All Forum Posts by: Harrison Painter

When I say cash, or lines of credit, I base that on many of the properties in the Midwest being below much of the loan limits out there. It is difficult to get a tradtional non-owner occupant loan for $20K, then you will need about $15K to rehab the units. (at least in my business model.)

It is understood that the 50% rule has shown validity, what I am saying is that the your expectations of cash flow must be changed if you have others managing the property, not that the basics of financial rules change.

If you are a backyard investor buying three properties that cash flow $200 a door, and you enjoy the work, in theory you are making $600 a month in income, and having fun doing it!

Now lets say you have no desire to be a landlord, and can still cash flow $100 a door. Somebody else is doing all the work, and you are still making $300 a month.

I ask folks what their time is worth to them? If you do not want a job, then getting rid of the headaches for $300 a month is well worth it.

Another question that many fail to ask themselves is: What is your cost for capital?

On a commercial loan, you are paying 25% down, higher rates, and shorter terms. On a traditional non owner occupant loan you will be putting down 20%. Then, as in the case with my company, we offer a Zero Down program where you put nothing down, and you can save your cash for other investments, or to sock into the mattress for a rainy day.

While many people might disagree with me, I come from the school that the real wealth is created off the tenants paying off your asset and the long term equity that a home provides, any cash flow is just much loved icing on the cake, and just makes it that much more attractive!

Keith,

In my opinion, $100 a door is good........but:

How much are you putting down, what kind of equity is in the property, what kind of shape is it in, what is the demographic of the neighborhood, and what kind of investor are you going to be?

These are a few of the questions to get you started.

There are sub-categories in the buy and hold model:

1. A backyard investor will buy properties close to where they live and based on the 50% rule, with some in lower income neighborhood. They buy with cash, or on lines of credit, and usually have some rehab to do. They are hands on Landlords and live the buy and hold business every day.

2. Turn-key home investors usually need to buy out of state because their backyard does not make sense at this time. These investors try to come as close to the 50% rule, but more flexibility must be allowed as you will need a team to property manage the asset.These houses should not be in war zones. These types of homes will usually be financed with a non-owner occupant loan with 20% down, or on a Zero Down program like my company offers to qualified investors.


Bullet Point Recap:

- The hands on guys that buy and hold will always make more cash flow, but do a lot more work.

- Investors that buy turn-key make less cash flow, but do minimal work.


*Once we define the type of investor you are, we can get a better feeling for the cash flow number you should target.

This is the best website in the world for this kind of information, and I am confident you will find what you are looking for!

Thanks,

- Harrison

Tiara,

Stephani is 100% correct. If you do not have cash, then you will just need to get more offers out, talk to more people, and hustle, hustle, hustle!

No shame in that at all, and it will only help you in the long run!

The important thing is that you are taking action, and since I have read many of your post, I know that you are on the path to success!!!

She doesn't know me very well yet, does she folks? :lol:

Karen, the comment I made was an inside joke, as I am very passionate about what is going on. I have been known to get into some heated debates here on BP.
:help: :shoot:

I just needed a break, as my eyeballs are tired of flying out of their sockets over everything that is going on around us.

There comes a point and time when a person just needs to put there head down and get to work without worrying about many of the things we can not change in the short term.

I decided to turn off Fox News, CNBC, and stay off of my political blogs for 2-3 weeks. While I have fallen to temptation with a few peeks (as proof by my DOW up 1,200 post), I am pretty proud of myself for sticking with it.

I will be back to talk politics another day BP members, you can count on that! LOL
:woohoo:

Tim, I think you just hit the jackpot!!!!!!

How is this not a HOT topic?

You are right, Zillow comps are crazy off!!!!!!

My houses are showing up in the high $80's to low $90's. Can I present that to the banks whenever they send me a low appraisal? :mrgreen:

That golfer is pretty hot!

Have you noticed she never looks the same way twice?

We just introduced the Lil' Gladiator!!!!!!

http://www.biggerpockets.com/blogs/85/blog_posts/1026-diary-of-a-real-estate-gladiator-iii

She is taking charge!!!!

I had to dig deep to find this thread again, is anybody watching the show this year?