All Forum Posts by: John Casmon

Originally posted by @Miguel Luna:

Originally posted by @Crystal H.:

If I were 19 again, I would continue my higher education (college) as fast as possible. Work as much as I could part time, weekends and side jobs. Save save save every penny that came my way and every windfall (tax refund, birthday money). Make a plan for purchasing my first rental property instead of a car. Learn as much as I could about RE investing from peers and school. Research properties in my area, talk to a mortgage broker about purchasing a property and check my credit report monthly and increase my credit as much as possible.

 That's exactly what I'm doing right now! Raising credit, school, save save save! I bought a car though... so that's $300/month gone

Don't just "pay off" the car, sell it if you can. Are you upside down on it? If so, can you become an uBer or Lyft driver so the car pays for itself? If you're in TX, you should be able to trade that for what we used to call a "whoopty." Seriously, if you're 19, want to invest in real estate and have minimal capital, you shouldn't be spending $300 a month on a car.  

If I could do it again, I would do most things the same, but purchase a 2-4-unit with FHA financing near my campus and rent out the other bedroom(s) in my unit. My last two years, I worked a full-time job, a part-time job and went to college full-time. My work ethic was solid and while I missed some parties here and there, I still had plenty of time to enjoy the college life. My sophomore year, I was an RA (free room & board) so I had experience managing "tenants" and I guess this was my precursor to being a landlord.

What I would do differently is savor those moments and not waste so much time laying on the couch watching TV or playing video games. I wouldn't necessarily spend that time investing or working, but just optimizing memories. 

Don't be in such a rush to grow up and have the responsibilities that come after being young, but continue to seek out advice and mentors who can help guide you to achieve your goals.  

Great post. By engaging in the forums, you're able to gain and share knowledge, while building relationships. This is a great platform to build your brand and communicate your expertise, value and goals to a prime audience of investors, lenders, agents, wholesalers, contractors, etc. Take advantage of the platform and convert the online relationships into real world relationships and eventually, real estate deals.  

Even if you don't have a lot of knowledge to share there are more ways to engage than just posting. Vote for posts that you like or learn something from. Add colleagues who have similar interest. Welcome new members to the site. Find a way to engage, and you will see the value. 

Hey @Ryan Chorbagian, first off congrats on your first deal. We started the same with an FHA financed 2-unit and refinanced 18 months later to get out of the FHA and open a line of credit.

If you're looking to do another deal, but don't want to wait until you can save up the money for a downpayment, you have a couple of options, but may need to get creative. First, look for family or private lenders to get you the $$ needed for the downpayment. Each bank has different rules on what you need to season the funds so do your homework here. 

You can do a new FHA loan after 366 days, but will need to refi out of the current one first. This is a fairly viable option, but you must intend on living in the new property. 

Last, if you are finding these deals off market, I'm sure there are plenty of investors that are willing to invest and partner. There's an active Chicago network here so connect with folks and I'm sure they'll be willing to help you out.  

Those are 3 drastically different markets. Out of curiosity what criteria puts Los Angeles, Detroit and Charlotte on the same list? As for the original question, my guess is you seek a combination of cash flow and appreciation. If so, I've heard good things about Texas - Houston to be more exact. Also, Charlotte was showing strong signs a few years back. Not sure of the current landscape. Detroit is rebounding, but the metro area is so spread out that'd you really have to dive into the sub-markets. You may want to look into Ann Arbor. When I lived in Detroit, the only are that I felt comfortable holding multis in would have been Ann Arbor. But that was before I purchased a single property and I'm from Ohio, so who was I kidding, I was never going to buy a property there, lol.

Originally posted by @Mark Douglas:

Originally posted by @Max James:

Did you place an offer??

 Yep, I offered $165k with closing costs paid and the ongoing eviction finalized before closing. They counter-offered with $183.5k and $5k in closing costs, but no word on eviction.  Going to pass on this one.  Also the rent roll came in, the actual rents are $70/mo lower per unit, than they had listed.... So $210/mo that I had been calculating in rent isn't accurate.  I didn't run the numbers again, it's going to be too far off for me though.   

According to the listing agent, the seller is "upside down" on the property, but he doesn't seem all that motivated if he really is in financial stress.   

Whether this property or another one, find out what's driving the seller's motivation. Sometimes I ask what does the seller plan to do with the money, it's a great indication of the real motivation. If you can solve his problem, you can create a scenario where everyone wins. 

Originally posted by @Mark Douglas:

Originally posted by @Brent Coombs:

@Mark Douglas, are you living rent-free currently? If not, then it might take you longer than a year to find a better cost/benefit opportunity. 

Are quads like this readily available at this price point? If not, then time is NOW!

Any harm in offering even lower than $165k? All the best...

PS. Oh, and you asked if this was a good idea:" I'm draining my savings to cover the down payment". I say: Congrats! Why not? How could you do it cheaper?....

 Nope, I'm not living free right now.  Apt. rent is $650, and when you throw in electric and renters insurance, total cost is around $700~750/month. 

In my mind, those expenses would automatically translate into savings just by moving into the quad  (I'd still have to pay electric..separately metered units..but that's a minimal expense)

Still, the cash reserves being wiped out makes me hesitatant to pull the trigger....  To your point, securing a lower price would lower my down payment.. 

All I needed to hear was this. If you're paying $700 bucks in rent right now, this would get you an investment property that pays for itself with little out of pocket costs. Looking at it differently, buying this property would actually save you $700 a month! As long as you like the area and expenses are manageable, don't overthink the analysis here. 

@Triston Murray Congrats on your first pure investment deal. I started with an owner-occupied 2-flat as well.

In regards to the deal, is this an SFR or multi-family? You mentioned a mortgage and LoC, what are the interest rates and terms here? Is this a hard-money or conventional loan? What are market/actual rents? How long have you had the property?

If you were to sell the property based on the figures you provided, you would look at a profit of $22-24k (including selling costs like agent commission), plus capital gains tax.

If you decide to do a cash-out refi and rent the property, you may want to only pay off any high interest loan and use the additional funds to purchase another property. You should consult with a CPA on your options to avoid capital gains tax.

If you can buy a cash flowing property not sure why this would be a bad time to buy (or anytime for that matter). As @John Thedford said, it's never really a bad time to buy, but there are certainly bad times to sell. 

Originally posted by @Vincent Crane:

Most people do say it's a good time to by while interest rates are low... However, would you rather have a 6% interest rate on a $150k house, or a 4% interest rate on a $250k house? With the higher prices that we have, it negates the benefits of cheaper interest. Plus, what is about to happen really soon is... High prices, and higher interest rates.

Think this example is a bit of a stretch in most markets, but say the same 150k house from a few years ago has seen a 20% increase in value and now is valued at 180k. The interest rate comparison would be as follows:

150k @ 6% - Monthly Payment: $1,055; Total Payment: $380,007
180k @ 4% - Monthly Payment: $1,046; Total Payment: $376,865

Keep in mind rents have increased in most markets as well and that alone could make up for the increase in home values in most markets. And if higher prices and higher interest rates are about to happen, would't now be a perfect time to buy?

You need to use real numbers, either current actuals or your projected costs (expenses tend to go up, so I add a little more to each expense line item). Confirm utility costs and what utilities are paid by owner. Also, what's the market rent if you don't think the figures from your agent are accurate? 

As @Jon Gluckman and @Joseph Weisenbloom mentioned, commercial financing varies, so you'll need to weigh these options. Do you want a 5 year loan amortized over 25 years with a balloon payment or a straight 15 year note. This will drastically change your cash flow.  

I like to look at cost per unit and cash flow per unit to help compare deals, but you need to get all of the other info to properly assess the property. 

Hey @Mark Douglas, think it depends on your goals, along with the class of property and tenant. A/B units are easier to self-manage as long as you have a handyman and plumber for any issues that arise. With just 3 tenants, you'll be okay to self-manage as long as you properly screen tenants. Owner-occupied is easier because you're in the building. It's not like you have to drive 45 minutes to go check out a problem. However, keep some separation between being a neighbor and a landlord. I have my owner-occupied tenants email me with any repairs or concerns, but call in case of an emergency. Otherwise, other interactions are like any other neighbor.

@David Begley brings up good points about goals and exit strategies. Property management is a critical component of buy and hold investing and learning the ins and outs will help you manage your PM. Tenant turnover is the most costly part and most PM firms make the most money when there is tenant turnover. So don't just hand a property over to a PM and HOPE things work out. You meed to MANAGE them and tell them what your expectations are for the property.