All Forum Posts by: Cory Binsfield

I just applied for the loan this afternoon.  It was the most straightforward loan application I have ever experienced outside of an Amex Next Step loan I have used in the past. It took less than 15 minutes since I have reliable financial records that are easy to access. 

I entered all my expenses (mortgages, CAPEX, utilities) under the cost of goods sold since there is no other way around showing your expenses. I also kept the loan amount under $200,000 just to avoid more collateral.

It will be interesting to see if the 10K advance option comes fast. It was strange adding my bank account info, but I must give kudos to the SBA for streamlining this process. Just check a box for a 10k advance!

The government/Fed sure learned a lesson or two from the last crisis. Both the speed and size of this stimulus is blowing my mind. I will keep you posted on how this works out. 

Thanks for the heads up!

Pre-paid rents are coming in with a few warnings from residents about being late. I'm waiving late fees for anyone who sends even $25.00 since I have an online portal that makes it easy to send partial payments.

Hoping I won’t need this loan. However, I scraped through the “Big One” in 2007-2009 by making major cuts to expenditures since I had around 30 units at the time. Now that I have more than 100 units, things will get interesting.

I learned some valuable lessons from the last crisis. Mainly, keep your loan to value at 70% or less and only buy for cash flow. While I’m in much better shape now, it’s impossible to predict how this will play out. Especially when some of the fringe residents talking about rent strikes.

Back in 2007, as the housing market started to go south. I will never forget the conversation I had with a wealthy developer.

We were getting concerned about the banks tightening credit and he told me how he just tapped a line of credit for $1,000,000. I thought that was kinda odd since things didn’t seem too bad at the time and he was hardly scraping by. 

Little did I know we were entering the worst financial crisis since the Great Depression. 

Whether you need it or not, you might want to draw from credit lines just like the developer or take advantage of some of the disaster relief loans. 

I wish they had this SBA loan during the last crisis. It would had made my life way better.

As the old saying goes. "A banker is someone who will loan you an umbrella on a sunny day."

I’m in the same camp as John Teachout. Delta is my favorite and the easiest to find parts at Menards or big box stores. Like Moen, lifetime warranty. Just call em up and they send ya the cartridge. I keep extra cartridges on hand so the tenant doesn’t have to wait. They have never asked me to send the damaged cartridge back. 

I’ve tried the “plumber” faucet and they were not worth the price. Better to provide your own faucet if you can. However, plumbers have access to specialty faucets if you need a weird one. 
 

Hey BP investors,

Want to take advantage of an epic opportunity? The 10 year bond is at a record low. Why would you care? Conventional mortgage rates rates tend to track the 10 govie yield. 
 
Oh, Wall Street and Main Street are freaking out. This spells OPPORTUNITY! 

Now is a great time to refinance your primary residence and any income properties that have less than a 75% loan to value with healthy cash flow to cover payments after all expenses 

I just met with my banker and we locked in 3.375% on a 30-year fixed on my primary duplex. Originally, the rate was 4.75%.

Next, I locked in 2.875% on my 30-year VA loan. This was a property I purchased for little down and I was able to drop the rate from 4%. Never in my 20+ career buying income properties have I seen a 30-year fixed this low!

Now, I’m working on eight other conventional loans. I’ve been waiting more than a decade for this perfect pitch and it looks like I’m going to hit the loans out of the ballpark.

As an added bonus, the real estate market is hot and getting the properties to appraise is a breeze. I was pleasantly surprised when another duplex I refinanced appraised for $25,000 higher than I projected.

If all goes according to plan, I will pick up another $2,200 per month in cash flow as a result of locking in 30 years of fixed debt at 3.5% or less. While my principal pay down will drop by $730 per month, I can easily make up the difference. All I need to do is deploy the savings into a new property or simply reinvest the money into the stock market for a higher return over the long term.

Whatever you do, don’t get cute and wait for rates to drop lower. This is an amazing opportunity and rates could easily jump fast once the global panic ends.

Lol!

This morning,the 10-year Treasury hit a record low. Being that mortgage rates tend to track 10 year Treasuries, you should call your banker today to see if it makes sense to lock in a low rate on your primary residence.

As an added bonus, sale comps should be easy to obtain since the real estate market continues to accelerate due to cheap money and low inventory.

I just called my banker this morning and locked in a 30 year 3.375% fixed on my owner occupied duplex. Looking forward to a $478 per month bump in cash flow.

Nothing better than getting paid to live in your primary residence!

Oh, quit tripping over pennies on the way to dollars. A good CPA will not cost you anything as a result of tax savings. The key is to find the right CPA. 

Despite not being able to offset passive losses against active income, you seem to be only focused on 1 income stream-tax benefits.

Here are the 5 income streams.

1. Cash flow

2. Appreciation

3. Mortgage pay down by tenants

4. Equity capture by creating value. I bought a duplex last summer. By converting the 2br upper unit to a 3br as a result of finishing off the huge attic space, I increased the rents by $300/mo.

5. Tax benefits. Despite missing out on deducting losses, you still receive tax free rents since the mortgage interest deduction plus depreciation allows you to offset the profits. Depreciation is the only expense you don’t have to pay out of pocket.

It’s understandable that you feel like real estate is underwhelming when you first start out. However, once you own 10 properties and all 5 of these income property streams kick in, you will be glad you stuck it out. Real estate is a long game.

Give the people a written 30 day notice. Right now, you have a verbal lease agreement. I would find new residents since keeping these people are not worth the hassle. If you give them a notice now, they would have to be out by March 31 since the notice window is a calendar month.

Next, you do not have a signed lease agreement. You cannot charge for the extended term. You can raise rents as long as you give them a proper 30 day notice.

Hopefully you have before and after photos of the room that was damaged. You could seek damages in small claims court and represent yourself. Just be prepared.

Imagine facing Judge Judy if you seek damages. Most judges are fair unless you are ill prepared and try to seek excessive damages. Whenever you rent to someone, take a video of the premises while you are meeting them to move in. Make sure you have a record of them in the video. Keep it casual. I.e, hey I’m recording the video inspection. Can you say Hi and state your name?

Assuming you don't own the property in a LLC, you can go to small claims court and represent yourself.

Finally, try to avoid court at all costs. Just tell em this is not working out as planned and you wish to move on without drama. Be firm and fair.

Here is a great resource for landlording in Minnesota. It outlines the rights and responsibilities of tenants and landlords from a legal perspective. It is published by the MN attorneys general https://www.ag.state.mn.us/Consumer/Handbooks/LT/default.asp 

Only hire an attorney if it gets nasty.

Best of luck on this and consider this tuition paid to landlord university. Don’t get discouraged. I made many mistakes on my journey and still found rental real estate to be a game changer for my net worth.

Clifford needs to be on the BP podcast. Amazing story! Someone dm Brandon Turner or David Greene or whoever  books guests for the show. I was floored by his story!