All Forum Posts by: Craig Jeppesen

Your lender is doing its due diligence in deciding on giving you a loan. It is simply part of their underwriting. It is their money and they are taking a risk by giving it to you and want to make sure they get paid back. They are doing nothing wrong and you should be completely honest with them and give them a good answer. If you have a property picked out to purchase you should give them the details. They deserve to know the numbers to ensure repayment. If you don’t have a property yet then you can be vague and say future investing.

Well if you can get $1000 per door for rent that changes the numbers and you would cash flow each month. Why is rent only $4300 if fmv is $6000?

That is a horrible deal. You are negative cash flow and that is without any vacancies, repairs, capital improvements and utilities. You should be positive cash flow $200 a month a door on a duplex so $1800 positive cash flow per month. You will be putting in over $5000 grand a year of your own money to hope for appreciation. I would run as fast as you can.

If you live in the first fourplex and rent out the rest you can get an fha loan with 3.5% down.  This is the way to go to get started.  Once you are hear you will probably have your tenants make your mtg pmt and you live for free.  This is where you will live super cheap and save up a large portion of your income for a few years to save up a down pmt on your next purchase which will need to be 20% if you don't live in it.  Just keep doing this saving up your money and keep reinvesting in new properties or paying down your existing properties. How fast you get to $3000 depends on how fast you can save up a down pmt for each new property. if you can get $200 a door, you will need 4 fourplexes with you living in one unit to reach your goal.  Put it in a spreadsheet with your budget and you should have a good idea of how long it will take.

if you pay off your loan you will have less risk, but a lower return of your cash invested. simple as that, neither is wrong, just depends on your risk tolerance.

I use a local garage door company, just had a door installed this Thursday. For one door it’s about $1k, if I did it myself would be about $600, but it takes me longer to do it and my time is more valuable elsewhere.

I turn power on when I buy and water on when demo is complete but before any Reno besides new plumbing such as valves etc. I like to check for leaks.

Sounds like great properties, just make sure the numbers work. If you do the ballon just make sure you can refinance or he will foreclose on you and get them back. I would do a traditional loan before I did a balloon especially after 5 years. Too risky for me. If I did a balloon it would be a 15 or 20 year balloon.

@Theo Hicks Your friend is not entirely wrong. What if your tenants lost their jobs or you did  or worse both, and your property values declined and you didn’t have the monthly cash flow to pay all your debts. This can and did happen to several investors in the crash of 08. This is the risk of being over leveraged in a big recession. Also what if you were renovating a brrr property and the market crashed you would not be able to refinance most likely. It doesn’t mean it will happen but there is risk that it can happen. It sounds like your friend is a conservative investor. I would at least listen to him so you understand another investors perspective. If you are less risk adverse than him that is fine but at least understand all the risks and have a plan to mitigate if you want to leverage more. Your plan can work as long as the recession doesn’t hit you or your tenants.

Since you have land, I would investigate more on the storage unit idea. If there is a market for it, use your cash flow from your property and hopefully more from your job and invest in the storage units. You can put those up pretty cheap and build them out slowly as you save up the cash. It is at least worth looking into.