All Forum Posts by: Cory Binsfield

Don’t sell the property. You will regret it later. The big box banks are stuck in rigid loan overlays that make it impossible to extract equity unless you fit their model. I ran into the same issues about ten years ago, so don’t get discouraged.

I will never forget the day when I was turned down for a refi on my primary residence from Wells Fargo. The loan was for $250,000 or so. While that was happening, my local bank just approved a loan for one million to refinance some of my small multi units.

I would target regional banks and credit unions. They are more flexible and you may be able to get a portfolio loan or a simple business line of credit. Hit up your network since it is critical to find a business banker that knows what they are doing. Beware of the “newbie” banker. 

That is one creative strategy. Never realized you could use a construction loan for a low down deal. Let us know if you hit equity capture target! Would be a decent post for real estate success story. 

It’s never a good sign when a turn key promoter leaves the country. Ex-Fox & Friends co-host Clayton Morris leaves country amid fraud allegations, lawsuits

Thanks to Bigger Pockets, he was exposed. 

Ryan, check out this recent post. It offers a lot of ideas for you. 

https://www.biggerpockets.com/forums/223/topics/554291-how-i-built-a-portfolio-of-35-rentals-and-10k-monthly-cash-flow

I use Power One all the time. It’s the best financial calculator I’ve found for running amortization schedules, time value of money and total return calculations. You can also download other functions for engineering, construction, etc. It’s my “go to ap” on my iPhone. 

Another iPhone product I use is Property Evaluator Pro from realestatetools.com  They have a suite of tools for the iPad and iPhone similar to the Bigger Pockets deal evaluator. My banker loves it since I send him a deal package and he e-mails the pdf to underwriting.  I feel it helps me obtain financing quicker than other investors. It’s all about the presentation. 

Thanks for the heads up Jay! If it sounds to good to be true......

Just a heads up for all the people out there who are advertising their units. 

There are some surly characters on Craigslist that like to steal your ad and entice people to send them money. 

The typical scam is the tell the person they are out of town and to wire money to there attorney to set up a showing. I have rented to people in the past who told me this is how they got conned.   

Here is my latest hijacked ad which I never even posted on Craigslist-they grabbed it from Zillow. 

My Ad posted on Zillow and all the free sites like hotpads, etc. 

Here is the Scammer Ad

Notice how they dropped the rent and added some amenities. I sure wish I had in unit washer and dryer!

If you ever see this happen to your rental ads, click the prohibited button and notify Craigslist. 

Unfortunately, I wanted to mess with the scammer and have not heard back from him yet. If the person responds, I will let you know. 

As a best practice, it is good to quickly scan craigslist when you post your rental to stop the scammers. 

I've added a bed bugs clause to my lease. Basically, tenants are responsible for bed bug remediation since it can cost a few thousand for treatment from a pest control company. I had a 1br apartment in a six unit building and it cost $1,200.00. 

Another clause I like to add is move out time. My lease requires they move out by 12 noon at the end of the lease period. Most leases end at midnight and I find this annoying since some tenants will  stay till 11:59 PM and then you can't verify if they actually moved out by the end of the term (unless you like visiting a property at midnight). 

If they are not out by 12 noon, I charge a $250 holdover fee. This has dramatically altered by move out process since all tenants are in a hurry to move out.  It also allows my crew to get in early and clean/check for damages before someone moves in the next day. 

Chris, just a thought.

Assuming your goal is increasing your passive income and building upon your net worth, I’d keep the 8 plex for the time being and put a line on it or consider a cash out refi with a loan to value at no more than 50%.

Interest rates are extremely favorable right now and lenders are throwing money at real estate investors. 

Once we hit the down turn, credit will dry up and you may find yourself needing lots of cash to buy distressed deals from other investors who employed to much leverage. This was my problem during the last crisis. I had lots of equity and banks wouldn’t let me tap it to buy screaming deals. 

Next, set aside the refi/line proceeds into a safe/liquid account and dub it your opportunity fund.

Next, I would focus on selling the single family portfolio one at a time to maximize the price. If you sell as a package, it may be at a discount.

Use the proceeds to trade up into higher quality 5-25 unit assets in solid areas that are known to appreciate over time.

The small multi family market is ripe for picking since most of the sellers are mom and pops and you are not competing with the syndicates taking down deals in the 50 plus unit range.

Better yet, single family and duplex properties are a hot commodity right now. You can maximize your sale price by putting these units out to first time investors or homeowners due to the housing shortage.

Understand, you will pay a premium right now to purchase more small multi properties. However, it is impossible to predict market cycles.

If your investment horizon is 10-20 years, you will be fine as long as you buy for cash flow.

I’m a huge fan of buy and hold along with 1031 exchanges so you can defer till you die. It is a pain structuring a 1031, but this allows you to purchase more property since you don’t have to worry about paying the taxes.

Obviously, if the taxable gain is nominal or you have loss carry forwards, skip the 1031.

You have a nice problem here. I bet a lot of BP folks would be happy to be in your shoes. 

Nice job! 

Luke, you have a great problem here. Keep up the hustle!

Have you joined the Minnesota Housing Association? It is the best place to learn and network with property managers along with vendors and other landlords to scale your business. Here is the link http://www.mmha.com/

Another area that helped me scale to over 100 units was an investment in property management software. 

This freed up a lot of the admin and bookeeping and made running my portfolio a breeze. As an owner/operator I’m always looking for ways to systemize things.

Are you focusing on buying your own rentals as well? As a property manger, you gain inside information on the buildings you manage and can hopefully buy them before they hit the market. It appears that the best players in my small town own and manage properties.

Lastly, I’d definitely hire an assistant like the other people mentioned. It will be the best investment you can make followed by building up an inside maintenance staff that you can farm out to other landlords in the event they do not want you taking over all the duties of property management.