All Forum Posts by: Ehab Shoukry

I remembered someone asked me how did I know these were good investments. I think most people will tell you that a good investment is a subjective term and varies from investor to investor. 

For my criteria the most important analysis I do is to figure out how much money I will be coming out of pocket and how much will I be getting back for that investment annually. That's a cash on cash return calculation and for me made the most sense. 

For my first rental I put down $15k and estimated that I would make $6k a year in rental income after expenses and mortgage payments, etc. Thats a 40% return which I realize can decrease with unexpected expenses. So I felt if an investment will make me a 30% return or better that would be a good deal. 

I am in the process of buying my 9th rental for $52k and it currently rents for $1100 a month. The tenant has been there since 2012 and wants to stay. I estimate it will cash flow $700 a month so when I calculate the return I will get on my 20% down payment it will be over 50% a year. 

The deals are out there. Good luck!

Ehab

I'm glad folks are finding motivation from my story.  I always found it encouraging to hear people share their success stories and it made it feel like real estate investing was more possible than I imagined. 

To answer your questions:

I used Spirit of Texas bank.  They lent me 80% of the $320k purchase price with 5% interest on a 15 year amortized loan.  I put 20% out of pocket but received multiple credits at closing including September's rent which the seller credited me.

I was able to come up with the money to put 20% down because of a live in flip that I did where I bought a house in an up-and-coming area, lived in it for three years, and sold it for twice as much as I purchased it for.  That one decision has helped me to catapult my investing career because it gave me a healthy chunk of cash to be able to use to invest, rehab, have reserves, etc.

If I understand the BRRR strategy, I believe that usually involves getting a hard money loan to purchase and rehab the property and then you can refinance into a conventional loan, right? We have lenders here who will do that and lend 75% of ARV but you are paying hard money points and interest followed by additional points for the conventional loan. Plus you have to have a 720 credit score I believe to qualify for the conventional loan once you get more than four houses. Also these houses didn't need any repairs because they were properly rehabbed by the previous owner. Having said that, I may choose to refinance down the road to try and recover some of my initial investment but I'm happy with the current deal.

I also talked with some conventional lenders I used in the past and they were going to treat each house separately with a separate purchase price, separate loans, yada yada.  I really was looking for a lender who would be willing to lend me on the bulk deal with one loan and simplify the process.  The bank I used was able to do that for me.

Thanks for all of the positive feedback and keep the questions coming.

Ehab

Steve...I think that's great advice. All of these properties fit my investment criteria. The biggest risk I have is with the tenants I inherited. They are going to need retraining, however, the properties themselves are all home runs IMHO. They have all been remodeled by another investor who dealt with the headache of permits, contractors, city inspectors, etc. 

The tenants are used to someone knocking on the door asking for rent but I've already sent letters to all of them explaining our policy which is direct deposit at any Bank of America or I offer online bill pay. 

I'm planning on being firm but respectful. 

Thanks. 

Ehab

Joe...I mostly invest in the south and southeast parts of Houston. All of my deals have come off of MLS or realtors I met through MLS who I established credibility with.

Mark... My mentors were through Su Casa realty in Houston. They offered a VA service which I used to make multiple offers every day to help find deals. Like any mentor you get what you put in so I was VERY hungry to succeed.

Hi all -

I've been a long time lurker on BP and am happy to say I've listened to every Podcast and read as many posts as I can.  My passion for real estate started with rehabbing because I love turning old run down properties into updated homes that families can enjoy.  I did a few rehabs back around 2002 as a hobby and then took a long hiatus from real estate.

This year I decided I wanted to get serious about investing. I hired a mentor in January to teach me how to wholesale off the MLS and quickly did two wholesale deals. I can definitely say that I don't love wholesaling but appreciate all those out there who do.

In April of this year, I was about to wholesale my third deal for a nifty $10k profit when my mentor recommended that I start building a rental portfolio.  So I purchased the house for $56k and it currently rents for $1k a month.  I quickly found a second house with very similar numbers a month later.

I continued to build relationships with realtors and was approached with a six house deal for $320k.  All the houses have been completely remodeled and have tile throughout along with updated kitchen and bathrooms.  The investor who owned them was moving to another city and didn't have the stomach to be a long distance landlord.  I just closed on those six houses which each rent for $1k a month each to bring my total to eight houses.  

Next month I'll be closing on my 9th house which is bringing me very  close to my goal of buying 10 rentals this year.  All houses are in Class C subdivisions and I purchased with 20% down loans.  

Thanks to everyone who helped answer my questions along the way and to the BP folks who share knowledge and continue to motivate through podcasts and articles.  I hope this motivates others to follow their dreams.

Happy Investing!

Ehab

@Greg H My leases have a 30 day notice to vacate or renew clause in them.

That all makes sense.  So in reality, even though the lease period has ended the only way to "make" a tenant move who is unwilling to is to evict them.  That really seems like a bad deal for the landlord that you have to evict a tenant even when their lease has ended.  

You would think that the since the contract terms has ended it would be a lot easier to get someone to move out. 

Hi all -

I'm curious when a lease has expired and you no longer want your tenant to live in the property, is an eviction required or can you just send a letter to move out?

I ask because I am about to buy six SFHs and am planning on placing the tenants on a 90 day trial period before signing new leases.  If I find that during that period some of the tenants are slow or do not pay, I wanted to know if I have to formally evict them or just send a letter to move out.  All existing leases have already expired.

Thanks,

Ehab

Thanks.  It seems like the recommendation is to definitely have a trial period prior to signing any new leases.  I'll be sure to make this clear in the welcome letter.

Thanks,

Ehab

Hi  all -

I am a relatively new landlord who currently owns two rentals.  I'm off to a good start with these rentals--I ran background checks on my tenants, collected a full month's security deposit, setup online bill pay and have good tenants who are paying on time.  So far so good!

However, I am buying six houses from an investor who is moving to another city and is ready to  sell.  Four of the six houses are section 8 and the owner has already told me that he has put effort into collecting rent from the current tenants.  His handyman goes around every month and persistently knocks on doors until the tenants pay.  The good news is that the tenants portion is around $50 and section 8 pays $950+.  Even though it's a small amount I still planning on collecting it.  He also only collected a $200 security deposit from each tenants.  All leases have expired on the six houses by the way.

Here's my question...how would you handle the transition process once I close on these houses?  I want to sign new leases but don't want to sign leases with tenants who are slow to pay.  On the other hand, 95% of the rent is paid by the city so I don't want to lose the tenants either.  I was thinking I would send change of ownership letters and then give each tenants a three month trial before allowing them to sign new leases.  I wasn't planning on making them fill out rental applications and running the usual checks on them since they are already tenants.  

Thanks!

Ehab