All Forum Posts by: David Garner

Hey Stephanie - While I can't speak to the 60 or 70's markets, I have been investing steadily for the pat 10 years, with 104 doors acquired in the past 5.

For me, I am buying. Primarily because my own model involves finding discounted houses off-market and adding value. So I'm not concerned with a dip in the market. Also, I buy C Class and focus on both asset and tenant quality, so my portfolio tends to be pretty resilient in terms of income consistency. We did OK through covid as an example.

As I use private money to buy most of my houses, and then refi later with commercial lenders, I'm not too concerned. I think rent inflation will offset interest rate rises for the vast majority of properties in my portfolio right now, and for future purchases too.

Also... always my perspective is to buy as much as I can while money is still historically the cheapest its ever been, and lock in those rates for as long as possible. House prices and rents always rise given enough time, so if you lock in a cheap rate your profits just go up and up over time.

Good luck!

DG

I'm north of Pittsburgh in PA. 104 units so far. Where are you buying?

Yes... I'm buying off market at a discount amd adding value. There are always motivated sellers and value add opportunities regardless of the markedly cycle. I'm usually all in for less than 65% of ARV, so I'm good with prices falling or rising to an extent.

Hey Patrick

For me, I view through three lens' in my markets...

1. Can I buy below market and/or add value.

2. Is the property an appropriate product for the local rental market (that's different in different areas, down to street level).

3. Am I prepared to own it myself for the next 30 years if we cannot find a tenant-buyer on our program.

As I already know right down to street level where I am buying, I will buy any bed/bath/size combo as long as I know it'll rent.

The only thing I avoid are those that don't fit the numbers, and anything with a particularly weird layout.

DG

Hey Justice... Great deal you did there! 

If it were me, I'd probably look to sell that and repeat in a new area. Unless of course it still cashflows with a cashout refi at 75%... that would give you close to $50k in hand to go buy rental number 2 (50% down on the FL property) and re-do your magic on that deal while also keeping this one.

Ultimately, what you choose to do should be guided by more than money. Do you want to be a landlord twice over? Will you lose sleep with more debt and more houses? What's your end goal? Where do you think the market is headed? All of those things are personal to you, amd they all matter.

Good luck, I hope it works out for you.

DG

Hey Jay

Firstly, congrats on finding the deal. I'm assuming 18% is the gross yield?

Without more info it's difficult to say what I'd do personally. Where you pull funds from for your deposit will.depend on a lot of factors, including the deal, your wider circumstances, your plan, and your attitude/tolerance for risk.

Seems to me based on the info you did provide that you do have some options on the table to choose from already. You could wait to sell your flip amd then 1031 into the rental, but the rental.might well be gone by then, amd you might not make the 80k you think you will... lots of uncertainty there.

The HELOC might well be your cheapest and most easily accessible option.

My only real piece of advice is, don't get so caught up in the funding part that you neglect your DD on the rental. I've been blinded by big headline numbers before and got so excited about trying to get the deal done somehow that I ended up buying a real dog with lots of issues.

Good luck, and I hope you get it figured out.

DG

Hey Steven 

Hard money, no. Private money, maybe. I have personal private lenders that do, but they know me, trust me, and already did a ton of deals with me.

Do you have a personal network you can Pull on?

DG

Hey Vikas

1. What should be lending terms?

Terms should suit you, the borrower and the project. Rehab loans typically run at 6 to 12 months.

2. What if rehabber drops/delays the project?

Be prepared to take over the project yourself, or take control of the real estate and sell it, or cut the borrower some slack and extended your term in exchange for points or higher interest.

3. What if property does not sell as fast you would like?

Same as above.

4. How much should you lend?

Subjective. I have lenders that loan me 100% of acquistion and rehab, but I've done a ton of business with them and always performed. 

Typically you will want to loan a % of the contract, plus a % of the rehab. That might be 80% of the contract and 100% of the rehab, or some other ratio that suits you. Just make sure your borrower has some skin in the game... this is your first rodeo together.

5. What paperwork/contract needs to be done?

Loan agreement

Promissory note

Mortgage deed or deed of trust

Personal guarantee

Get these drafted by an attorney. Don't skimp here, you might rely on the paperwork later to get your money back.

6. Reward (interest rate etc)- what are the rewards for lending that private money lender should ask for?

Points upfront

Late fees

Origination fee

Underwriting fee

Usually just points and interest with private money.

Also....

Close through a proper title co or attorney who will ensure full title work is done and your deed is recorded properly.

Have the borrower pay for lender title insurance.

Make dure the borrower has all the correct insurance for the property, and licences, permits and insurance for the project.

Hope that helps.

DG

Hey Mario

I invest OOS in PA. Your process is pretty sound. The only reccomendation I would make is spend the most time and effort building your team locally. I have 104 OOS houses in 2 States, and since I started 5 years ago, most of the problems I've had can be put down to a 'who' rather than a 'what'. Investing OOS has had its drawbacks and advantages for me, but overall I would say (based on my experience) that who you have on your team will have a bigger impact on the success or failure of your investment than what you actually invest in.

Good luck!

DG