All Forum Posts by: David Garner

Thanks David - I do appreciate that owning and managing a lot of rental properties can be far from a passive income experience! 

Private Lending and REIT investing seem not much different to me than stock/bond investing. What kind of ROI can I expect since I won't be able to leverage up? And then I'm not owning an asset that has tax advantages and can appreciate. I'm new to this so I've no doubt I'm missing something, but thats my initial reaction.

I did W2 for 30 years as in corporate IT. Dabbled in real estate but never went for it big time - bought and sold a few primary residences and a couple of condos over the years. Now I'm 56 and hoping to never work for anyone again. I've got $2 million in an IRA (invested in mutual funds), $300K in investable cash, and $200K in reserves. I'd love to take that $300K and build up some passive income of $50-100K annually. I also got my real estate license during the pandemic but I am not into being a real estate sales agent. My wife has a great income and covers half our costs but we live in the NYC metro area, so expensive. Considering all of these variables, WHAT WOULD YOU DO IF YOU WERE IN MY SITUATION? Would you invest in some cash flowing (if they still exist) properties and start up the road of passive income from real estate? Is it too late for someone like me to make this happen?

Hello,

I have a company, an LLC, that has owned a property for 5 years, which has been cashflowing for 5 years, and appreciated in value a lot during that time. I was using Bank of America as my bank, so they can see the money coming into the account and piling up. I call them to get a mortgage on that property to use the money to buy another. Their answer was "We don't offer loans to companies unless their revenue is 100k/year or more". I don't think we are talking about the same things at all. That sounds like unsecured loans. It's like they didn't know mortgages exist.

They told me to go talk with personal banking (not an option to me because I'm not a US person, I don't have a SSN or credit history).

Is this correct, banks just don't offer mortgages to commercial entities to the point where their workers don't even have them in their radar? I feel like this can't be the case, but it's not my first time attempting this, and I feel like I'm doing something wrong.

Okay,

Admittedly, I don't hang out in every corner of the BP-verse, but from what I can tell, there's a very under-discussed topic, that we need to be talking more about.

Maximizing cash flow on currently owned properties 

So much is said about "finding the next deal" and hustling to acquire new properties to add to our portfolios to grow our cash flow. But that takes MONEY! And yes: Money is everywhere and there are always solutions to getting more capital for more deals (creative financing, BRRRs, blah-blah-blah). That's all great.

But, you know what's free and can grow our cash flow just as fast (if not faster)? Focusing on maximizing the returns on what we already own. It's a false assumption that the cash flow we achieve when closing the deal, is the most we're gonna get. It's NOT.

In my opinion, this is one of the superpowers of real estate investing, and I just learned it on accident. Quick case study from my experience:

We closed a triplex outside metro Detroit. Cash flow at acquisition: $475/month. Over 10-months, and some tenant turnover, we've been able to increase the rent in all 3 units. And, in shopping around for insurance, I was able to switch insurance carriers and slash the annual insurance premium in HALF (while keeping the exact same coverage). When all was said and done, the cash flow increased to $932/month. So, we effectively DOUBLED our cash flow on the property in less than a year....FOR FREE. We could've doubled our cash flow by spending time and money locking down another, similar property (and believe me, we're still looking for these!), but we just did the same thing in a fraction of the time, and for no money at all.

In reality, the ways of maximizing cash flow are limited. There's only so many line items in a property's P&L. You can either increase rent, or decrease expenses in order to improve cash flow. But I'm curious, what strategies have worked for you in optimizing the cash flow on a single property? What success stories do you have to share with the community?

I have been reading a lot of new investors' posts where at some point in the post they write "I am interested in..." or "I am highly interested in..." and then proceed to name the strategy that appeals to them. While there is nothing inherently wrong with these statements, I think these people should be saying "I will be investing in..." strategy.

Take the possibility out of these statements. Make definitive statements while trying to learn more. Too many people talk about investing and never actually do it. I think this mental shift could be helpful to someone.

Whats the max LTV are you guys seeing out there for private lenders, bridge lenders etc; and what credit requirements if any or even lenders that don't require any credit.

@David Garner we ended up closing on the subject house yesterday. It was like you said, an inherited house that they were not motivated to do the rehab work to make it half decent. Thank you all for the advice. The seller ended up paying half of all the occupancy inspection items so it was good!

Hi Everyone,

When running your numbers on single family homes for long term rentals do you change your regular maintenance and CapEx reserve numbers when looking at homes of different ages? For example, a home built in the 1950's/1960's versus one built in the 1980's/1990's (assume both are in decent condition that could be rented as-is, but have not been remodeled).

I realize there can be a lot of factors that play into this, but I have currently been running the numbers about the same way for almost all the properties I have been looking at. I feel that when I start adjusting things I am trying to "make" a deal when the numbers don't look that good. I am currently budgeting for 10% of monthly rent for CapEx reserves and 7.5% for regular maintenance, but don't have any properties yet to compare real numbers.

Thanks

What is a good average of rates and closing speed that you guys see in your private lenders? I'd love to leanr more about good standards and connect with investors!

Matt

Hey @David Garner thanks for the advice, appreciate you weighing in. So you're actually supporting the borrow rather than earn model. 

You're right about the assets providing enough profit to repay the debts along with the need to cover your day to day expenses.  

We currently have 6 doors, they pay for the borrowed money along with generating about 1/8 of our day to day expenses. At this rate we'll need about 48 doors to cover the debt and our personal lifestyle. 

Thanks and congrats on all your success!