All Forum Posts by: David Flores

@Mara Thomas

I would take it one step at a time. The beginning should be slow and a learning process. Learn as much as you can. I would concentrate on a house hack first. While doing that go to local meetups and meet investors. These are usually free and can be very important to your future. Once you get the house hack done and you have investors start looking for deals to shed off to investors!

@Nawzad Babiry

NC and Tennessee are good markets to look in. Clarksville TN is one that has a lot of development going on.

@Derrick Smith

Hi Derrick, i am an investor and would be interested. DM me with the details. Purchase price, address, estimated revenue, expenses, taxes, insurance, etc.

I live in weehawken NJ so not to far from you.

@Lauren Hogan

Nicee!!! Thanks Lauren

@Jonathan Yeh

It depends how much your talking. But if we are talking like 1 million dollars for the fun of it I would probably get involved in apartment complexes in growing markets (NC, Tennessee, Arizona, Colorado).

I would look into mobile home park investing in colorado too. Some crazy stuff out there with mobile home park investing. Wouldn’t mind having a trailer next to breckenridge either :)

But in aspects of using on your own properties. I would want at least every place to have 20% equity to be more risk averse. So whatever it takes to get that done. Then the remaining amount I would use for more investments.

@David Denzy @Edgar Navarro

It depends on what you are trying to do. I will start with David since he said specifically he is a wholesaler. Whole selling works best for flippers. That is because they usually have the capital on hand to close quickly and smoothly without hiccups so you can ensure the turnaround time to wholesale. That being said I would look in well appreciated neighborhoods with foreclosures or run down properties. Flippers like these because there is protection in the neighborhoods/towns and they know they can sell for a high price. Tax deed auction sales are where you can get good deals, but in well saturated areas you will end up paying near or maybe a little below value at auctions.

Edgar if you are looking for rental properties look at towns or cities that have very high rentals. This will ensure quick turnarounds and constantly filled units to reduce vacancy risk. I usually look for 80%+ rentals in a town or city. For numbers look for the 1% rule to work as a quick glance (rent revenue is at least 1% of the purchase price. For example 1k rent for 100k purchase price). Also, I personally like caps above 10% for SFH or anything below 5 units. That is because if vacancy occurs it can be a big hit, need the extra cushion. One 5+ units you can afford a couple vacant units without it hurting too bad.

@Jay Hinrichs

Agreed, but the concepts of finance should be and can be equated to every investment.

Not coming on here to argue though, just trying to help people understand no money down investing, the precautions to take, and how to correctly do it as many people are interested in this subject and guidance as you mentioned is key. I have successfully used the strategy and all my cash flow far out produces all my expenses. During downturns I am protected through my high margins (only need a couple units rented to breakeven). I am also invested in student rentals and unless these large universities go up in flames the social economic situation is very low risk. Rental demand is and will always be extremely high. We look for markets that have 80%+ rentals.

By the way, bigger pockets has a book about this subject, this is not a voodoo concept. They do an excellent job on explaining no money down investing, precautions to take, and how to do it correctly. And I doubt Bigger pockets (the website we are all on) is putting stuff out there that doesn’t work just to draw in interest and put people at risk.

As to everything there is a structure you need to have in place to successfully do things. I would not hand out aimless advice.

If you don’t have experience with it that is fine, but attacking a concept that is well documented and proven is not good for the bp community either.

@Jay Hinrichs

There is risk in every investment and leverage is not a new concept. Whether you risk your own capital or others capital, the risk is there. The best investors are more leveraged than not. Actually the best investors NEVER use any of their own money. I have worked as a financial analyst for a big 4 firm for years on M&As and IPOs. I understand finance more than your average investor.

And trust me, if someone is a decent investor (in any kind of investing) leverage is your best friend. I do not advocate for not having money on hand or over investing where your capital cant support maintenance/cap ex. I think you are putting words in my mouth.

I liked the little jab though ;)

@Jay Hinrichs

A FICO risk is much less significant in my opinion then a large down payment. FICOs can be healed and there are ways to invest without a good FICO score in the worst case scenario. Your money as risk though is not going to come back. Also, putting 5% down is not much different then being fully leveraged. Only difference at 5% is your taking a “FICO” risk and risking your own capital. For example if the market turns 20% you now have just lost your down payment and you are in risk of defaulting. I personally would much rather be in a situation of just risk of defaulting. The thing is though my advice is to get involved with caps above 10% on seller financing deals. If you can find these your rental property should always be producing more than your expenses including first and secondary loans. Thus, in the rental game you should be protected from down turns and the home price/appreciation should be your second concern. Cashflow would be priority in seller financing deals, not appreciation.

Bottom line is you have capital investors and leveraged investors. If you want to scale you need to learn both. Not sure what you mean by “stack up” if your buying properties with zero debt. In order to “stack up” properties you would need a massive amount of capital (millions) or you would not be able to scale without debt investing.

I am sure others will come on here supporting their opinion. But if you run your numbers carefully and use leverage as a tool it is WAY more powerful than using your own capital.

@Benjamin Hurwitz

Understood, i am assuming your premium is in the interest rate to cover the extra risk.