All Forum Posts by: Jeremiah B.

@Zach Adams

As a general statement, investment property purchases are more expensive than owner occupant purchases.  But, it's important to remember that the cost to you may come through as points, or it may come through as a higher rate.  Although this may not be intuitive or even transparent, the two are ultimately interchangeable - meaning you can probably opt to pay zero points and pay a higher rate, or lots of points and a lower rate.

With that said, 3 points does feel high.  I would suggest speaking with a couple different lenders and getting good faith estimates (GFEs) from multiple lenders before you lock anything in.

Happy hunting!

Hold.  I highly recommend it.  Best beginning book for a buy and holder that I've found.  There was also very little fluff - some motivational stuff in the beginning, and some nuances (advanced strategies) in the end, but 90% of the book is a how-to guide for new RE investors.  That 90% is stuff that really is a needed if you want to be successful.

http://www.amazon.com/HOLD-Find-Rent-Houses-Wealth...

It's also available on audio-book.  In fact, I did the audio-book and was very impressed with it.  That's about 7 hours long.

I'm a conservative long-term, buy and hold investor.   For me, in today's rates, I work exclusively with 30 year fixed mortgages.  

I believe that mortgage rates will increase significantly over the next 5 years.  If I'm right, getting a 7/1 today means that I will have difficult choices to make in 7 years.  And over the long term, the 30 year option will have lower monthly payments, and will probably get you owning the property free and clear sooner.

If you plan to sell in a few years, a 7/1 is fine. If you value the cashflow today over long-term ROI, a 7/1 is probably the best option. And if you're a bit of a gambler, a 7/1 is also viable.

Happy hunting

Hey Andres,

How you buy and own a property will impact what exit strategies are viable.  If you own in cash, you have far more options than if you have $40 K in credit card debt to support the refi.

The big ones are listed above:  turn into a rental, move in, or get creative with seller financing (e.g. lease options).  As a fourth, some people forget that dropping the price is always an option.  This may eat away your profit, or even run you in the red, but if you need to move the property - that's always a way to move the property.

Happy hunting!

@Daniel Mohnkern cracked me up with his "if you want to call non-investors investors" comment.  That's funny, but true.

When you say "real estate investor" I'm reading "wholesaler."  That's in no way derogatory, but the challenges of a flipper are very different than those of a wholesaler, and I want to be sure we're talking about the same group.

For wholesalers - yes - I would say that 95% of people who say "I'm going to wholesale a house" never close their first deal.  With that said, I don't think that information overload is the most common barrier.   In fact, I would say that wholesalers who never do a deal would say that they lack sufficient information.  The catch is that no reasonable number of seminars, camps, talks, guides, workbooks, coaching, etc. will ever get someone feeling that they have enough information to get started.  Though, I would also argue that a lack of information is far more excuse than reason.

I think that the main reasons people stall before their first deal are fear, unrealistic expectations and a lack of grit.  

Hey Hey,

I'm just south of you in Portland.  I own one locally, but have invested out of state for a couple years now (Charlotte - though I considered SL).  

Just let me know if you want to grab coffee and talk shop sometime.

Some good themes.  Here's what I've heard (most of which you're already doing - I'm just summarizing):

1- Keep the ad heading friendly and 'normal' (I'm dying to know what the old header was)

2- Soften the verbiage in the description to remove reference to BG, reference, etc.

3- Use Postlets and the MLS (if available) to get more online views. Note that the MLS is not available for rentals in all areas.

4- Include an email option to the ad

5- Consider moving away from Google Voice/getting to the point where a person answers.

6- get a for rent sign in the ground.

7- do not decrease the rent yet.  I've skimmed the listings, and you look appropriately priced.

Overall, if you've had four showings in a cold/snowy month, and many more calls - you're not in awful shape.  Work on some of these themes and things will work out.  Hang in there!

This is a personal question, and one that only you can answer.  But, let me try and give the question some context:

Would you take money from a family member?  And, which is more important - the relationship with the family member or the relationship with the boss (actually think about this - and don't fall into the trap of saying what social norms dictate)?

There are no right or wrong answers to these questions.  But if you can answer these questions, it may help provide you context as to whether taking money from a boss is a good or bad idea.

I try and keep it simple, and just use a few:

1: Projected cashflow over the next 5-years (dollars per year). This is simply monthly rent minus projected vacancy, minus expenses (PM, repairs, capital, etc.), minus PITI. DO NOT assume increases in rents in this projection.

2: Cash on Cash return (percent per year).  Take the cashflow metric and divide by the total dollars you have invested in the property to buy and fix it.  Include closing costs.

3: Ideal Month Income. This is not a great metric, but has been helpful during the rapid growth periods. This is simply what you would make if nothing went wrong (gross rent - PITI and PM). This will not tell you if you will be profitable, but is a good way to track your growth year-over-year during rapid growth phases.

Happy hunting!

Hey Sarah,

I've seen this plan many times.  It's loosely based on a 'how to get to a million dollars in RE' book - though I can't recall the specific title.

Overall - I like this plan as a high level guide.  It sounds like you have a lot more details behind the scenes, and while these details should not directly guide your decisions, they can guide your plan which will in turn guide your decisions.

Still, I do see some gaps:

Philosophically, I'm real uneasy with selling real estate during the portfolio growth phase.  Real Estate is expensive to buy and sell, and when you're turning property every few years, you're paying a big premium to do so.  I figure 5% of the house value to buy it/get it ready and 10% to sell it... those are big expenses that often don't make sense if you're holding a property for less than 5 years.

On a related note, I would at least not buy in year 3.

This plan is heavily reliant upon the market staying strong.  If we hit another dip and prices drop, you lose your equity and can't move up.

It looks like you're assuming forced or natural appreciation of your duplexes.  That's an aggressive assumption.

Be wary of taxes when you sell!  In addition to the cap gains, I think the gross profits affect your gross income on your taxes - in turn impacting AMT and other taxes.   

Based on scale, those are some cheap duplexes with huge cash flow assumptions.  Not to be rude, but you may want to check your numbers on those.  I'm happy to be a second pair of eyes if you like.

Based on scale, those look like some old duplexes.  As such, expect to be hit with large expenses while holding them (just part of the game, and maybe you built that in).

I would change the gap between apt #1 and apt #2 to match the loan terms on apt #1.  If you can get a 5-year loan, you should keep apt #1 for close to 5 years.

The plan is non-diversified.  At three times, you are putting all of your eggs in one basket.

I don't mean to beat up the plan - just wanted to highlight some areas I see as relevant.

Happy hunting.