All Forum Posts by: Jeff Richardson

@Milind Shastri sometimes you can have the city inspector come out post-construction and issue a permit for the work.

@Chris Leininger if you're going to occupy the 2-4 unit you can do an owner occupant loan. I don't know of any lenders willing to take on a commercial product 5+ unit with 90% LTV, since they typically underwrite the property using only the income generated from the property to qualify the loan. You may want to syndicate the deal to limit your out of pocket.

Texas has the best Landlord/tenant laws that I know of. DFW and Houston have great cash flow if you buy them right. There are deals to be had in any market, you either work at your 9-5 for the equity in a deal or you work your network to get deals at a lower price to get your built in equity. 

@Bob Houston we purchase all of our properties with hard money, then rehab them and immediately refinance them into conventional loans in our own name to get the best terms. There are much better and cheaper ways to get asset protection than an LLC, consult an attorney and Insurance agent. Once you and your wife both have the 10 conventional loans each allowed by conventional lenders, then you'd want to go to the higher rate, lower amortization of portfolio products, like commercial lending.

Rebogateway

@Treivor Cashion There are 4 ways we make money in real estate: 

Equity capture (the amount of discount we get the property for after all closing costs included)

Cash flow

Equity build up (I factor 5%, and DFW has been close to 10% for a couple of years)

Debt paydown

Here is a deal we have under contract:

Purchase price: 100,000

Repairs: 12,000

ARV: 135,000

Hard money loan: 101,250

Refi to conventional loan: 101,250

My total Cash out of pocket: 18,722

Closing costs from Hard money loan and rate/term refi and carrying costs: 8,081

All in: 120,081

Equity capture: 14,919 (80% return on capital gain)

Monthly cash flow after immediate refinance: 483 

Yearly cash flow: 5,796 (31% COC/year)

Annual appreciation: 135,000 ARV x 5%= 6,750 (36% return/year)

Debt pay down: 1,200 (6% return/year)

EC=14,919

CF x 2 = 11,592

AP x 2 = 13,500

DP x 2 = 2,400

= 42,411 return after 2 years or 226% after 2 years.

Our strategy is a 5-7 year hold and when cap rates improve, or once our cash flow is double our living expenses, we will start partnering into 50 unit plus apartment complexes.

@Chris C. Joe Boston at Dallas REIG is doing this exact method of investing for his members, you should attend their meet up. 

@Jon Klaus what types of investing are you doing in DFW right now?

This is not what I was wanting to read, we are going to start our postcard campaign in January. Are you mailing all 10,000 each month?

Treivor, our criteria is:

20% COC minimum

100% ROI over 2 years

Minimum $400/month gross cashflow

<2,000 sqft

ARV $100,000-$170,000

3 bed 

1.5-2 bath

As much rehab as it takes to get those numbers.

Every house we have purchased has had foundation work in the rehab

In an area I'd feel comfortable having my wife and children outside.