All Forum Posts by: Val Csontos

@Jon Holdman  

We had found that our local bank(small bank with about 10 branches) do not care how we hold the properties as long we co-singn. They finance owner occupant for 4.35% and rental for 1% higher. So we started buying in the name of our S-corp and we just co-sign the loans.

@Thom Sieloff Here are some ideas to buy creativly from my postings from a few months back:

Talk to enough motivated sellers, estate attorneys/ bank REO reps in your target area, to see if there are motivated enough sellers for you to talk to. And don't quit until you have at least two or three possible properties with motivated sellers lined up.

This way you are not "chasing" sellers/deals rather they will come to you. (you will come a cross a lot more confident in your offers or just talking to sellers when you have at least two more nearly as good deals to make)

The above action will dramatically increase your chances to be able to negotiate much more realistic deals for you that you will be able to perform (close) on.

If I was you i would also do some reading in creating financing technics as they can come handy to acquire properties. For example when i first started out i had asked about 20 realtors i my area if i could borrow their commission (buyer agent's) and just pay them 60 monthly payments out the the rent cash flow, and 19 said no but 1 said yes. So with that agent i was able to buy over a dozen properties and use his commission to pay the closing cost (3%) so i could buy houses with almost no money down.

Good Luck to you!

@Tenzin Yangzom 

You may be able to do some thing called "cross collateralizing" I have done this quite successfully several times in the past.

This is how it works:

     When you have rental properties with lots of equities, and would like to by more, you can normally obtain a commercial mortgage (only about a 1% more than mortgage for owner occupied property)  from one of your local bank (SMALL BANK with only few branches)  for about 75% of the value of the property.

      They will tell you need to have a 25% down payment, that is when you can tell them you have substantial portion of your investment portfolio in home equities. And you were wondering if they would cross collateralize your 25% down payment from another investment property you owe free and clear! This mean they will secure a "second" mortgage from another property you already owe.

      This does not mean how ever that you have to make payment on that note. It is just extra security for the bank Let me explain:

This will work IF buy the second property for 70% of the appraised value. That way the first mortgage you are getting will cover the purchase price so you can pay the seller his/her sale price in full from the first mortgage.

As a savvy investor you should buy it right any way!

This is a Win-Win-Win

-you win because you are buying a property  for 70 cents on the dollar with no money down!

-the bank wins because they sell you a VERY LOW risk loan with terrific equity position.

-seller wins because you take the property off their hands.  

     Will this work with any bank? No but you need to build relationships if you are planning to grow your investment business anyway! I had tried about 3 banks in my area (when I was starting out) and the third one said yes.

Even if they say no don't get discouraged just ask them why it was no. Sometime it will be as simple as wait six months so you have owned your properties for at least 12 months, 18 months etc........

If I was in  your situation i would definitely take this route, you should  be able to buy many more rentals, as after the first one the banks will take you even more seriously.

Good Luck! :)

@Ben Leybovich  My advise is more of a "pause" strategy and not an exit one but who knows, It might cure your "itch to exit" :)

    Not knowing your exact situation, but I still totally understand  your views on not wanting to take on any additional hassle and risk unless is worth your time and hassle. If you been in this business for a while (and no longer starving) It is understandable and make perfect sense that you get selective in your choices, same here. 

     Here is something I have been doing, and you and others can easily do while "sitting in idol" between purchases: 

It does sound sort of obvious but It was point it out to me years ago my mentor

(he started 25 years ago with a townhouse and now in 2014 has an 8 figure net worth) 

 when is nothing (sensible) to buy, one of best thing to do for our investment portfolio is to accelerate paying down the existing dept our properties carry as a normal course of business.

      This can financially put us in a very strong position for when the "big opportunity" comes around, which will sooner or later if we keep our eyes open. 

      The other thing one can do to stay a wake between deals AND to increase our deal opportunities is to mentor others. Provided  that the candidates for mentoring are carefully selected, this can be a lots of fun and us mentors can most of the time benefit from the additional networking opportunities.

@Bryan N.  Nothing replaces experience, but if you need a quick crash course on how to inspect/repair homes sort of like a professional, go head and watch a full season of "Holmes Inspection" it is fun AND very educational. Its on cable and Netflix too. I used to watch it 3-4 times a week for years. It had saved me thousands more than once. Thanks to that show we had insulated our personal residence such way that our average Heat/AC bill is now $120 month for 2400SF!

Good luck to you and most of all have fun with it!

@Brandon Turner 

I really enjoy the website but i have a question:

I understand that you might have business arrangement with I tunes/Apple but it would be possible for you guys to "diversify"?   My family is boycotting Apple for two reasons.

     1, We believe in capitalism/ free market, and having a market share of 90% for one company like Apple is not a competitive business environment.  It is Oligopoly at best.

     2, Apple's questionable business practices. People gets locked inside factories in China to prevent thefts like they did  here in the US in the 1910s.

Please keep in mind IF we all support oligopolies, the download/streaming business can end up like the internet server provider/cable business, where you and I have no real choice anymore.

Kind regards and thanks for the hard work you put into this site, day in and day out.

Ps if I see you that you allow a second streaming podcasting option /Beside Apple I will sign up immediately to the Pro account. I am already planning on signing up but I will move that up to immediately. That is my promise to you! I also suspect that several other's will follow realizing that your website could use more financial support and it also is for a good cause (supporting competitiveness and Free Market)

@Jay Hinrichs  In Maryland you don't need a license to property manage. As a matter of fact many of the RE Brokers do make the RE agents sign a disclaimer, in case the RE Agents would want to PM,  they must do so with out involving the broker's license in any way.

@Ryan Mullin 

    Not to shut the idea down it is not bad one! For us it did not work so well. When we first started out in the late 90s we had tried this route and most of our clients were ungrateful. 

    They were gone to Europe for a few years and we rented out their homes and when they came back they were NEVER really happy about the condition of their homes. We looked-after the properties like our own, but did not matter. In their mind they imagined the house perfect, and after renting it our for 4-5 years(most of the time with cash flow) , they were disappointed about the wear and tear. So we decided only to manage our own properties.

Better way to start in my own opinion is sort of how we started: 

Purchase for Buy and Hold, with Other People's Money.  We used to borrow RE agent's commission on a 60 months note 0% interest so we could pay closing cost on properties etc....We purchased Refrigerator from first month rent, we did what we needed to do go get going, but in general creativity would always work.(Due to the highly leveraged acquisitions our cash flow used to be $30-$50 month/door but with lots of patience a decade and a half later now over $1000/door) We learned the slow way like most people: To work smarter, and not harder.

@James Park   Here is what your "top guy" Soros  is doing quietly while we are going back and forth here on BP. :)  

(Reuters) - Hedge fund managers George Soros and John Paulson have both taken a 92 million euro ($127 million) stake in a new Spanish property investment vehicle called Hispania, the Financial Times reported on Saturday citing sources close to the deal.

Hispania, created by Spanish-based private investment firm Azora, last week announced plans to list on the stock exchange and launch a share offering in order to raise 500 million euros from qualified investors.

It will operate as a real estate investment trust, or REIT - listed vehicles that typically invest in income-producing assets, such as rental properties.

Azora, George Soros and John Paulson were not immediately available to comment.

REITs are taking off in Spain, where they are known as SOCIMIs, as foreign investors hope to cash in on the country's economic recovery and search for real estate bargains following a 30 percent property price slump since a real estate bubble burst six years ago.

@Karen M.  Real Estate is local, so here is an example on how properties are appreciating differently from what you had seen in your area. 

In our backyard here in Maryland, I started purchasing some properties in late 90s as well.  Here however we have had approximately an 8% per year  appreciation since the nineties and this in for the most part is due to the 1.5% per year population growth. According to forecasting experts this trend seems to be continue for at least a decade or two.   Here is an actual example of one the rental properties we own since the nineties. 

http://www.zillow.com/homedetails/2123-Commodore-Ct-Odenton-MD-21113/36110825_zpid/

This is fairly typical for most of our properties in general (except Multi Unit buildings)

The link I included here show you a property we had purchased it in 1998/9 for $112,800 No money down, (realtor lent me his commission at 0 interest so I could fund the closing cost.) Please note that not only this property but the entire town is appreciating, as most of them do the same around here.

As you can see today's FMV for the same property is probably about $250-$270K.

 I know that Zillow obviously is not 100% accurate, but in our market we found it to be close enough for a trend analysis, and  for a quick "drive by" appraisal. 

Just like anything in life if you hear that  something sounds fantastic it has to have a downside right? Well in our case the down side:  there is almost no cash flow for the first five years. But I guess if you have little (or No) money invested into the property acquisition than does that really matter? We can live with it :)