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All Forum Posts by: Jane Du

Jane Du has started 2 posts and replied 4 times.

Post: Have investors, need business plan

Jane DuPosted
  • Real Estate Investor
  • Dallas, TX
  • Posts 4
  • Votes 1

Strange problem, I know. What would you do with 250k of capital that is minimal work with maximum payout? Most investment ideas I see around here are very time and effort heavy, which makes logical sense. 

The investors are looking for a return that will beat the stock market long term, so 12%+ at a minimum. And if I do all the work, I would want something out of it on a more regular basis than, for example, if we buy and hold for X years and then getting a % of the sale. 

Post: Have investors, need business plan

Jane DuPosted
  • Real Estate Investor
  • Dallas, TX
  • Posts 4
  • Votes 1

I am in a rather unique situation of knowing a small group of people who is interested in investing in real estate, have money, but no time or wish to put in any work themselves. I've known these folks for many years  and they regularly hear about my side real estate investments - a handful of single family homes, minor renovations, hold and rent. They know that my properties are cash flow neutral and that I'm in it for the long term payout (principal paydown in 15 years with low interest, and hopefully, nice appreciation). Recently, they have offered to "back me" with their money purely because they want to get into RE investing. These people make plenty of money at their day jobs and are not looking for a monthly payout (though I think they would welcome an annual payout of some sort). Mostly, I think they just want to diversify their portfolio, which is the same reason I'm in this game. We haven't talked numbers yet, but I am guesstimating that as a group, there is at least 250k to invest. They've asked me to give them a proposal if I am interested.

So I've crunched the numbers and don't see a way for this to be profitable for me to loop them into my current plan. I would be putting in the not insignificant work of finding, financing, renovating, and leasing. I justify doing this for my personal investing for the long term payout. But given that we're two full time working parents with kids, it's diminishing returns to take on more work (for others) without significant personal payoff. And neutral cash flow SFRs do not look like it manage that.

So my extremely broad question is this: How do you accept investors and get a fair payout for yourselves? I am not interested in short term flips and am more of a hobby RE investor. 

Post: What does it mean to leverage while accounting for cash flow?

Jane DuPosted
  • Real Estate Investor
  • Dallas, TX
  • Posts 4
  • Votes 1
Thanks for the feedback, everyone. I'm going to have to look up some of these acronyms. It sounds like the consensus is we should find better purchase price to rent ratios. Those are difficult to find around Dallas right now and these numbers are about the going rate. I'll add that these are all newer builds with minimal, if any, repair work before they can be rented out. One first one we didn't even vacuum or wipe down the counters, it was in such good condition. Let me also add that we don't require the cash flow right now, although it sure would be nice. And our goal is to overall maximize total return over the long term. Basically a retirement plan. Does that change anything about your advice? And I would love to hear what it is that you do. How much are the properties? How many % down, 15 or 30 year term?

Post: What does it mean to leverage while accounting for cash flow?

Jane DuPosted
  • Real Estate Investor
  • Dallas, TX
  • Posts 4
  • Votes 1

Hi there. I am new to this forum and relatively new to real estate investing. I have one rental and two more currently under contract. All are single family homes that I am planning to hold and rent for the foreseeable future, with no current plans to sell (though will reconsider in 5 years). The first home I bought with cash, but refinanced to get 75% back shortly after closing in order to free up funds for additional down payments. All are currently on a 15 year mortgage, rates at ~3.75%, with a purchase price of ~165k and renting out for ~1400/mo. After the mortgage, insurance, taxes, and HOA, we are left with no cash flow at all. Yet, all the advice I've seen is to make sure the month to month cash flow is high, several hundred $'s in the positive each month. We are clearly not getting that.

So my question is, when people say "leverage," the more they leverage the lower the cash flow, right? What is a good balance? Regarding the term, I chose 15 years over 30 to lower the interest rate and to pay less over the life of the loan, though 30 years at 4.25% may leave us with $250 in the positive per month. What's better? A few hundred/month now or tens of thousands saved later?