All Forum Posts by: Jason Chambers

@Account Closed was that information on the website or did you discover that during the demo?

@Account Closed,

You hit the nail on the head! That's exactly the case and I didn't think to take certain bill paying habits into consideration. Being in a border town definitely requires cultural knowledge especially in business situations. Thanks so much for reminding me of that. There is a local bank a couple blocks away that we're going to set up a deposit only account in. This property is just outside of downtown so the nearest walmart is on the other side of town.

Thanks to everyone for all the feedback! This is an awesome discussion. I'm in a peculiar situation where I inherited the tenants from the previous owner. He's old school and had no problem coming by every month to pick up rent. With my 9-5 job that isn't always possible because I travel quite a bit. I'm trying to get them away from that but again, most of them don't have regular banking habits that include online banking. Electronic payments would be preferred. I'd also rather stay away from the mail. Just don't want to deal with the hassle of waiting for checks or them getting "lost" in the mail. I think setting up a local bank account they can deposit into might be our best bet. 

Since we took over we have everyone on a month to month lease except for one tenant. We've already had turnover in one unit and immediately found another that we were able to charge higher rent. Within the next six months we expect that most of the tenants will be moving on which will allow for a rehab of all the units and allow for us to charge market rents throughout and target a different type of tenant. I'm hoping this current rent collection headache will only be temporary.

We recently bought a 5 unit property in an older historic area that is seeing some growth. We got a good deal and the rents have been kept artificially low which allows plenty room for more cash flow. Only problem is that the current tenants don't have bank accounts and generally pay by check or money order. That means we have to show up several times at the beginning of the month to collect.

What are you guys doing to avoid having to physically collect rent payments? A couple of the tenants in this particular building aren't very savvy with the internet either. 

Thanks!

Jason

@Francisco Gonzalez

Welcome. Have you tried the local real estate investor meetings? I've found it to be a great place to network and get a better feel how things are going in El Paso. Check out the El Paso REIA on Meetup and also EPIC. You'll find people from all aspects of the industry at these meetings. EPIC also occasionally has deal nights where people come with contracts in hand for properties. EPIC meets at the Hilton Garden Inn at UTEP and the REIA meetings are now being held at V Realty on the west side. Hope this helps.

We have two multi-family properties that need some work in the Sunset Heights and Kern area. We have a couple of bathrooms and kitchens to redo in addition to some paint and flooring. Does anyone have any suggestions for contractors you trust that won't break the bank? We're still fairly new to the EP real estate market and have had a bad experience with contractors that we would rather not repeat. Thanks!

Anyone here a member of the El Paso REIA or EPIC? If so, what's your experience been? Any good leads, deals, or networking?

Sorry to hijack the post.

@Dana Schreiber it took me a while to wrap my head around it too. No books or blogs. Just networking with people that do this with their properties. It's actually quite simple. It's the difference between simple and compound interest. We'll use my home as an example. Our mortgage was $3200 a month. Of that, more than $1700 of it was going towards interest. That was at a 3.75% interest rate. Looking at real numbers, 3.75% interest is actually more like 80% interest after 30 years and is front loaded (WHAT A SCAM!) We got a HELOC at 85% LTV and our home appraised for a bit over $700,000 which left us with a $600,000 HELOC. We had a bit over 25% equity in the home (we owed about $530,000). With our introductory, simple interest rate of 1.75% for two years, that left us with a $700 a month, interest only payment. We paid off the mortgage and told Bank of America to take a hike. We now use the HELOC like our checking account and deposit all of our income into it. Having to pay exponentially less interest and depositing all our income into the HELOC allows us to attack principal in large chunks. At this rate we can have the remaining balance paid off in 5-7 years. Remember also that as you pay down your line you still have access to it. So we've been using the available balance to finance some buy and hold properties that are bringing in good cash flows.

I've been asked, "well if it's that easy, why doesn't everyone do it". That's a reasonable question. The simple answer is the numbers have to be right. There needs to be enough equity and monthly cash flow (whether from real estate or from your full time job) to qualify for this type of financing. And not every bank offers fixed rates. We did this with Bank of Hawaii. We initially used a personal line of credit to pay down enough principal for our numbers to work for the HELOC. Keep in mind that even the worst variable rate HELOC beats the best rates on a mortgage (simple vs compound interest). Compound interest is a killer!

Hawaii is a high dollar market but the idea is that same anywhere. Reduce or eliminate the compound interest or the amount of time you have to pay it and attack principal in large chunks.

I have a BS in Aeronautics.

I fly airplanes and helicopters.

I pick my nose a lot. 

I make money in real estate. 

Networking has been the key to navigating our way through real estate. We've met people from all kinds of backgrounds that have been very successful in it.