All Forum Posts by: Ian Plocky

Hey @Stephanie Caruthers and @Tyrus Hampton, 

Congratulations on starting your Real Estate journey! How exciting. 
You have a few options here - 

1) You can get a lower % down if you decide to owner occupy. If you are willing to house-hack (purchase a duplex, in which you live in one unit and rent the other out) - then you can get a down payment via FHA program as low as 3.5%. A lot of people get started this way

2) If you already own a primary residence (IE - you already have a home), you can utilize a 'second home' mortgage. These are typically 10% down. Usually, though, you will be expected to occupy this home for a certain amount of the year (sometimes up to half). However, sometimes people use the loan to get the deal and then subsequently rehab and rent it out. Using the added sweat equity, you should be able to refinance into a conventional 30 year after 6 months. 

3) You can invest with a partner. For instance, if two people who want the same property but only indivually have 10% down partenered - then inherently they could get the 20% down together. However, I will advise, that waiting until you individually have 20% will typically be better than rushing into a partnership without preparation. However, If you had a sibling or trusted friend that you feel could make a good partner, this is an option. 

4) If you already own property, you can utilize a cash-out refinance or portfolio loan to pull out equity from your already-existing home. You can use this cash to help for a downpayment elsewhere.

5) You can invest in syndications and/or real estate funds. Although you won't be as "hands on" as if you had your own duplex, sometimes investors find this option to be preferrable since they can invest with very little money and have equity in a diverse portfolio in which an experieneced investor manages. I am happy to walk either of you through the various kinds of funds (core vs value add, private vs crowdfunded, etc) 

Hope this helps. Reach out anytime.

@Anthony Feola - congratulations on begininng your Real Estate journey. 

The only mistake you can make here is by not getting started. Just know that, as you progress with your decisions. 

It sounds like your goal is cash flow, along with the ability to snowball into further investments. If thats the case, I would leverage instead of own in cash. The reason being is that if you put 20% down on a home that appreciates 10% in value, then you actually have an ROI of 50% on your down payment (just from that one property). If you owned in full and the bulding appreciated even 20% - you would only be up ... 20%.

If you can find a way to diversify your 80k on multiple homes, increase your ROI (from appreciation), and still maintain a cash-flowing portfolio, then I believe thats the way to go! You'll be able to do cash-out refinances and portfolio loans that allow you to purcahse new homes for little to no additional cash out of your pockets before you know it.

As @Jim Pfeifer said, real estate syndications and funds are also a great tool if you are looking for a totally hands off investment. Reach out if you have additional questions on this, and I can help explain what kinds of options you may have for this type of investment (open-ended vs closed-ended, private vs crowd funded, value-add vs core, etc)

Hope this helps. Reach out anytime.

No, @Dan Ashley you're not crazy. 

The truth is, the only thing that WOULD make you crazy is if you decided that Real Estate investing wasn't worth your time and/or wasn't a long term generational wealth builder. 

My two thoughts are:

1. If you saying you want to do this in NY is only a result of you wanting to live in NY - then consider the option that you could purchase an out of state rental, cash flow, and use that cash flow to help payoff a nice rent in NY. Renting where you live and owning elsewhere may not be traditional, but it makes more intuitive sense to cash flow 10k a year off of a 500k investment oppose to racking up a 3k/month liability off of a 500k investment (primary home). 

2. If you want to do this investment because you think investing in NY has long term profit margins that out of state rentals don't have, then I would open your mind to purchasing an even BIGGER building. For instance, 20% down on a duplex may seem a lot less scary than taking that money and puttign 5% down on a NICE 4-plex, but sometimes the latter option is a lot easier to manage (with regards to differed maintenance) and will cash flow more. 

@Steven Spinicchia, congratulations on getting started!

I agree that, if your goal is cash-flow, NY may be a difficult area to swing. 

I assume you brought up the turn key firm because you would don't want to take on a rehab project from afar. Like some of the other users have commented, I would not go through a turn key investment firm. Reason being is that a lot of these turn key investment firms 'inflate' the cash flow and show you an income/expense sheet that is bogus. Most of them make most of the money off of buying and selling these turnkey homes to people like you for a profit - their goals are not aligned with yours. 

What I WOULD do if I were you is reach out to a few BP agents in the areas you are interested in and let them know that you are looking for turnkey. Sure, you will have to find a PM to manage - but these agents have trusted PM's to get you set up with. If the property is turnkey, things should be smooth once you get the team acquainted. 

 Otherwise, you can invest in out of state real estate as a part of a syndication or crowdfunding platform. 

Happy to help. Reach out anytime. 

@CT Nguyen Will PM

@Frank Teshima - typically I've seen anywhere from 1.0 from smaller banks & credit unions to 1.5 from big banks. 

My advice would be to form an LLC, find a deal, and send it to both a small and big bank and see what they say. If they turn you down, at the very least, ask them why and figure out what their underwriting assumptions are for DSCR. That way you can start to run THEIR numbers on deals you find.

For instance, they may assume a 10% management fee, but your local PM fee is 8%. You should be running their assumptive numbers as well in order to see if you'll qualify for their loan.

Happy to help. Reach out whenever.

@Greg Todrank @Jim K. @Poem Turner 

We have moved to completely waive in the inspection contigency on our offers. 

The truth is - with a quick walkthrough, you or a trusted agent can get a good enough idea of the condition. Does it look terrible, fine, or amazing? Are their tenants living their?

I think these questions should be able to give you a pretty good idea of the condition of the building. Things you don't typically see, like the foundation or roof... are actually not THAT expensive. Worst case scenario is that they are both TOTALLY destroyed and you had no idea - but call if $30,000... but in a couple years, you winning the offer could generate way more than that. 

I see it to be worth it.. don't be scared of the unknown before setting parameters of the best/worst scenarios. 

@Kyle Barton, it depends on your PPM/LP agreement. 

Are you offering a preferred return? Or is there a pre-determined split?

My office typically does 100% to investors until their capital contribution has been returned, then a split for the equity growth. In this scenario, the GP is not rewarding itself until it's profitable.

Hope this helps. Reach out anytime.

@Janet Balian, PM me and I'll send you some advice :)