All Forum Posts by: Jeff Houpt

Thanks everyone I appreciate it!

Hi Bigger Pockets!

Thought I would do a sanity check and see what kind of rate others are seeing from their portfolio/nonconventional lenders. Specifically the financing terms your getting on your 11th+ homes. My lender is giving me 7% interest, the fees are reasonable and I could buy it down to 6.5%ish but the numbers don't make sense so far so I haven't opted for that. 

Just thought I would see if this is competitive or if there is room for me to find better financing. I really miss getting 4-4.5%!

Thanks!

Jeff

Can anyone recommend a good real estate attorney in Fort Worth? I have a commercial office building and one of the tenants is selling their business to an employee and I need help on how to approach the lease assignment and changing the lease so the new tenant is personally liable since she doesn't have previous business history. Also need yo add to the contract that the new tenant must put me on their insurance policy. Thanks for any help! Jeff

Hello everyone, I think one of the most controversial subject on real estate investing is whether or not to put your first few properties in a LLC or if an umbrella insurance policy gives adequate coverage. My position is that you should just start investing and then become more efficient as you evolve, that way you don't get paralyzed buying your first property. Afterall your first few properties are often your tuition to real estate school. However my bottom line belief is you should move to an LLC as quickly as the numbers make sense. That aside Im looking for real stories of investors who did not use a LLC but had an umbrella policy and insurance on the individual properties and still lost everything. Can anyone share such a story? What were they sued for, what happened? Thanks for any insight, I have not been able to find one such story but I know they are out there!

My thoughts are "it depends" on what your goals are. If you have a good job and don't need the cashflow today then I think maximizing your cash on cash return will build the most wealth for you over time. If your goal is to be able to use the cashflow to improve your lifestyle in the near term then I would focus on what will do that the quickest as your initial goal and get to a place where you can be comfortable with the combined income from your job and a portion of the cashflow from real estate. Then be more aggressive on using leverage with the cashflow beyond that level. Build a strong foundation, then your empire upon that foundation!

Welcome to DFW and Biggerpockets from a fellow software guy! This is a great area for cashflowing real estate for sure, check out the book Hold, and get the version with Linda Mckissack on it shes local and simply amazing (just did a workshop with her team out here last week) it's basically the strategy I'm using to build my portfolio. Feel free to reach out if you get stuck, see ya on the forums. Jeff

Hi Jacob, It's a small world my company has worked with yours for almost a decade (ORS/timesheets/MDM). Welcome to the wonderful world of real estate investing! I always wished I had some help when I started in real estate investing, feel free to reach out if you get stuck or just need someone to bounce ideas off of. Jeff

Well you brought up another great point, vacancy cost and tenant turnover are two of the most expensive costs associated with owning a rental property. The way I handle that is I only invest in markets with stable population and job growth, near "7" or better schools and the median home price is very affordable for the medium household income for the market. That way I know there is demand and I know the people demanding can afford to pay what I need.

Well you're wise to respect leverage and debt as over doing it is the major way people to lose their properties. For me I got over it by starting slow but taking action, my first property I bought in cash as I was afraid of debt at the time. As I educated myself I learned that the ability to lock in the price of a home in todays dollars is actually the most powerful force in real estate investing. What I mean by that is lets say the house you live in is worth $150k. What if you could go back in time and buy it 30 years ago? You would probably pay more like $40k. A mortgage allows you to lock in todays price, then have others pay it off for you. After i understood that I became very pro leverage, but I still wont keep more than 70% ltv on a property, and I keep adequate cash reserves to be able to adapt to a drastic market change. Because if you lose the property, the power of the leverage doesn't mean anything.

I wouldn't do that deal, not being able to tap into your equity could hurt you down the road if its stopping your ability to refinance. You should google amortization schedule and see how expensive that loan really is, 5% sounds good, but Ill bet its not pretty compared to a 20 or 30 year, which are available at 4.25ish right now. Also be sure its possible to sell the property!