All Forum Posts by: Chris Youssi

Best wishes

Phillip excellent thread many good responses. Not sure what I can add but will give it a try. I own 60 +/- combination of 31 SFR and the remaining townhomes ( all in the same location ). We are also am in the process of building 12 duplex units and then another( 10 ) 4 families in 2019 . The duplexes are setup as condos from day one and the 4 families townhomes so we can pick off and sell when needed to scale other props . IMHO I prefer the SFR better for reasons already stated. I am a big believe in debt reduction along with cash flow, so have anywhere from 6 year fully amortized props to 15 with soon to be 20 on the new props. All our properties cash flow with monthly rental income of anywhere from 1-1.25% of values. We are custom home builders and as such have instant equity in all our deals with a current YTD vacancy rate of .7 and ,4% in both existing categories. For our purposes we apply the same concepts in new homes with our SFR in that we only purchase props that we can force equity in and get in and out with refi's with typically none of our own money. EG... we purchase for 50k ( lender gives us 100% off our LOC ) we put in 20k property appraises for 100k. We pay off the first loan get our rehab costs back and repeat. We have done this close to 40 times since 2015. We are of the same cloth in that at one point we too could have gotten better interest rates with secondary market money but could never have scaled as quickly. We have 5 companies but far and away love the rental game more than the other 4 combined.

Sounds like your off to a great start and have many informative posts within this thread.Best wishes moving forward!

Christopher I am networked on here thru biggerpockets along with 3/4 Realtors that contact me when they hear of an opportunity. Eg... looked at one today asking price was 50k I would have offered 35k and then only after a second look. Someone came in and scooped it up for 50k cash - unreal to me that someone would overpay for such a prop but they say they are born by the minute. Network with local meetups is a great way to find props IMHO. Maybe 4/5 out of the 30 I have purchased in the last 3+ years or so have been off market deals. 

Best wishes moving forward

To be honest - if wifey was not supportive it would make things very difficult for us to grow our business. Based upon that a compromise is # 2 in that he gets the cash flow and you have the ability to refi if and when you want to scale up.

Best wishes moving forward.

I NEVER place a prop under contract without viewing . IMHO waste of time / your post verifies my point. I am certain others may disagree but again its my opinion in that I personally work way too hard to waste my time and resources on what may turn out to be a time hog / earnest money at risk etc... Out of state investors thats an entirely different scenario - not sure how they accomplish with any degree of success but clearly some on here are profitable doing the same thing mentioned in your question. I will be interested in other replies.

best wishes moving forward

Personally I cannot ever see paying cash for a property LONG TERM. Short term we have purchased 8-10 SFR within the last 12 months in that we buy / rehab / rent / refi / repeat. Purchases use 100% borrowed funds based upon LOC from commercial lender. IMHO it's all in how you manage your doors in that good solid property management yields much greater returns in time / upkeep / quality of tenant savings, which of course increases your bottom line allowing you to seek other opportunities. We have a .4% vacancy rate YTD ( 60 rentals ) which is fairly typical year over year and yes we maximize our rents. I love the 1st day of every month because I am paid twice / once in cash flow and next in principal reduction as we have anywhere from 6-13 years remaining on our loans. 2 questions for your situation:

1.) Do you want to grow your portfolio and if so at what velocity? 

2.) What is more important monthly cash flow - security or growing equity? If its cash flow and security no brainer very safe to pay cash. If it's growing equity leverage in a smart way not being reckless.

Best wishes moving forward!

Charles my pleasure. Keep me posted and let me know if I can help moving forward just PM me and we can converse!

Charles here is what I have setup and is working amazing for me over the last 3.4 years specifically. We are similar in that I started a homebuilding company in 2009 and have been a residential developer for nearly 20 years . Far and away I favor investing in SFR over all other facets of our companies .

1.) Shop a commercial lender preferably a community bank or similar with assets of under 1B as they have more flexibility. I recommend minimum 2/3 although you may already have contacts from your previous experience which if this is the case a no brainer to reestablish those relationships.

2.) Obtain 2 lines of credit - first one is for cash purchases only.Eg... I went under contract on a SFR Friday after T giving for 65k which I close this Thursday. Bank giving me the entire 65k . I put in 8-10k myself take me about 2 weeks all cosmetic work.

3.) Obtain 2nd LOC for 5-7 year commercial loans. In the case above the home will appraise for 90k . I pay the 65 off the first LOC, get 7k back out of my 8-10 k and then repeat. Rarely do I not get all my rehab money back as bank gives me 80% of appraised value or 100% of my costs whichever is lower. In this case deal way too ez to pass up.

Important to know a few things IMHO about myself and other posts on this thread. Charles I disagree with the partner approach as you already have funds and skillset .Next its' Way way too difficult to obtain secondary market money in my situation and it sounds like where you wish to be by scaling. Several reasons for this - low W-2 / AGI vs commercial lenders add back in depreciation -giving etc...Unsure about secondary market financing. Next is the speed of which you wish to scale. If your wanting 1/2 props / year than secondary market may work. If not then commercial loans ignore the 6 month waiting period for you to get your rehab funds back - 

Simply put apply 1-3 and then repeat. We now have purchased about 35 over the last few years sold a small amount and now are sitting around 30. Avg cash flow / door is $300/ month. All loans are on now 6/13  fully amortized loans. All bc props no section 8 props. I also am now building on duplex lots I purchased during the correction from a lender and am developing 4 family rentals. Again a no brainer with your skillset and background IMHO. 

Let me know how it works out - best wishes moving forward.

Joe are either of your props owner occupied? If so you may may want to consider selling the props and grabbing potential tax free gains. I have been investing for nearly 40 years and it is my opinion that now is a good time to buy .I just bought another SFR Friday after T giving and we will have it on the market within 2 weeks after closing this Friday.

Economy very strong  feds are now rethinking more rate increases so things may quiet down with that part of the equation. As you know being from Illy we have many challenges but we also have great cash flow properties. Sounds like you have already taken baby steps now time to start walking like a toddler being cautious while you learn to start running.  Love this business more than any other facet of my real estate development and building companies. Best wishes moving forward. 

I just closed a property on Monday with somewhat similar circumstances. Difference is I demanded the seller serve the tenant a 30 day notice before I agreed to the contract. he served them I signed but theres more ... Day of closing I get a bizarre text first from the seller than from the tenant in a group text , gushing over each other about how good of landlord - best tenant I ever had etc... Whole thing seemed very staged to me so I told the seller I was not closing until the tenant was out and I could see for myself. She moved out on Friday as scheduled,I closed Monday no issues. I'm unclear why anyone would ever purchase a property based upon no verification of leases/ security deposits and of course inspections of all units.  All the leverage with the existing tenant disappears the moment you close.

Best wishes with your investments now and the future!