All Forum Posts by: Jason Flint

 First National Bank

Hi Grant.  Small bank financing......they offer more creative financing than big banks.  Also, with the commercial loan, they are going to take the total value off all the houses and as long as we are only borrowing 75% of the total value, they said that would take care of the down payment.  They said worse case scenario would be us throwing in one of our current rentals we have a lot of equity in into the commercial loan to provide even better loan to value for the commercial loan.....which we would have no problem with because it would be a house that is financed now anyway.

@David Ducille.

Thanks for the reply....realy appreciate it.  I should have explained the properties better than just saying they are not "crap".  They are not fixer uppers.  We will be buying the homes for 20 to 25% less than there current appraised values.....not of our estimated value of them.  2 of them have actually been completed remodeled 5 years ago or so.  The other 3 are very presentable homes as rentals that would need paint, some replaced floor coverings, clean up the outside, HVAC tune-up, etc if current tenants decided not to stay.  

The key thing that attracts us to these homes is the same thing that attracted us to our current rentals......quality homes in quality neighborhoods.  We definitely take a different approach than the average investor/landlord as we take tremendous pride in providing a nice home for our tenants to live and treat them with the upmost respect. (provide lawn treatments for weeds, fix issues within 24 hours most of time, provide furnace filters, etc).  In return, in the years we have been doing this, we get very few calls and our monthly cashflow is truly passive income....We have never not returned a full deposit because our tenants have taken great care of our properties and it would have just been flat out wrong to keep it.  

I definitely respect the comment about not being in real estate investing to make $200 a house.....but the vast majority of the time, its $200 per month for doing nothing.....and obviously it will be a lot more when the homes are mortgage free. Our main goal in real estate has always been to provide a nice retirement through passive income. (I totally get the BRRRR method and DEFINITELY a better way to make more money....and I am certainly not opposed to it.....but wanting to have rentals in neighborhoods we would live in ourselves makes the BRRRR very challenging in the current housing market).

With the new purchases, we would hopefully just raise the rent as the leases expire to increase monthly cashflow and the current tenants would stay.  However, if some tenants did decide to leave, we would certainly put the elbow grease in and make any upgrades to make them homes tenants will be proud to live in.  

I like your idea of possibly flipping one and keeping 4.....that makes alot of sense financially.

@Samantha Soto

Thanks for the reply.....really appreciate your thoughts.  Cash flow would be $100 to $125 per month per property.  On average, his rents are $100 per month below fair market.  We do have capital set aside for necessary repairs, plus our monthly cashflow from our current 5.  As I am typing out the answers to your questions, I am thinking these are convincing points to present to my wife. :)  Thanks again for the reply.   Jason

I just recently joined BP and the information/advice I have seen so far is always very solid, so I thought I would ask your opinions on a opportunity my wife and I have.  We currently own 5 single family rentals in the Greenwood/Whiteland/South Indianapolis area and have an average of 35% equity in each.  I met an investor/landlord about a year ago who owns 60 or so single family rentals in the same area.  We have been talking with him pretty much the whole year about him wanting to liquidate some of his properties.  He has agreed to sell us 5 of his that are tenant occupied for 20 to 25% below market value.  We would obtain a commercial loan to buy the 5 from him.  We would not have to put any money down due to the discounted selling prices.  They are all in A and B neighborhoods which is what we are used to with our current 5.  I know the deal sounds great so far, but here are my concerns:

*Even though we would buy them below market value, due to the appreciation this area has gone through in last few years, and the fact his current tenants all pay below market rent, the cashflow, atleast in the beginning, would not be good. ( I do realize I can raise the rents at the end of leases, but if we end up getting new tenants due to the raised rents, I am certain we would have to put some $ into the houses to get them rent-ready again).

*While none of the properties are "crap" properties and are in good neighborhoods, I am not sure how well they have been maintained the last 5 to 7 years as the main reason he is selling is because he spends most of his time on his Flipping projects and has certainly neglected his rental inventory a bit in recent years. 

*The lack of good cashflow along with the unknown of the maintenance makes my wife nervous on this deal.

Any thoughts/advice would be greatly appreciated.  

Thanks!  Jason