to on BP podcasts, but I'd love to learn more.  :)  I'm not sure on the numbers here, but wanted to bring it up because it's out of my price range, but I'd love to be involved as boots-on-the-ground for this and maybe work out a mutually beneficial situation.  It's about 25 min. from me.  Let me know if anyone is interested in running some numbers or if I could help anyone out who might be interested.

http://www.realtor.com/realestateandhomes-detail/2081-Fort-Loudon-Rd_Mercersburg_PA_17236_M34840-11807#photo0

Oh, one more thing I forgot to mention, dig around about borrowing from your 401k. I had asked a CPA friend of mine (granted she's been out of it for about 3 years) and she said it's not the best way to go for funding. She didn't really elaborate, but based on her feedback and what I had researched on BP, it was definitely a "back burner" option, but some have done it with success.

Matthew Steslow - Ask away, but more importantly, keep searching on BP as I am far from an experienced person, but I'm happy to help. I used an attorney for starting the LLC as opposed to LegalZoom for the fact that my lawyer owns 35 of his own properties and offered some great advice during the process that LegalZoom would never do. Yes he's more, but it was worth it to have his knowledge of what he calls "land mines".

Sebastian Marroquin - Thanks for breaking it down, great information!! Appreciate your time and thorough input. It's making more sense now.

@Sebastian Marroquin

I found our current rental as an off market deal. It was an old co-worker looking to cash out for a new truck, boat and to help his kids with college. As to your comment on there not being much meat on the bone, it had appraised in 2010 for $115k and I know things were a bit down at that point. He was asking $95k originally and then, after a year, he said he just wanted to get the cash, so that's when we worked out the deal, so I think the ARV SHOULD be more than $76k, but even at that, we're still OK. I guess we'll see in 6 months. However, I'm hoping to get better at finding those deals with meat on the bone as you said.

I like your comment about "so even if it takes you some months - who cares."  I really want to get going, but I don't want to jump too fast.  I think 6 months and a re-appraisal will really help.  I will have 6 more months of research and knowledge and 6 more months of income.  :)

I'm a very conservative person, and even more so with someone else's money, so I would never feel comfortable on only my second deal using someone else's money, but I like your strategy.  No one ever laid it out like that for me and it makes sense.  In this case, when you're saying about splitting "the deal" are you referring to buy-and-hold or fix-and-flip?  I guess either could work depending on the expectations of both parties.

For your friend, how does he come up with ARV as $105? Does he have someone appraise it beforehand, or does he use his own experience to estimate. I'm concerned that I don't have enough experience, so let's say I buy a house for $50k, I determine it needs $15k in repairs and I determine that ARV is $95k. I certainly don't trust myself to be accurate on those numbers, so how can I be? I guess in my mind, I wonder, why should someone tell me that information and why wouldn't they just take the deal themselves?

So when I'm borrowing the money for this, are you saying to avoid the loans that may have lower rates but with payoff penalties in favor of ones with potentially higher rates, but I can refi with no strings attached?  This seems like it should've been obvious as I type, but I never considered that.  I always figured the low rate wins, but if I'm flipping (or refinancing) I guess that's when I can look for the lowest rate.  Sound right?

When you say to let an investor come into my current deal, do you mean the one I have finsihed up and am getting income on, or do you mean the 2nd one I'm trying to start working on?

Thanks all for the input!

@Vinod Dasani - We do everything through the LLC, except for the first deal obviously, the bank had to secure some personal credit from us to get the LLC started. The way I understand it, we'd only get about 80% of the ARV, so my current bank guy said to let it season for 6 months and then consider another appraisal. Mortgage with escrow for repairs has us all in at $55,000ish. It appraised for $76k so we're barely under the 20% so we wouldn't get much of a loan at this point. I'm hoping in 6 months, we could get it re-appraised for more, but we can't really refinance because of the payoff penalty, so I kinda feel stuck. Or is there something I'm missing about that strategy? Obviously, the other methods mentioned are feasible as well.

@Anthony Barbato - Great info.  Thanks.  I did actually reach out to another bank and both are smaller, local banks with 10-30 branches around my area.  The second bank actually said she could do better on the interest rate if I borrowed more, but I don't want to get out of hand, but I want to keep going.  I know there is the option of hard money, family and even credit cards, but in my mind, I think my next one should be a fix and flip, just so I can NOT borrow money again and use fix and flip income for my 20% cash down.  Is that reasonable?

All good info. above and love to see the PA people on here.  I am 1 day away from receiving our 2nd rental check and it's great.  Just today, I sat down and tried to figure out when we'd have enough saved up for 20% down on our next property if we ONLY used the income from this rental.

One thing I struggled with was, what do I do first and the answer is, you can do a few things at once to get started.

1.  You're already on the right track, being on BP.

2. Start looking at deals, look on MLS, drive for dollars, etc.

3.  Listen to the podcasts.  I have 1hr 20min. commute one way every day (now you see my motivation for rental income) so I listen on 1.5x speed and bang out about 1 and half podcasts a day and they are jam packed with great info.  One thing I LOVE is that @BrandonTurner and @JoshDorkin always back up and ask an experienced person to "break that down for the newbie investor."

4. Get an LLC setup. I heard a BP podcast example where a guy had built a rather nice real estate empire, only to have it taken in a lawsuit when his son killed someone in an accident. The properties were not under the LLC and they were taken!

5.  Keep chipping away and saving money.  See what you can do to cut back on what you're spending now.  Can you get around in a cheaper car?

6.  Keep on posting and asking questions

Best of luck and keep us posted on your progress.

Anyone else?  I thought I'd get more replies.