All Forum Posts by: Greg Henderson

It really isn't something we can turn off. Is it? Depends on what side of the business you're on I guess. You stop the work flow, everyone leaves, and then you have to rebuild. Perhaps the real solution is to give up a solid chunk of profits to hire someone to take the wheel. You could manage that person remotely.

No way would I replace the copper in my region. I replace all of the stops though. Anything with a valve is updated. 

@Travis Kay

I ran into this same issue. I'm up to 10 SFH now and all of them are commercial loans between two local banks. They're portfolio loans. Interest rates are 1% over prime. 15 year amortization. A couple of them

are 5/1 ARM. I signed as guarantor, but none of them show up on my credit report. They are however used in my global DSCR, all of my property NOI/ debt service. The minimum for both is 1.25 global and on the deal. As long as the bank will use pro forma along with tax returns, global debt service coverage is a non issue. Just make sure you're claiming rent income on your taxes and not filing a lot of maintenance that will bring your AGI down.

Multi family is lower cash flow per unit but you can get a lot more units at once than single family. I can buy a 20 unit MF for 2 million but can’t buy 20 SF separately for 2 million in a short amount of time. The banks have told me they can only pro forma so much before it’s too risky for them. They want copies of leases and track my income. I believe this is the real reason so many investors move into multi family. Scaling in single family is a lot more paperwork and aggravation.

Every time this question comes up, it’s the same answer. Some people prefer cash flow and some people prefer appreciation. That’s so far from the truth. It’s a matter of misinformation.

No one talks about Debt To Income Ratio or Debt Service Coverage Ratio. It's simple but glossed over if ever mentioned. If your assets DSCR or DTI do not meet your financial lenders requirement, you're dead in the water. It's not a choice, it's a requirement. All I hear is don't take no for an answer. Has anyone actually stopped to ask why lenders say no and then try to play by their rules?

My banks want a 1.25 global DSCR. That's not per deal, that's global. That's my net operating income plus a maximum of 30k from my W-2 divided by my debt service. They look at the deal AND global. Most of mine are single family and on a 15 year amortization. I own too many units for my W-2 to cover the debt, but not enough to cover that .25 on a large property if it's negative or neutral. The best option is cash flow otherwise it's a no from my lenders until I'm showing a strong enough positive income on my taxes. Why wait a year when there is an faster route?

The real question is high rate of growth or high rate of appreciation? We're not buying one asset and staring at it for 10 years. While that next, hopefully, high appreciating asset makes you unbankable for two years, I'm buying more properties. Which will increase wealth faster? 1:1 sure appreciation wins but it doesn't work like that. It's never 1:1. It should be a balance of both. Cash flow covers the higher risk higher appreciating assets to always stay above 1.25 DSCR.

On the other hand, if I had just one option in the magical real estate world, I would take the huge appreciation in 5 years on every property. In reality I’m just trying to keep this lumbering giant moving forward and trying to keep it from crushing me.

@Michael E.

I say go for it! Personally I started with nothing. I didn't have a lot of connections, didn't have a high paying salary (I've made 50-70k most of my life), zero experience in real estate or construction, and no tools. Hell I'd say I was pretty damn stupid for even starting. I bought a 97k VA foreclosure in ‘16 and ripped it to studs and concrete. I spent the next year and a half working nights and weekends. I put 40+ hours a week in it after my W2 and did most of the work myself. Watched 100s of YouTube videos. Read building codes for most crafts. I found a few subs for drywall finishing and HVAC. I got lucky and found a good contractor after firing 2. Even had to fire half a dozen "helpers." I got robbed and cheated. You name it. This was not the easy path. All in all, I have 60,000 in the rehab total.

From there I bought a $15,000 2/1. A real crap hole. I nearly threw up when I walked in it the first time. I couldn’t shake the question. Am I being stupid? Even after the first project was finished, everyone still thought I was stupid or crazy. I finished this one in about 4 months. It brings in 800/month rent. All in I’m at 35,000 after financing and holding costs. I just kept moving and kept learning while keeping costs low.

Fast forward to today and that first house reappraised for 283,000 last month. I’ve got my 16th door under contract, putting me over 1.3 million in assets, four full time guys that know a hell of a lot more than me, and I know enough to follow along and not get cheated. It never would have happened if I had not done something stupid and started. All of these guys on the forum are right but also wrong. This path is only for a few. I’ve worked 7 days a week and haven’t had a vacation in four years, but I will have enough cash flow to hit fire by the end of this year. Everybody’s story and situation is different. Get ready to do whatever it takes or quit now.

Ran across this thread through a google search. Great information, and I wonder if positions changed after two years.

@Daniel Felix

The ductwork was likely sized for the original install. If it’s rated at X CFM, going higher will cause major issues down the road. Replacing all of the ductwork isn’t cheap. I’d recommend adding a mini split unit for the upper floor and installing the 3 ton if that’s what was original and isn’t adequate for the house.

@Chance B.

What are you doing with the house and why does it need to be rewired? Even knob and tube, if intact and unbothered, is intrinsically safe. If it’s a rental, you wouldn’t replace the siding because it isn’t up to current building code would you? If it’s a flip, I could reason the cost.

If the entire house is 103V, its an internally shorted main breaker (cheap), an issue on the power companies end (free), or a shorted common from the weather-head to the main (not rewiring the whole house). Get a good electrician that can diagnose the issue.

If it’s a short on one circuit, it’s a lot cheaper to rewire. Again, I would pay for an actual electrician and not have a GC guess. If everyone else will not buy it because of the unknown issue, you could stand to get a great deal.

Buy a cheap voltage meter and watch a YouTube video on how to use it. Literally will take under a minute and save you an enormous amount of time and money.

Yeah. The dust is horrific, but the finished product is undeniable. Proper PPE is a must. Alternatively, hire a company that utilizes dust collectors with the grinders.

Like others have stated, you can add whatever you want to the top of the clear coat. It will likely adhere and be fine. However, if the clear coat didn’t adhere to the concrete properly, it’s coming up. Is it worth skipping a step and possibly having to redo it in 5-10 years or doing it the right way now. That’s always the question

@Alyssa K.

Rent a push behind diamond grinder. It will get dust everywhere but will take half a day to prep the entire floor.