All Forum Posts by: Giles Smith

Wow looks great! I got a lot of great pms, posts, and other feedback and found someone. Thanks Bp. 

Hey guys,

Does anyone have a recommendation for a good handyman in the Clawson + Royal Oak + Troy area of Southeast Michigan? 

Tom,

We did meet at an RDI.  I'm looking forward to attending some of your meetups.  Unfortunately I can't make this month's meetup but I look forward to going in the future.

Mike, Dmitriy, and James, Thanks for the welcome!

Thanks Brett!

Thank you for the welcome.  I look forward to being involved on the site.

 Thank you for the welcome.  I felt that although there was a lot of variance, bankroll swings, in poker, ultimately with good bankroll management (having a certain amount of buy ins for a particular game, and planning on long term increases while weathering short term ups and downs, it was not as risky as one would think.  I played over 40,000 tournaments, mostly 6 person tournaments, in a roughly two year period.  I probably made money (top two places) 40% of the time and lost money 60% of the time. The 60% of the time you don't finish top two you lose all the money for the tournament.  The 40% of the time you place 1 or 2 you will make 200% to 300% of your buy in. If I played one tournament I would have a 60% chance of losing everything.  Over 40,000 tournaments it would have been a tremendous statistical anomaly for me to lose money assuming I was a good player. 

I liken this to real estate in this regard:  The bankroll management part is how much money am I willing to put into one deal.  If I put all my money into one deal, even if I were very careful with all my numbers and a savvy investor, there is a certain appreciable chance that I lose money.  If I am able to finance 10, $50,000 properties instead of 1, $500,000 property, this will decrease the strain on my bankroll and the variance of unexpected repairs, bad markets, bad tenants, a bad contractor, etc... 

I think this outlook and my previous experiences with poker make me a more cautious investor, knowing the potential for ups and downs.  That and my wife's input :).  I am also cautious because for the time being, much like with poker, I have a separate, business, fund for real estate.  I do not mix it with my living expenses.  I feel this will discipline me to make money doing only real estate and grow my skills as opposed to making money as an anesthesiologist and potentially losing it by being inexperienced and jumping into expensive real estate deals I have not yet learned the skills to execute.  I started playing $1 tournaments in poker and was regularly playing $500 tournaments over a year later.  Had I just used my savings to play the big tournaments I would have gone broke and not had the skills to profit at that level.  Having built my bankroll from $1 tournaments, I learned many skills on the way up that made me successful at that level.  I feel that my real estate experience will be similar to some degree.

Hello Bigger Pockets,

I am a long time lurker and occasional poster looking to network and learn.

Several years ago, before online poker was destroyed with lawsuits, I was a professional, online poker player.  I read books on poker theory, studied math, played 15 tables online simultaneously, and earned enough money to pay the bills and do some investing all while in medical school.  One of my poker forums had an excellent ask me anything about real estate investing and piqued my interest.

I began to read books and go to real estate investor meetings when I had time, including Renegade Investors of Detroit and REIA of Oakland county, made some connections, and set up my first deal. I purchased a home in Redford Michigan for 35k cash. I did a back to back closing and sold the home for 50k on land contract with 15k down payment and 7% interest on the balance amortized over the next 6 years. That note has been performing for 2+ years now. I am currently in the process of doing some wholesale deals with fellow BP member, Andrew Holman, am moving to a new home in Grosse Pointe. MI with my growing family, and am converting my home in Clawson, MI to a rental property with a contract already signed.

My current goals are to continue educating myself about real estate, generate capital from wholesale deals and eventually do some flipping after I have set up a team in the area. I would ultimately like to convert this capital into buy and hold SFR and manage a growing portfolio of real estate to protect and increase my wealth. As I learn, grow, and build my portfolio I am going to focus on automating and streamlining as many processes as possible so as to further grow my income and be able to spend more time with my family. I am currently reading J. Scott's books on flipping and estimating rehab costs and regularly listen to BP podcasts. I am also a resident physician in the third year (of four) of my anesthesiology residency.

I look forward to attending some Bigger Pockets Detroit meet ups, meeting some of you, and continuing to learn and enjoy real estate. 

Thanks for the input guys, I'm going to go with the Refi. rates today are 4.375% + closing costs.

Hey guys, was hoping to get some opinions on refinancing my homestead. I am fairly new to real estate and want to make sure I am analyzing this correctly and not missing any major considerations. Please let me know what you think. I'll post some numbers here, my analysis, and my considerations for and against refinancing.

Numbers/analysis:

House purchased 2012 for 112,000 @ 30 year fixed, 4.25% FHA loan with Mip $103$/month (mandatory MIP for 5 years). I have paid for 2 years so I owe 28 years of payments.

Payments = ($551 + $103)*12mo.*3years + $551*12mo*25years = $188,844 total payments

Currently $107,500 balance remains. I should now qualify for a conventional loan as my house should comp around $145,000 (I would need > $134,000 comp to have 20% equity). The best rate my mortgage broker found was 4.5% with $1000 in costs (title work, appraisal, underwriting fee). I would roll the $1000 into the balance and would pay: 107,500 +1000 = 108,500

108,500 @ 4.5% 30 year fixed. Payments = $549.75 * 12mo.*30years = $197,910 total payments

As for exit strategy I am planning to move in 1-3 years. I plan to evaluate the value of the home, the rental market, and my experience in real estate at that time to determine whether to sell or to hold as a rental.

Thoughts:

1) If I sell in 3 years, I will have saved $3,600 dollars in MIP, made the same payments, and will have only about $1,300 less equity paid off with the REFi. I will have saved $2,300 over 3 years.

2) The break even point for selling, where the loss in equity overcomes the savings from the MIP is 2023. At this time I would have a balance owed of ~$89,600 with the REFI and ~$86,000 with the FHA. I would have saved $3,600 in MIP. If I sell the house before this time it seems to make sense to do the REFI. If I sell after this time or continue to hold as a rental it seems to make sense to keep the FHA.

3) If I sell at any time I will be able to transfer the FHA interest rate of 4.25%. This would not be possible with the conventional and would be subject to market rates. This could be a very advantageous selling point.

4) If I hold the house as a cash flowing rental property, at the conclusion of 30 years I will have spent $9,000 more on interest with the REFI vs. the FHA.

It seems that if I sell the house in 1-3 years or sell/pay off the house before 2023 it would really make sense to do the REFI but if I want to hold as a rental property indefinately without expediting the payment schedule/refinancing, or if I refi after 2023 it makes more sense to keep the FHA and pay less total interest.

It seems most likely that I would sell/refinance the house in the next 10 years or pay it off more agressively and that the REFI would make the most sense.

Thanks for sharing your time and knowledge

-Giles in Clawson, Michigan

My goal for this property is to find something I can live in for two to five years with my fiancee and not lose money on it when I am ready for an upgrade. I was trying to merge this goal with the goal of a moderate cash flowing property but it seems this isn't a possible scenario.

I intend to invest in cash flowing properties outside of this deal and have already done one cash deal where I bought a property all in for 33k that would comp for about 35k and sold it on land contract for 48k, with 14k down and the balance to be paid at 8% over 6 years.

I am continuing to learn and hope to develop my knowledge and comfort in doing a variety of real estate deals but for now I will start with buy/hold rental properties or land contract notes As I have minimal sweat equity/time.

My financial situation is interesting as I am a fourth year medical student who will not realize a substantial income for another 5-6 years. I have hit 6 figures of income from poker playing over the last couple of years but that has slowed down with current poker legislation affecting online play and time commitments at the hospital. As a result financing has been somewhat tough to acquire but I have some cash reserve to do a few deals.