All Forum Posts by: Ezra Henderson

Hey BP, I think I might have just had the craziest idea ever, and I need somebody to smack some sense into me and tell me it isn’t possible. But if it is possible, then it would be amazing.

So not too long ago I purchased a LLC from an investor, and in that LLC are 10 rental properties. I didn't purchase the properties individually, I purchased the Business/LLC as a whole. I got a sweet deal from the guy, and did 100% owner financing. All the properties in the LLC were payed off and owned in full. I now pay the previous owner of the LLC a set amount each month, for 15 years at a 3% interest rate. The properties were not held as collateral on the loan, and there was no lien placed on them.

Now my question is: what's stopping me from refinancing these properties, pulling out 75% equity and using that money as down payments on more properties that cash flow? And then using the cash flow from the new properties to pay off my loan on the original LLC? I know it would mean I have two loans, but I would definitely make way for money this way.

For example, to keep things easy let's say I bought the LLC for $1,000,000 dollars, and I pay the previous owner $7,000 monthly.

So on each of the 10 properties, I give $700 of the monthly income to pay off my debt.

So say I took one of those properties, and did a cash out refinance and pulled $80,000 out, and spent it on down payments on 4 new properties, each of which cash flowed $200 each month after all expenses. That would mean that 1 property turned into 5 properties, cash flowing $1,000 between them all! I would then use that money to pay of the $700 I owe from the original loan.

And then say I did that on all 10 of the properties! So I turned 10 properties into 50 properties, am now making more cash flow, and am having debt pay down and appreciation on 50 properties rather then 10.

I know it’s too good to be true LOL. Somebody tell me what’s wrong with this idea.

Thanks!!

Hey guys, I need some advice. I am close to finishing the rehab on my first Fix & Flip, and am looking forward to starting a new one as soon as possible. Here's my problem:

I have pretty much all of my money to invest tied up in my current flip, I bought it with cash, did the rehab with cash, and my original plan was to wait to purchase my next flip until I sell the first. But now I don't really want to wait (30 days to close on the one I'm selling, and then another 30 to close on my future flip) and would prefer to buy my next flip ASAP. 

Would it be dumb for me to get a HELOC on the flip I'm working on now, and use it to pay the downpayment on my next flip? Financing the remaining 80% + rehab costs with a HML?

I know that's two loans... and a lot of leverage... but I can't think of another way to avoid waiting 60 days before being able to purchase my next project. Do you guys see any problems with this idea? Or do you have any better ideas?

My current flip was a steep learning curve but overall is going awesome (i actually stayed on budget believe it or not lol), and my realtor thinks he can sell it for 50k more then I was originally planning on... so I guess I was being a little too conservative with my numbers haha. My plan for the future is to start financing my deals with HML's rather than paying all cash, so I could potentially have five projects going at once rather than just one.

Thanks!

Awesome, thanks a ton!! I’ll probably take your advice and just try them both out. Appreciate your advice a bunch

Have any of you guys used both these vinyl plank products? I'm in the middle of a 215k ARV Fix & Flip, and am wondering which product to go with. Trafficmaster is far cheaper at around $2.29 per sqft, while Lifeproof is $3.49 per sqft. Obviously I would prefer to save money, but I don't want to go with the cheaper one if the other is far superior. Any thoughts? Thanks!

Hey guys, I have a question that I would appreciate your advice on. So as somebody that is just beginning to get into house flipping, I’m wondering how (and if) I should set up a legal entity. Some people say not to worry about it at first, while others say that you absolutely have to before you start flipping for liability reasons! I understand that there are pros and cons to both, but I’m wondering what I should do in my situation, so I’ll give you a few details:
I’m hoping to get into house flipping full time in the next six months or so… I’m planning on going all in. 
I am probably planning on paying cash, at least at first, until I start getting multiple projects going at once and will need to finance. 
I tend to be the sort of guy that likes to do things the more safe, legal, and systematic way. 

If you think I should form a legal entity before getting more into this, what type would you recommend?

It seems like most people I've talked to recommend a type C corporation that owns individual LLC's for each flip.

I would really appreciate any advice you can give, thanks!

- Ezra

Hello everyone! I am a new investor, trying to figure out how to get started in real estate investing. I recently purchased 10 rental properties (bought from and financed through my grandfather, an investor) and it awakened a strong desire in me to pursue real estate investing full time. I have $150,000 cash capital to begin investing with, and I'm wondering what the best way to get started is, given the amount of money I am starting with. I've been doing research, and am leaning towards using the BRRRR method, since it seems like I could theoretically keep investing the same money over and over again after I refinance the property. I have a construction background (a few years in trade school, as well as working for a remodeling company) and would like to do as much as the Rehabbing process as I legally can in order to save money.
Does this seem like a smart way to get started to you guys? 
A few other questions I have: 

Would you recommend buying distressed properties off the MLS, or from a Wholesaler, or to try to find properties marketing on my own?

Would you recommend doing this through the LLC I created to manage my 10 rentals? Or to do it in my own name?

Will I even be able to get a bank to refinance these properties to me? I’m only 19 years old!! I’ll be 20 by the time I’m in contact with them though. Or what refinancing options would you guys recommend?

Any other advice?

Thank you guys so much for your time, and any advice you can give! 

 - Ezra Henderson