All Forum Posts by: Daniel Kidd

Just wanted to confirm that the magic of velocity banking is that it accelerates your mortgage so that when you make payments normally the amount of principal that is paid is higher while you juggle the chunk payment debt according to your monthly income through paycheck parking to avoid the higher interest rate of a credit card? This would mean that without making any actual additional payments you would then still pay off the loan faster because you are always paying at some principal vs interest ratio. The videos I watched initially were very confusing because the debt would just go away faster than the amount of income could support, but what I am talking about can be best illustrated through downloading the calculator in this link. 

https://www.vertex42.com/Calculators/mortgage-payoff-with-line-of-credit.html

Quick question for anyone who is tax savvy out there. If you use a repair allowance from a purchase to repair your property and you sell that property not using a 1031 and it was not your primary residence for at least 2 of the last 5 years then would that repair allowance that was put into rehab count against the portion of the profit that would be taxed or not? Also does it matter how it is worded on the HUD, and would it matter, particular to this individual question, if you held the property for a year or not?

Quick question for anyone who is tax savvy out there. If you use a repair allowance from a purchase to repair your property and you sell that property not using a 1031 and it was not your primary residence for at least 2 of the last 5 years then would that repair allowance that was put into rehab count against the portion of the profit that would be taxed or not? Also does it matter how it is worded on the HUD, and would it matter, particular to this individual question, if you held the property for a year or not?

@Guevara Mike I found mindset books better to start with. Miracle Morning Millionaire or Miracle Morning for the Real Estate Agent are a great place to start. Organizing your life and developing morning rituals for success will do more than knowledge at this point

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Fayetteville.

Purchase price: $250,000
Cash invested: $1,700

VA loan Quad, Fourth investment property

What made you interested in investing in this type of deal?

Multi Family has been my go to in getting started in real estate. I had actually been looking for a quad in this neighborhood for a while so when it popped up I knew I was going to get it.

How did you find this deal and how did you negotiate it?

I was on a simple drip campaign from an agent for multi family homes in the area

How did you finance this deal?

VA loan

How did you add value to the deal?

There has been a lot of work needed in this deal. Fortunately with the concessions I was able to get and having two tenants in place when I closed made the financial burden much easier. I am in the process of getting one unit ready for Air BnB as well. Should be ready to launch in a month or so.

What was the outcome?

So far I am still working through some tenant turn over and getting all of the work completed on what was a very needy property but high expectations for the rest of the year.

Lessons learned? Challenges?

Always be present for every inspection with a place like this if you are able and be sure to have good contractors lined up. I actually messed both of these things up a bit and got very lucky with the amount of concessions for repairs I was able to get and the availability of a good crew with only a few days notice. Always check in the envelope at closing for rent checks and deposits. We did look and found them not to be there and I closed anyway thinking it was a small issue. It was a pain.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Shelby Osborne - Real Estate Agent
Alotta Properties Property Management

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Louisa.

Purchase price: $450,000
Cash invested: $50,000

Quad and Duplex. These were my second and third properties that I bought on the same day different state as my first property. Seller Financed and Fully Occupied from day 1.

What made you interested in investing in this type of deal?

My brother actually brought this deal to me. We had been looking around the area for a while trying to buy some land zoned multi family to build on and his agent mentioned this while they were out looking at a plot one day. I am always looking for any kind of multi family and when I heard seller financing I knew we could do it at the same time as my other duplex I was under contract for.

How did you find this deal and how did you negotiate it?

I found it through my brother and his agent.

How did you finance this deal?

Seller Financing, 20% down

How did you add value to the deal?

All of the rents were raised about $100 so 6X100= $600 and we went to work getting a few things taken care of. There was an issue with the drainage so the old landlord was having a plumber come out a blow out the pipe for $100 every month. We addressed the problem for $800 and added $100 to the cash flow there.

What was the outcome?

So far it has been great. The rent has flowed like clockwork and I couldn't be happier to have found such a cool deal near my hometown to be able to close on the same day as my first investment property.

Lessons learned? Challenges?

Some of the challenges just included how to negotiate the deal. The seller was more than generous in my opinion and didn't even ask for any prorated rent so we got the whole month even though he had paid the mortgage and it was the end of the month.

Mike, 

The purchase price was the price so the 27,500 wouldnt be added to the 105,000 that was just the 25% down and some closing costs. 

I do have a property manager and I have one now for all of my properties. I actually went up to VA to purchase two more Multi-families that same day and I will do a write up on those when I have the time as well.

I Like Multi Family just because it scales faster and you don't have to worry about losing 100% of the rent every time you have tenant turn over. I have roughly 12 units renting now but only 4 properties to keep records on, 2 duplexes and 2 quads, and with everything else going on I prefer that to having 12 separate properties. It just works better for me is all. Cash flow is a little less than $300 so something like a 10% return without counting the IRR.

I hope that helps and please feel free to reach out to me if you would like to know more or invest in my area. I am a local agent and I love to work specifically with investors. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Raeford.

Purchase price: $105,000
Cash invested: $27,500

This duplex was my first property purchase ever. I cannot over state the importance of just get started. This may not have been the home run that we hear about and read about in investment books, but it is a great turn key that has taught me so much. The importance of getting your system in place for how you will structure your properties as you get them outweighs the need for a first time home run. The mindset of changing your spending habits to investments rather than liabilities is the key.

What made you interested in investing in this type of deal?

Multi Family in general is what I liked about this deal. I was initially looking to BRRR a local duplex because there were a ton on the market at the time. With less time to find a good contractor who was free and manage the project in general I settled on getting started with a turn key investment.

How did you find this deal and how did you negotiate it?

The deal came through on a drip that I was getting from a local agent and I simply bid roughly 5% below asking and was able to negotiate a few concessions as well. Both units were already rented and has cash flowed since day 1.

How did you finance this deal?

Conventional 25% financing

How did you add value to the deal?

As a turn key without much to do in this realm I only made a few changes. I upped the rent a bit and added a few things to the house like some bushes and gutters.

What was the outcome?

So far the checks have been coming in on time and the tenants have given no issues or any signs of leaving after the rent was raised.

Lessons learned? Challenges?

It was the first piece of real estate I had ever purchased so just learning that whole process was great. Also I was able to learn how to get property management for the property and set up all of my payments automatically in a new account. Every little piece was actually quite easy, but to initially look at getting it all set up while purchasing a property seemed daunting at the time. I am happy that I chose to go in with a turn key first to get my systems in place for the next one.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Shelby Osborne Real Estate Agent
Alotta Properties Property Management

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Raeford.

Purchase price: $105,000
Cash invested: $27,500

This duplex was my first property purchase ever. I cannot over state how important it is to just get started. This may not have been the home run that we hear about and read about in all of the investment books, but it is a great turn key that has taught me so much as I moved into more deals. The importance of getting your system in place for how you will structure all of your properties as you get them, in my opinion, outweighs the need for a first time home run. The mindset of changing your spending habits to investments rather than liabilities for the rest of your life is all that you really need to be successful in this.

What made you interested in investing in this type of deal?

Multi Family in general is what I liked about this deal. I was initially looking to BRRR a local duplex because there were a ton on the market at the time. With less time to find a good contractor who was free and manage the project in general I settled on getting started with a turn key investment.

How did you find this deal and how did you negotiate it?

The deal came through on a drip that I was getting from a local agent and I simply bid roughly 5% below asking and was able to negotiate a few concessions as well. Both units were already rented and has cash flowed since day 1.

How did you finance this deal?

Conventional 25% financing

How did you add value to the deal?

As a turn key without much to do in this realm I only made a few changes. I upped the rent a bit and added a few things to the house like some bushes and gutters.

What was the outcome?

So far the checks have been coming in on time and the tenants have given no issues or any signs of leaving after the rent was raised.

Lessons learned? Challenges?

It was the first piece of real estate I had ever purchased so just learning that whole process was great. Also I was able to learn how to get property management for the property and set up all of my payments automatically in a new account. Every little piece was actually quite easy, but to initially look at getting it all set up while purchasing a property seemed daunting at the time. I am happy that I chose to go in with a turn key first to get my systems in place for the next one.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Shelby Osborne Real Estate Agent
Alotta Properties Property Management

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Raeford.

Purchase price: $105,000
Cash invested: $27,500

This was my first purchase in starting out in real estate investing. It was just a nice turn key property that I liked and I had the money for it. This was one of four duplexes I purchased that day. I like the pricing for the duplexes around this area and especially the ones that need some work because they are priced generally where I would need them to be for them to be an effective BRRR. Super happy so far with this place and with myself for getting in there and making it happen.

What made you interested in investing in this type of deal?

Originally I was looking for somewhere to put my VA loan to allow me to do a house hack and live in one of these for free, but around the time that this came up a quad also came up so I bid on both and went with conventional for this one and VA for the quad. I won the bid for the quad but still working through that one at the moment. The VA appraiser isn't giving me much love and isn't requiring a lot of things to be fixed that I feel should be before it is worth the value they are claiming.

How did you find this deal and how did you negotiate it?

I linked in with a local investor and agent. She has been super helpful and I will actually be transferring out of the military to work with her as an agent. Anyway she just put me on a drip from the MLS for local multi family and that is how I found it.

How did you finance this deal?

Conventional financing through MC Mortgage group

How did you add value to the deal?

The rent was a little low, so I have upped that a bit and will be phasing out the lawn care. Normally for something multi family I would still provide the lawn care but maybe only once I get up to a tri or bigger.

Lessons learned? Challenges?

I liked this as a first deal but moving forward I will definitely be looking for ways to better leverage my money by BRRRing duplexes in the area. Turn key was nice for the simplicity and the knowledge it gave me of the whole process but I doubt I will go in on a turn key %100 conventional loan by myself again.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, I would highly recommend working with Shelby Osborne, She is my agent and Patrick Stoy with MC Mortgage. I also use a Alotta Properties as my property manager here in the Fayetteville area