All Forum Posts by: Greg Gaudet

If both properties produce positive cash flow (which you probably shouldn't buy unless they do), then your DTI should not be hurt by purchasing the condo. Maybe it will hurt your DTI short term, for the first year or two, but once you show that rental income on two years of tax returns it will improve your DTI.

I'm dealing with that right now, after buying 5 rentals in my first year I need to watch my DTI carefully. But I was just approved for a heloc on the last unit I bought and they reported my DTI at 24% without counting my rental income. Heloc and mortgage underwriters calculate DTI differently, actually almost every bank will calculate it differently so there's no one answer. Mostly I'd say talk to your lender at length. In fact, don't talk to your lender... talk to Darren Au at Primary Lending (he's on Oahu). His cell is 228-6610 and he'll text you back within seconds at all hours of the day and night. His service is unbelievable, and he's also an investor. I can't say enough good stuff about the guy, seriously. Plus I believe the banks cover his fee, so getting his extra level of service shouldn't cost you anything (double check with him).

You might also want to just refi the condo into a traditional loan before you buy your next unit. 

Last thing, make sure you find out when the leasehold renegotiation date is. If it's coming up soon you might want to look into that and see if lease rents are expected to increase, as they usually do. 

Investment Info:

Single-family residence wholesale investment.

Purchase price: $115,000
Sale price: $120,000

Closed my first wholesale deal!

I'm not a wholesaler, I'm a buy and hold investor. This seller called me but I wasn't able to get the price I needed to add his unit to my portfolio due to other investors with higher competing offers.

So instead I marketed his unit to my network of investors and brought the seller an all cash offer with a nice little spread for me worked into it.

Super stoked to have generated some easy extra capital to put towards my next acquisition!

What made you interested in investing in this type of deal?

Generating capital to help scale my rental property acquisition.

How did you find this deal and how did you negotiate it?

A realtor that I network with was the sellers PM. When he said he wanted to sell, but didn't want to do the repairs needed from the prior tenants eviction, she told him that I'd make a cash offer sight unseen. So he called me and I made my offer. He already had a higher offer from another investor (who he had just sold his other rental to), and I couldn't beat it, but I told him I could find someone that would.

How did you finance this deal?

Buyer paid all cash.

What was the outcome?

Helped the seller unload his distressed rental, helped the buyer add another unit to his portfolio below market value, and I made a nice little wholesale fee! All in just about a month total.

Lessons learned? Challenges?

I should have locked the unit up under contract right off the bat. I could've made more. Since wholesaling isn't my focus I definitely made some mistakes, but in the end it worked out great and I'm very happy with my return.

BTW you can go to my profile if you want more details. I've posted a lot of details on some of my deals there and even some pics.

Welcome! I felt the same way. Too much to type, but basically I found a niche of condos that I could purchase for around 100k and rent for 1700 to make cash flow. They do well, but they're more work because they're D class. But I'm very happy with my yields and have been able to scale a lot quicker than I ever imagined when I first started. You can do it.. But you have to be committed to doing it, not just want to do it. Maybe also consider looking at Big Island market. I've considered it many times.

Need to review any existing lease. If there's no existing lease then you'd probably just have to give him the standard written 45 day notice of rent increase. You can google the Hawaii landlord-tenant handbook to reference. I just use the HAR rental agreement because they cover everything. But I also think that signing a lease mostly protects the tenants, so I prefer not to be locked into a lease.

@Loren Clive

I thought about that too! So much cheaper over there and cash flow seems more attainable, especially with STRs. Let me know how it goes please Loren!

Also hope you can make it Thursday! I think the beard man from BP will be there. Although I know you got your hands full with the kids :)

@Ryan O'Leary

Agree with Isi!

@Jasmine C.

He sounds super interesting, I’d love to come hear his presentation but I live on Maui! Will it be recorded? Ask him if he wants to come over for one of my Maui Wealth Builder events! I have plenty buyers for him over here!

Don't take this the wrong way, but it sounds to me like you should do some more research on the BRRRR method. Expensive markets like LA are typically not cash flow markets, their more of speculative markets in my opinion. You're buying and hoping prices go up, or you just have the means to be able to hold until whenever it is worth double what you paid for it. Read the BRRRR book and David Greene's book Long distance RE investing.

BRRRR could work anywhere, (I do it here in Maui) but it generally works better in lower priced cash flowing markets, such as Jacksonville, Alabama, Georgia, Memphis, OK, KC, TX, etc. I found a way to make it work with our median home price of $820,000 here only because I found a niche market of condos that I could buy for 100k each and rent for 1,700 each.

That being said, if I were in your position and had access to 2M to invest I would start searching for an apartment building and learning everything about commercial RE so I could be educated enough to find the right deal and be successful with it. I would expect you to make a whole lot more money by doing a value add MF deal than buying a few SFH rentals.

I expect some people to chime in and suggest MF syndication to me; I'm just not attracted to the idea of being responsible for a bunch of other people's investments. I'd rather just work for myself and invest my own money even though I know it's not as profitable or scalable.

Just realized I wrote June 6th in the body of the post! 

It’s supposed to be 6/13 but I can’t edit the post. 

If you guys want to meet tonight we can do that instead?