All Forum Posts by: Dan D.

Thanks for the feedback, everyone.

@Jeff Berg Thanks for that whole new idea.  I hadn't even thought of that, and that might make the most sense.  

You blew my mind this morning as I was first waking up.  The thought hadn't entered my head.

The inside is dark because of that porch, so opening it up could be good.  I have a nice old door on it that I can salvage, and there is already a mini-mudroom off that door, so you actually go through three doors right now to enter the house.

Plus, the screen door was going to go anyway.

That front bush is a bush more than a tree.  I still think I will remove it and replace with something else, and add some low shrubs across the front of the porch to improve the landscaping.

Thanks @Roxanna Daniel and @Jamie Moyer for your ideas as well.

The shrub is being removed and we'll likely replace the front door.  The aluminum windows are an eyesore.

Is there a way to make these look better, or do I need to remove and replace?  The space behind them is a porch.  You can see the interior windows behind it.

Has anyone used those vinyl-pane windows like ezporch or ez-screen?  The porch is cold in winter regardless of windows.

The current windows are functional.  They are just ugly.

If you aren't happy with the contact, and you knew him before, I'd call him and talk to him about where he over-sold you.  If he's a legit dude, he would probably want to make sure you were satisfied.  If he's just another guru, then good luck with that.

But based on the fact you knew him before and he seemed legit, it would be worth having that conversation.

From what he trained you on, however, it seems like he was living up to his side of the bargain.  Only you and him can discuss where there was a difference of understanding.

Oh come one...  give that big pine a shot.  You can do it!

What's the worst that can happen....  I mean other than death.   Or a tree on the house?

Hi Jacob,  I'm not an expert, but normally what I've seen is people separate any of the land around as farmland and the house and property that makes up the house an yard as another price, then add them together.

Say you are buying 50 acres.  The property might sit on a corner of the land that could be separated into a 10 acre lot.  Separate that on your napkin as one value, then see how many acres are left. In this case 40.  What type of land is it?  Is it agricultural?  If so is it tillable, or is it wooded, swamp, etc?   Split the land by usage to determine whether the price is right and to determine what price you might want to offer

I like to take something that is broken, buy it, fix it, make it nice, and let others enjoy it for a modest price.

Satisfaction in providing nice homes to people who need one because they incurred unusual life circumstances, but still want to be proud of the place they live in.

@Brent Coombs You're not including his total returns on his equity of $1,400,000.  The fact he has that much equity should not be used against him as a metric for return.

His return on investment is the more important number, and to calculate that an increasing equity would aid his return, not hinder it as it does in your calculation (especially if you are not including equity increases into the formula as part of the return).

@Einar Mykletun  Attached is an example of what you might have for current mortgages on each property.  What you could do if you want to increase cashflow is just pay off the properties and the corresponding mortgages for the ones highlighted in gold.

Also, should your properties appreciate (the two big ones), you could refinance to pull out some money.  Say the big property 9 increases to a value of $1,000,000, and you refinance at 75% for $750,000.  That would allow you to pocked he difference of the $750k and the current mortgage balance which could be in the $550k area depending on how many years from now you do it.  Your mortgage would increase from the current level of $3,025 to $3690 or so.  An increase of $700, but in turn you might be able to pay off four or more mortgages.  That would eliminate payments of $1200 a month in this example for a net cash flow increase of $500.

Of course, over time, those mortgage balances are decreasing, and your rent should be going up.

Overall, I think your doing great.  The cash flow isn't always king when you can have properties of $700k increasing in value at 3% a year.  

My strategy is similar to what you're doing.  I don't want to be cash flow negative, but I'd sooner build equity through rehabbing, then holding them over time.  I need to cashflow after the rehab, but knowing you have 50% equity across all of those properties is a great place to be.

You're probably gaining $30-40k a year in debt paydown a year, and if you're averaging appreciation of 2.5% a year across all properties, you're gaining 70k a year there.

You don't have cashflow, but your printing money through equity at a great rate.

Yes, some would call in speculation, but if you are buying and holding for 15-30 years, that's a long time for appreciation (or even inflation) to not help you out at 2.5-3.0 a year.

I'm not an expert, but I play around with numbers a lot.   :-) 

With the equity you have and the debt you have you have the two options of either buying property, or creating cash flow by paying off some of the debts. You might have smaller mortgages on some of those smaller properties that you could pay off with a new refinanced mortgage at 75% LTV on a big property. (Or with cash you have on hand for that next down payment).

Juggling or managing your debt can help you achieve that.  

That's where the appreciation on those big properties can help (if you can get it).  You might not have cashflow now, but in a few years, you might find you have a $1,000,000 house due to appreciation that has a mortgage from 10 years ago that's down to $500k.  All of a sudden, you can refinance the $1,000,000 property for $750,000 then use the spare $250k to pay off a couple of those smaller mortgages. 

Your monthly payment goes up some for the one house by maybe $300-400, but you've just eliminated one, or maybe a couple monthly payments on smaller mortgages you had of $550 - $900 each. Just like that you've created more cashflow and your overall LTV is about the same.

How many of those properties do you need to own outright before you hit your goal cash flow?

Do you have enough already?

If not, you need to play the leverage game.

When in doubt, just buy the property.

You can't make any money in real estate without a property.

:-)