All Forum Posts by: Glenn Espinosa

Key word in that sentence is "small". It's all about what kind of goals you have and what risks you are willing to take. The blanket statement regarding bank accounts is simply a shot in the dark as it is obviously not the case for everyone.

Anyway, to get back to OP's question, you use private money and hard money for leverage, simple as that.

You will never get a bank loan on a 60k property that is distressed and needs a rehab. Even if you were able to, someone with cash using other people's money will beat you to it while you fumble around with bank loans.

Edsiaren Ignacio: I have wrestled with this decision recently and am almost 100% sure I will be getting out when my contract is up in 2 years.

My situation may be slightly different in that I have a degree in a highly desirable field that I can fall back on if needed. I also have no children and have already accumulated nearly a dozen units already.

I agree with Matt Devincenzo that compared to the passive real estate income you can develop in 17 years, the military pension fails in comparison. Have you done the math? Play around with this calculator and look at the different scenarios regarding your pension. See what happens if you make E-6, E-7, E-8, or maybe even E-9. Check out the O3-E, or O-4 retirements in case you end up going officer route.

http://militarypay.defense.gov/mpcalcs/Calculators/FinalPayHigh3.aspx

For what it's worth, an O5 who retires today with 20 years will take home only $2,630/month after taxes. Factor in inflation (and the fact that our annual pay raises are sometimes less than inflation) and that amount of $$ is almost laughable, in my opinion. Then again, the health benefits are worth taking into consideration, also.

I've written about this exact topic in my personal blog if you care to check it out, the link is in my sig.

Also, I see that you're nearby. Hit me up sometime and we can talk more about it. In the end a lot of it boils down to what you enjoy doing. If the military isn't it then I would suggest looking elsewhere. I would recommend taking advantage of the education programs the military has while your in.

Hope this helps,

Glenn

PS. I'm tagging James Vermillion in this post as he's a veteran who recently got out. Maybe he has some insight.

Google "LT Caplan" in Va Beach.

Tell 'em I sent you.

In this market, if you want to stand any chance on the MLS, you need to be submitting your highest and best the first go around. The more you tighten your numbers thereby increasing your MAO, the more offers you will get accepted. Riskier? Yes. But thats the name of the game in this market.

No point in playing games on these properties, offer your best and see what sticks.

Notice: I did not say offer more than your MAO.

Nice points Deborah B..

What I wonder about is their tenant selection processes and the efficiency of their property managers. Once these rentals are securitized, the incentive is again pushed to acquiring more and more as opposed to finding truly qualified renters who make can make these rental portfolios good investments.

Another thing to think about is that since these are rentals that we're talking about, the upkeep of the property is pushed to the firms as opposed to what we had during the previous crisis in which the home owners were responsible for the upkeep of their house. This, I think, will lead to an even faster degradation of these assets as these firms begin to realize the rental game is a little harder than they forecasted.

Just an update on this:

Looks like securitization of rental portfolios are on their way. Thoughts?

http://www.housingwire.com/fastnews/2013/05/22/featherstone-investment-begins-structuring-reo-rental-securitization

J Scott: Is this why they call it a spec build? JK.

Very curious to see your preliminary analysis. I'm about 50/50 on a new construction opportunity we have under contract. We have build costs quoted at no more than $58/sq ft. Acquisition $68k, ARV $299k for 2,000 sq ft. Only wrench in the scenario is building to proper elevation (AE flood zone since it is water front). We have survey and elevation but still trying to sort out a few unknowns. I just can't pull the trigger!

You, on the other hand, seem to be gambling a lot more with that $60-120 quote rehab quote you're working with.

I'm sure you'll clear it all up with your analysis.

Glenn

J Scott: Thanks for the insight. Your suggestions are basically what we've concluded to be the next step in our operations.

Interesting comments guys.

Lynn Andris: My thought (formulated mainly from reading Steve Cook's BP articles) is that many of these hedge funds are driving up prices to the point where the SFH game is not as lucrative as other traditional investments. The smaller funds who aren't able to securitize and repackage their portfolios successfully will take on too much risk and will simply pack up and leave while the big players continue to grind onward.

Google the term "Investment Proposal".

Now put one together highlighting the $25k deal you found. Reach out to friends, family, people you know who have money. If you can't get the entire amount, get a sizable chunk like 20-30% of total costs and do a promissory note/personal guarantee. Use that money as skin in the game to attract a HML.

Now the problem you'll bump into is writing winning offers without having the cash in your bank account. Also, some HMLs want to see you under contract before they take you seriously. Catch-22 is you can't get under contract without reaching out to a HML in the first place and getting a POF.

Solution: find off market deals.

So where does this road take you?

If you guessed marketing, you're right. Time to read up on yellow letters, bandit signs, driving for dollars, probates, etc. etc.

Marketing and finding a real deal is square 1. Money will follow.