All Forum Posts by: Dustin DuFault

I have an Ooma voip line that I use for faxing via my scanner/print/fax machine. I prefer to send sensitive document via fax because they cannot be intercepted over the internet. Unless you utilize encryption technologies on your email they are not secure by any means.

I always treat my credit score like the goose that lays golden eggs: my real estate! So I go to great lengths to avoid ID Theft. Regrettably this means faxing, lol.

As a side note, this is why you may notice that Faxes are still in regular use among financial institutions, doctors offices, lawyers, etc.

I've resigned myself to doing it on my own... I'm not a CPA - just a quick study. I like having my hands on the accounting so that I can learn, understand, and maximize the tax benefits of Real Estate. It's more work than I'd like - but thus far it's been worth it.

I use Peachtree Accounting for the same reason - I felt more disconnected from the accounting in QuickBooks. Peachtree is more complicated for a newbie - but to get your entries in (in a comprehensible way), you have to have a better understanding of what you're doing first.

I have the same luck as Josh. While we use online listings, the for rent signs bring referrals from people living in the neighborhood... since they have skin in the game trying to pick good neighbors, it seems to be a good source for leads IMO.

@Bill Gulley I love the tie in, lol! That is the truth for sure - and I had been doing so - but the responses I was getting were a lot less flexible than I was expecting a commercial lender to be. I think I just haven't found the right folks yet.

That's what I'm hoping thus far anyway! :D

Thanks again, David! It's interesting -- I've actually done quite a bit with PrimeLending in the past. My contact there, Eric Corbett, has been the most professional mortgage broker I've ever dealt with. The last word from him was that they would only do loans 1-4 though. I know that these policies change - I'll contact him and let you know what I find out.

I really appreciate the list - that will be very helpful I'm sure for others as well as me!

@David Beard

@David Beard

Thanks David!

I'm humbled you took the time to provide such a detailed response!!

I can hit all the bullets on your list there - but I'm bummed about the cash out refi situation. I really like the property - so my thinking is that I should convince a bank to do a conventional loan for the cash out refi (easier said then done, I'm finding), but rely on the Fannie program for my next acquisitions.

...or bite the bullet and sell after Thanksgiving when I reach the 1 year holding period for long term capital gains.

Great insight - thanks again for your help! I'll keep the contact info for Laura and mention your referal when I'm ready to pull the trigger on #5 :D

Hmmm - I only have 1 foreclosure auction buy under my belt. It must have been a good one though - I got a white Dior suit that fits me perfectly and a bunch of brand new clothing with tags in various sizes that fit my daughter perfectly from 4 months thru today at 16 months. It was all located in the garage and I could tell the tenants held a last minute garage sale.

I've also gotten plenty of furniture from my rental units too (i'm clearly not picky lol). Usually tenants tend to have older furniture - which, ironically enough, was built to a higher standard than todays mass produced stuff. As a woodworker I can make quick work of rehabing these pieces and.... that's where we've gotten a lot of furniture for the house!

David,

Thanks for your response to my forum post the other day! I was hoping you would entertain another question regarding the '10 Fannie Mae Property Limit'. I've heard this figure a number of times over the years. Unfortunately my financing guy's firm tops out at 4 total mortgaged properties. I've looked at several local credit unions and small to mid size banks and all seem to have this same 4 total mortgage limit (which appears to include mortgages held at other institutions).

Still - I hear people reference the 10 mortgage limit quite a bit. Is there a piece to this puzzle I'm missing? If I can get money locked in for 30 years at todays interest rates I'll certainly take that 10 times over! :D

Thanks again for your time!

@David Beard

Great feedback guys, thank you!

@J Scott - you make some excellent points. My margins are quite a bit better than 50% because I've spent my entire 'real estate career' learning how to do all of my repairs myself... I now have a workshop / tool arsenal that would rival a General Contractors. Still - your point is well taken in that if I continue to grow my business that level of involvement in each of them is not realistic, and that is in fact something that is easy to lose sight of. I appreciate you reminding me about that. I can see what you mean about the periodic large cashflows as well... I stay so busy that I haven't done a stellar job of tracking these in an ongoing basis to really do the proper analysis. I've always bought equity / had cash on hand so it's easy to chalk up expenses as 'the cost of doing business' and so long as the net worth / bank accounts are growing figure it's all gravy but I definitely see what your getting at there.

@Joel Owens - Thanks for the ideas on swapping out to a better yielding class of Real Estate. I'm actually actively looking at multi-family / mobile home opportunities and putting together a business plan to make that jump. I'm just such a buy and hold type of guy I have a hard time convincing myself to make such drastic changes... plus I'd be giving up my sweetheart financing deals which I know 10-20 years in the future I'd regret. If possible my plan is to build on top of my current portfolio and leverage the equity at some point (hopefully sooner rather than later!) into a bigger property. The whole concept of going in on a multi-family property and agreeing to balloon payments has me a bit sidelined on the idea to be honest.... I think part of my problem is that all of the common real estate valuation models seem relatively simplistic in a way that doesn't account for things like an aggressively rising interest rate environment - which would not only affect your debt service, but property marketability, etc.

.... I'm curious if you have additional thoughts on the matter.

@David Beard - Thanks for the kudus! I love being in business and building a future for my family and I love the challenge of building something that, properly managed, can provide a lasting source of wealth for my children someday!

Thanks also for your input on the financing. I knew that the values off of Zillow and Trulia were flawed (and that the assessors are a joke too). The only reason I refer to them is that it helps keep me objective. I didn't realize that by doing this I could cut my credibility with a banker though so that's great insight, thank you!

Now - I'm really curious about your idea on financing the property. I think what you're suggesting is that I quit-claim the property back to myself personally and apply for 'one of my ten' personal mortgages, is that right? I've read repeatedly about the '10' on BP but in all my research I can only find lenders that cut you off after 4 personal mortgages.... even if those mortgages were made by other banks. So by that criteria I'm capped. I've tried many local banks and they all want to push me to a commercial lender if I'm on number 5... am I looking in the wrong places you think? I've been trying regional and local banks.

If I can quit-claim it and get a 30 year fixed note I'll take that for sure!

Hello All!

I must admit to having lurked on this site quit a bit --- but not posting much. Call me the shy type :D

Therefore you don't know much about me and I'll need to lay quite a bit out for you to understand my situation. I have an idea of some structured financing I'd like to apply for with banks - and wanted your opinion on if it was feasible or not... and regardless some additional ideas about things I may not be considering.So I'll start with my situation, then! I'm 29 and I have a lovely bride who is 28. We bought our first house when she was 20 and I was 21 and we had just started out in our careers. She is currently a teacher, and I am a stockbroker making the medium bucks for a discount firm. I have an undergraduate degree in Aviation Management (and lot's of training as a pilot), and a Masters of Business Administration with a concentration in Finance, which is how I learned to run a business. We have a 1 year old daughter and 1 on the way and aspirations to get my wife home to raise the kids --- soon.

Now - we've been building our real estate portfolio slowly but surely. We've always been slow to invest - usually researching a year in between properties to find the 'perfect' ones that provide equity and cash flow on day 1. This was labor intensive to say the least, but has paid big dividends as we have a nice little portfolio of 5 homes now and some pretty good equity. The point of this post is that I'm looking for efficient ways to grow further, but first let me lay out where we stand currently...

(in case that graphic is as small after posting as it looks right now: http://www.dustinanderin.com/SalesPics/valuation.jpg )

Also important - I have $34522.39 in cash on hand in various deposit accounts. Thanks for enduring the gory details above - now here are my ideas and where I need help...

I'm, of course, interested in making further investments. Property #4 noted above is the only property I hold in an LLC, and it currently has no mortgage. I purchased the property at a foreclosure auction for cash, and did some minor repairs to it. It's been a great property, and I will have held it 1 year at the end of November. I was able to identify that property for acquisition because I've built a computer program that allows me to pull data from the county website and identify properties that should be targeted for further due diligence. This has sped up my workflow considerably and I can foresee my ability to grow my rental business at a much quicker pace than I have done in the past. As with prior endeavors I will be taking a cautious approach, of course, but if possible I'd like the financing allow for the purchase of multiple properties, but saving on closing costs, etc... Here is my idea for structure, and what I'm hoping to pitch to banks...

A Structured Loan Product With the Following Features...

-I'd contribute the property above (Property #4) as collateral to setup the note. This property would be my initial collateral. If we accept the online 'estimates' (this part could be negotiated between myself and the lender of course), that could potentially allow access to capital of $732,491, assuming an equity requirement of 20% (this percentage would also be a negotiating point, I realize).

-The capital noted above would be spent, without the full load of traditional closing costs on homes that met certain mutually agreeable characteristics. In addition the valuation on acquisitions would be determined by a contractually agreeable means - like a particular appraiser both parties agree to use.

-With each acquisition - either the purchase could come directly out of the capital amount above until those funds were spent, or -as a hopeful alternative- the equity if determined to be present would be adjusted based on the acquisition valuation to adjust that figure.

Okay - I think that's enough for a lot of folks on here to see where I'm going with this. One last idea that I'm sure the banks will pitch would be cross collateralize the equity from my other properties. If this were to be requested I'd be concerned about losing my very favorable sweetheart deals from my owner-occupied loans... would they be likely to subordinate? Would I be able to also access some of that equity if I agree to do so???

And finally - feel free to post your own ideas. The point of the complicated structure is to get flexibility and reduced costs (by way of avoiding full closing costs on each property), and also access to cash for quick closings and future access to the foreclosure market.

Your Input is Needed & Appreciated; thank you!!!