All Forum Posts by: David F

Thank you for correcting me. I never knew I had it mixed up. :)

Thanks for the feedback, guys.

I apologize if it wasn't more clear. Essentially I would be putting down 50% of the cash and then I would personally be giving him the private mortgage for the other 50%. He then pays me the monthly mortgage payments at 6% while we split all costs and proceeds at 50-50 moving forward.

I suppose that if he defaulted on the mortgage, he would lose his share of the property. The conversation with him was relatively superficial at this point. I wanted to educate myself more before asking him more questions.

Does it still sound like a sour deal?

This is fantastic food for thought. I have a lot to digest.

My main concern about the amount of properties is how long it will take to acquire them. Like you say, I may have to broaden my search so that there isn't such a limited about of deals. There are definitely lots of upsides to having many properties bringing in a bit each.

Thanks for your amazing insight. I will share my experiences with you and others as I make moves.

Hi Nathan, you obviously really know your stuff. You're forcing me to think big.

You've just demonstrated how leverage can really build someone an empire. This paints a really beautiful picture of how things can look down the road. My only concern is that it would take many more homes in my portfolio to reach my short term revenue goals compared to the cash route.

From the numbers you used in your example, which are pretty much the same numbers I have been using as well, one thing that I notice is that when using leverage, I'll need double the amount of properties to be able to pull in approximately the same revenue (after mortgage payments). I believe it can take me months just to find my first property so I'm concerned of how long it would take to just make 4-5k per month in rental revenue if I go the leverage route.

Maybe I can work some sort of hybrid model that falls between these two, like buying the first 2-3 with cash and then refinancing one of them to get the next one. Then repeating...

Does that sound like a possible middle ground to maximize initial profits while still leveraging over the long term?

Hey Nick, thanks for the welcome!

Great to see another Montrealer here. I'm interested to hear what you're up to in RE.

I'm looking at distressed properties in Palm Beach County. A contact of mine that has been working these areas has been paying cash for homes and getting a cap rate of ~15%.

My priority is for immediate cash on cash returns.

As a non-US citizen, I'm not certain about my financing options. Because I'm buying homes in poor condition I don't think a conventional mortgage is an easy option, if at all possible, but refinancing after it's rehabbed might be an alternative.

You bring up an excellent point about leverage. One of things that I have the hardest time deciding is if I'm better off paying cash or using leverage. I assumed cash made sense since that's what my contact is doing but as I research on BP and elsewhere online, leverage keeps coming up. OPM.

One disadvantage of using leverage is that if you have only 2-3 properties with standard mortgages, your payments will eat away at your rental income and you won't be left with that much at the end of each month, if anything. If my goal is to be able to have substantial cash flow (in my pocket), relatively soon, this appears to be a problem. Is this faulty logic? Should I be looking at leverage in a different way?

Hey Everyone,

My name is David and I'm 30 years old, from Montreal, Canada.

I've been researching REI for the past few weeks and yesterday stumbled upon BiggerPockets. I have been blown away by what I've read here. There are many helpful experts that are humble and willing to share their knowledge and opinions. Lots to take in. I really hope to be able to contribute as time goes on as I learn more.

I come from an Internet Marketing / Web Publisher background and have been self-employed for about 6 years now. Business on that front has cooled down but I've been conservative with my spending and have managed to save cash. I currently have those savings primarily invested in the stock market. I've always been interested REI but now that my business is cooling off, it has motivated me to make moves.

My goals: Being involved in a business that is pretty much virtual, I am really into the idea of moving into a business that is tangible and concrete, like RE. Financially, my goal is to generate rental income, starting with one property, and if it goes well, to build up to the point that it can be my main source of income.

From the research I've done, the returns in the Montreal SFR rental market just don't compare to what I've seen in Florida, so that is where I've been been focusing the most.

Thanks for having me here and I hope to learn as well as give back in whatever ways I can.

David

I'm a Canadian that has been interested in putting some of my money to work in the US real estate market. I've been talking to a few contacts of mine that have had success with different strategies.

One of the people I spoke to has been investing in rental properties in Arizona and managing them on his own, from a distance. He's up to 10 properties and said that now he's been getting people to invest with him.

It sounds like an interesting proposition but I'm a novice when it comes to the types of partnership/equity arrangements so I wanted to run his proposition by the community here.

Basically, I would be dishing out 100% of the purchase price for the property while he would take a 50% private mortgage from me at 6% amortized over 25 years. We'd both be on the title and moving forward all costs and profits are split 50-50. At the time of an eventual sale, I would get back my 50% that I put in the house plus the balance of what he owes on the loan and then we split the profits.

He would be in charge of finding the property, finding the tenant, managing the property. I would also consider value in the the experience to do this once with him with the understanding that I could be involved in what he does so I can learn and then eventually invest more independently.

I tried searching to see if this was an arrangement that is common but I couldn't find anything like this. Do these numbers make sense? Another issue I see is that by paying cash I am severely limiting my ability to scale this out but aside from that is this proposition worth considering?

David