All Forum Posts by: Emily And Eric Erickson

Recommend you save up the 3.5% + closing costs to get a primary residence FHA loan and rinse and repeat what you did Tucson.

You have started your portfolio, don't unravel it now. 

Good luck and let me know if you need any Tucson specific help for your unit there. I'm local to Tucson

You can set up seller financing directly with your preferred Title company and they have divisions that will do the servicing to boot. 

I personally use Fidelity Title and have done several deals where they close the transaction, set up the first position lien for the seller who is providing the financing and then send out monthly reports as the buyer pays. Set up is $100 and monthly servicing is $25. Works great. 

There are standard seller financing addendums you can get from any good real estate agent that go along with the purchase contract. 

Keller Williams because the CEO Gary Keller literally wrote the book on how to be a successful agent AND how to be a successful investor not to mention an oft-quoted best seller on how to prioritize and plan. 

The Millionaire Real Estate Agent

The Millionaire Investor

The ONE Thing

I was reading his stuff before I even knew I wanted to be an agent so was an easy choice. And I haven't regretted it 6 years later, I continually get value from the training, conferences and fellow agent network that is KW. 

Best way to know you haven't overpaid is when you make offers that regardless of the final price your numbers still work. The rest are details that honestly don't matter. 

Where people get in trouble is they get caught up in the auction style moment and bid over what the numbers tell them to do and then they are stuck with a negative cash flow or poor return for years to come

A good agent in your local area can help with the bidding process and how to win in the current market

Your cash on cash % will be higher using leverage

You will have higher peace of mind not being beholden to a lender

Ultimately it depends on your overall financial goal - higher growth or super safe return

True financial freedom usually includes paying down debt, just depends on when you are at that stage

It depends on much you want to be an out of state landlord and which option works best for the markets you are moving to. A single family home in general appreciates and commands higher rent then a multi family and not all markets have a strong rental market or numbers work vs purchase price

Recommend you find someone who either currently lives or was stationed in the markets you are heading AND has done the strategy you want to do

Quote from @Alex Guerrero:

Quote from @Ben Bolingbroke:

Hey @Alex Guerrero, I am 24 as well!  I think this depends a lot about what your goals are for the future.  For me, I am always looking to build passive income, and that means that I would keep this house as a rental.  But it would depend on how much you can get in rents for the home.  If you do sell, what would you do with the money?  Buy another house?   I think renting it out as your first investment would help you to gain a lot of experience in how to manage and run a rental, and help you to get a feel for what is needed to buy more properties.  And maybe you even rent it out for a year and then sell it, but whatever you do, you have some good options.

 My mortgage has gone up about $200 from last year, a realtor in my area had let me know that that could be expected again this year because my neighborhood is a new and developing neighborhood that the city is still trying to gauge the value of it. Right now I have a close family member looking to rent it out for 1800, that would put me at -$15 now this could be worth it if the house gains value again next year then I could make over an extra 15,000 to sell then potentially, right?

Why is your mortgage going up, due to property taxes?

I never rent a property that doesn’t generate at least $300 per month in profit and it’s important to separate family from business 

You need to figure out what the market rate for rentals are, not what a buddy or family member is willing to pay

Agree with previous post, ultimately it depends on what you want to do or learn - both selling and renting can be good options depending on end game

Quote from @Tim Sipowicz:

@John Underwood so the only way to do it is to be considered a RE professional? Looks like I need to give my two weeks!

 I did exactly that 6 years ago and haven't looked back. Lots of things to consider but a really important one is 1) how will you eat and 2) how you will obtain financing if you quit. Banks love lending to W2 employees, not so much for self employed. We are considered just "unemployed" until you have 2 years of tax returns that support loan payments again. So that could be 3-4 years if you don't have a clear path to income that isn't tied to a job. Viscous cycle, can get financing while working but no time to look. Quit to have more time and can't get financing. 

Safest path is to build up side hussle until it can support 1) eating and 2) tax returns that are healthy enough to get financing. 

This is a great way to get your feet wet and rub shoulders with others who are just getting started. Highly recommend. 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $226,000
Cash invested: $19,000

3 bedroom, 2 bath house that was an eviction and previous landlord just wanted out. Bought as is with a cash partner, cleaned it out, put a new roof on it, fixed the AC, replaced and cleaned carpets, new water heater and got it rented out for $2,085 per month on a lease option basis.
Cash investor is completely passive, I take all of the calls and did all of the above.
Will be a great investment for a long time!

What made you interested in investing in this type of deal?

It is the model that fits my abilities the best

How did you find this deal and how did you negotiate it?

Found the deal on MLS. Beat out another investor who wanted to flip it and couldn't pay as high a price. Price in a long term deal is the last thing to worry about, it is all about the cash flow

How did you finance this deal?

Cash from a passive investor

How did you add value to the deal?

Found the deal, saw the potential (listing agent didn't even post any pictures because it was a MESS!), negotiated the terms that was below list price, got a free roof out of the seller after inspection, did all of the repairs, marketed it when ready to potential renters, qualified a tenant, moved them in!

What was the outcome?

Cash flowing property in under 2 months

Lessons learned? Challenges?

Working with cash investors is GREAT!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I represented the cash investor as the buyer's agent.