All Forum Posts by: George Ghiorse

Decide if you want to be a wholesaler, flip properties or buy and hold as a landlord. I would say for the beginner, the best thing is to find a mentor to help you pull the trigger on the first deal. A mentor will improve your odds of success significantly and you will more likely continue to be a real estate investor. Many who fail on their first endevour quit the game.

I agree with Sam and Jon on the inspection period and septic. If you are still in the inspection period you have a chance to lower it, if not, you missed your opportunity. Did you have an inspection done?

As for the appliances, it varies state to state. I am a licensed Realtor in Texas and here stoves, ovens, dishwashers, built in microwaves are part of the property but refrigerators are not. Friges are considered similar to a coffee maker or toaster, you unplug them and take them with you. I would ask a local Realtor about the appliance issue.

Jeff, 5-10 is harder but still very doable. The rules are just a bit more stringent. Try Shantill at Texas Loan Star - (713) 802-0606. They are an investor friendly mortgage company with no limits on how many you can buy. Shoot me an email and I can send you a list of other possible lenders. They are always changing their deals.

I actually did a hard money to refi deal about a year ago. My total out of pocket was $12k. The problem I'm finding now are deals with the 70% equity required by the hard money lenders. Comparing them to conventional is much less of a spread in out of pocket and I'm paying double closing costs so cash flow and ROI is less. I do have a local credit union that will do 5% down that I'm going to do on my next two properties but then they won't let me do any more so I'm trying to find other options. I also found one lender that says they'll do 15% down deals. Always looking for more and better options.

And yes, I already know a whole bunch of hard money lenders and know about private money as well.

Has anyone come across any conventional financing with less than 20% down?

That's a good one Stephen. I assume you are trying to get the land value to determine depreciation. I would ask your CPA as this is an IRS issue. Is it the same issue with other condo complexes in the area? Try talking to other landlords that own other units in your complex and other complexes in the area. Perhaps their CPA has an answer.

Don't forget to post the answer to help everyone else in the same situation.

Hi Maurice and welcome. I'm fairly new as well just joined a short time ago. I live in Richmond and started investing in real estate about 7 yrs ago. I'm also a real estate agent and can help you get started if you wish. As I do with all of my investor clients, I teach for free. I currently own 4 single family rentals and a 224 unit apt complex. I am also currently shopping. Shoot me an email and I will give you my phone # if you wish to chat and I'll help you get started. Lesson #1 - never stop learning.

I agree with Ned. How is the seller going to owner finance with the existing mortgage? That aside, your biggest problem is the lack of cash flow. Even if you add the PM amount to your cash flow by doing the PM yourself, it's still way too low. I also like to look at ROI similar to if you were buying any other investment be it a stock, bond, mutual fund, CD, etc. My deals usually have an ROI of 20-40%. If it doesn't ROI 15% min, move on. The higher the ROI, the lower the risk. Likewise, you want to have enough cash flow to cover possible capital expenditures like hvac, roofs, etc. that cost more than say repainting a room.

Calculate your total out of pocket cost, say for example, 10% down on $80k plus $4k for closing costs, inspections, etc and another $1k per unit repairs. This would be $16,000. At $97/mo cash flow it works out to 7.28% ROI. If the repairs are higher this % goes down, if no repairs needed then your % goes up. Seems to me you need 2.5 - 3 times that cash flow to make that work and also reduce your risk.

I would recommend not using the 50/50 rule in lieu of an actual analysis. I use a spreadsheet to analyze every deal before I even go look at it. If you use actual values for purchase price, rehab, downpayment amount, interest rate, property taxes, hoa dues, insurance, ARV amount and rental amount, you should have a much more accurate answer.

That is not a good enough deal. Keep looking. Question though, is the PM in your list private mortgage insurance? If so, you shouldn't need it with a 20% down loan. That would start to improve the cash flow but it still seems lower than it should be for a triplex. Also, as Scott W. said, ROI is terrible. The ROI on most of my deals are 20-40% on average.