All Forum Posts by: Evan Evans

I can't get started on anything until August, but I'm checking in here, and reading everyone's comments. Extremely helpful! And I've been learning more about everything in between. 

I definitely miscalculated the 10% down. I did not know you can't do non-owner occupied 10% downs. But that's ok, 20% down on SFR or 25% as others mentioned. Another option is, my lender may be able to do the 10% down option. It's all one hand paying the other hand anyway. I'm in that fortunate situation of having $500k-$1M of cash on hand, even if it is a form of a loan.

I'm leaning on the idea presented by so many, to get into 1 multi-family property around $2M. Not sure that exists out here where I am, but maybe I'll have to jump into my first long-distance deal in order to get the cash flow invested right. I want it to be hands off anyway, so that forces me not to make any excuses to get all micro-manage-y with it.

Well, if anyone has any further ideas, I am literally soaking it all up. There are so many details. And as they say the devils always in the details. I just want to give it a try though. Have a small team of consultants, make the best decision I can for my first time out, give it a try, and hope I've been as smart as one can be on their first try out.

My focus is on cash flow and selling in 3-10 years for appreciation. I also don't mind flipping in 1-12 months, or any combination in between. But I'm DEFINITELY not interested in extremely long term holding. I want to cash out, and repeat at an interval that leverages my upgraded buying powers at all times.

@Jeremiah Duckworth I'd be interested in talking with you about investing in Holland. I know the town a bit. Great area. Is that where you want to invest?

You are all so amazingly helpful, and I definitely don't take offense at any of the criticisms. I am totally getting everything you are all saying to me. I want to really go into detail, but I'm on a deadline on some work this weekend. 

But I do want to add a little bit about the mystery of my lender. I am in the entertainment industry. I have cash flow income already from royalties from music that I have written that is in movies. The lender of mine, is private, and quite special. Although they charge interest, they wrap it in so I never see it. And they are lending me my future money. Because of this, I can actually ask for $1M if I like. And they already agreed that when I am ready to do the 10 properties, they can give me the 10 mortgage loans too. Their words: "no problem at all." I pick up huge checks from them all the time. So when they say "no problem" that's what it means. It's real.

I happen to be very busy until July 29th, which is when I'm likely to pop back in here more substantially. In the meantime I'm listening to BRRRR on tape when driving which is only occasionally.

Let me try and rewind some of my vision:

I am renting, have 3 kids and a wife. We just were looking for a place, in this absolutely gorgeous engineered community, with lakes, bike trails, 10 out of 10 schools, mall and movie theater within walking distance, trees, golf courses, underground wiring, all new building, etc. 

So, we go to look at a rental we were considering, at $3200/mo. Gorgeous. Extremely desirable. On the street next to the center park, which on the other side is the elementary school INSIDE the engineered community. We can walk our kids to school, lay in the grass for lunch, etc. 

Okay, so, next door that day was an open house (for sale, not rent). Same exact house. Same model. Same square footage, same everything. Identical. It was about $500k. I did the math on getting a 10 year IO loan, factored in buying down the rate to 3.75% (folding the costs), got the payment down to around $800/mo, added 10% for property management, 3.5%/mo for repairs, insurance, PMI, 7% vacancy (these places have 6 offers within 3 days to rent; extremely desirable), etc, etc ... I figured a positive cash flow of $800-$1200/mo conservatively to $1800/mo if I cut corners everywhere I can.

I think, damn, let's do it!

I then realized, that because of my lender situation, I could do 10 of these. I met with him, he auto-approved me no questions asked. He's in Beverly Hills. It was one of those faces like "no problem at all Evan" and they wave their hand. Totally approved. He knows my finances for decades now. Not a problem at all.

So I figure, okay, let's do this. 

My plan: get about 5-7 experts on board, paid for their time as freelance consultants, who can be long term consultants. They can help me pick winners, and manage the upper level of it. I supply the vision and the capital, and I'm smart enough to understand their analysis. I'm not going to try and "wing it" or learn the hard way. HOWEVER, I am experienced with business enough to know that I will have some failures along the way to learn from, and that it's a good idea to diversify the variables so many different results start to show who is the leading stallion vs others.

So then I'm listening to Grant Cardone the other day about: "compression", and I'm like: THAT'S EXACTLY WHAT I WAS THINKING. I had realized the same thing he was preaching. Which was to go where it's gorgeous, all access, compacted into a "bio engineered" community.

We have several communities like that here, and a new one going up with 35,000 homes over the next 3 years. And more where that came from. I want to get in on gobbling up this valley, 10 homes a month if I can do it.

Then I discover the BRRRR program, buy the book, watch the recent podcast. I'm still learning. I learn about REFI-ing to get your money out. I heard Grant Cardone talk about that, so I figured that is something you do to get your down payment back out in my original strategy I was envisioning. But now I see, that if you buy a repressed home in a great neighborhood for cash, that can be fixed up for a little, then you can refi for the new re-sale value of the home, and that 75% of that, can in the right situations be more than everything you just put in, or just about break even. But boom, you have your money back, a home in your name, and you rent it out to cover the new RIFI-ed mortgage. Brilliant. I get it. I understand it. I've owned 6 homes before, and even sold 2 of them myself (walked the buyers into escrow). I am aware of all the hidden costs.

So, hopefully that gives you a little more information.

For the person who said to "slow down". It's really not that. And no, I did not move fast previously to flip the 6 homes I was living in and roll $50k into $450k. It took like 10 years. 

What it is now, is, I understand business, and scaling, and having a team, so you can delegate SO you can scale. Infinity times 1 minute, will bury you. You have to delegate it all, and just lead with vision. And in this case, vision and capital. 

So I'm ready, well, in August moving forward I will be ready to move on this, and I dropped this question "bomb" in here to ask you guys for all your help. You've been wonderful. I haven't even had the time to fully read some of the great responses. BUT I WILL, and I will respond to them too.

So yeah, your words and advice are being fully taken in. Not wasted effort. You're going to help me a lot and I really appreciate it. Some of you even offered partnerships, or resources. I'm considering all that seriously, because I have no fear. I am moving full steam ahead. I just want to make enough right decisions, that overall I'm positive cash flow on my holdings by let's say January 2020. And for that, I will soak up all your advice and get back to you on your offers. 

Some of this stuff makes so much sense, that it's just a no brainer. Tweaking it all, so you squeeze all the margins, is just experience. That's the advice I want to make sure I go into these deals with. But overall, the strategy of getting into and out of positive cash flow properties and avoiding taxation, sounds like a much a better way to invest my money than the other $500k+ I have on the stock market. If things go right, I'll be liquidating that, and going RE 100% in 2020. I understand the importance of diversification, but I also am a new believer in the power of property.

 Near Los Angeles, CA

Hi, wow, thank you for so much great feedback. This is awesome! What a community! I'm quite literally tied up all day today, but I've just skimmed and this is going to be really awesome sharing what I do over the next few months with you, and taking all your advice! Really, huge thanks! If anyone has more to add, trust me, when I have a moment, I'm going to read it, and it's very meaningful to me and appreciative. So far, from what I have skimmed, sounds like going into a couple of cheaper properties, kind of a middle ground, would be better then BRRR-ing a $550k and better than getting into 10 properties at 10% down each. Back soon to read more! Amazing!

@Alex Bekeza DSCR?

@Diogo Alves Thanks, yeah that's why I ended up here. I just started David's book, and it's changing what I thought my strategy should be. I'm still "reading" (audible) it. Thank you for your feedback. It helps a lot to have this community. I hope others will give me some feedback as well.

I have access to $500k. In my area there are high demand SFRs around $550k which rent for $2900-$3200/mo.

Should I put $50k down on 10 of them, pulling $500k IO mortgages on each and go for cash flow and holdand reinvest profits into next properties? Or should I try and do a BRRRR with 1 SFR using all the cash to buy a $450k rehab with $25k and REFI at comp = $550k?

I've bought and sold 6 homes before the 2010 housing crisis. I flipped $50k to $450k during the 10 years leading up to the crash and lost it all...because I was living in the homes and flipping serially instead of investing all that money into cash flow producing properties all working in parallel. My mistake, but I definitely learned some lessons!

So, my point is, I've never done cash flow property rentals before. I have a financial backer so I can tap $500k. I feel like getting 10 homes, a property management company, IO mortgages, renting out, and netting around $500-$1000/mo each property is the strategy I'm comprehending. But I've just started learning BRRR and I'm very curious if that's a better route than getting into 10 properties, as far as best using this $500k?

Feedback?