All Forum Posts by: Jody Davis

@Dan Giungi  One thing to keep in mind is that if you go with a full brokerage (Edward Jones, etc.) you will be able to borrow against the assets in your account.  It is typically 50% of the market value but could be even less.  This is the best strategy to get the best of both worlds.  Keep in mind, this is on margin, so if the value of the stocks tumbles, you will be required to put up an additional amount of money to not have the securities sold.  The best policy is to always stay well under the 50% that you could borrow up to.

@Jason Thomas I would buy one home outright for $20K, as you will have fully maximized your cashflow in that particular property and use the paid off home to help pay down mortgage for the $35K house.  You will have the $35K house paid off in no time and will be able to use the equity to do some creative investing in the future.

I think the main thing to remember on many commercial multi families is that most banks, not all, will require a certain amount of money set aside for reserves. Most banks around my part of the world require 6 months worth of expenses set aside in addition to the 25% down.

@Justin Kroepfl congrats!  Nothing like the feeling of closing on a property and growing your business.  Sounds like you're killing it.  Keep up the good work.

@Florina Villarde  I went through this same situation as you.  In the end, I decided to stick to my guns and walk away from the deal.  After two weeks, the realtor called me back and said the bank was willing to take my offer now.  At the end of the day, I ended up acquiring the property by being patient and sticking to my guns.  Good luck in your journey.

@Patrick LiskaI certainly understand your point of view.  It is something I have thought long and hard about and weighed the pros and cons.  I am open to changing my strategy as I go, but right now, I want to get 3 deals stabilized before I seek long-term financing as a way to hedge my risk.  Honestly, I am still very young, and my parents are very risk-aversed people, so I'm trying to keep from mentally killing them in the process by being risk-aversed myself.  It is definitely hard to do something that your parents aren't fully on board with, but it's what I've always dreamed of doing.  They are coming around now that they've seen how successful my first deal has been. 

@Brit FosheeI do plan on self-managing the property.  It is definitely a unique learning curve going from real estate investor to real estate management.  It was a fairly easy process thus far, thanks in part to BP.  I advertised on Postlets and Craigslist and had it rented out in just a few days.  I'm ready for #2 now.

I closed on my first investment property on 2/10/16.  It was a single-family house with 3 beds, 2 baths that was a foreclosure from a local bank.  My plan is to put this property into my buy and hold portfolio and use it for long-term rental income.  

I plan to pay down the note by $1,200 per month.  The pay down will come from personal funds as well as cash flow from the property.  My battle plan is to pay off each property as quickly as possible, then use creative ways to use equity in the property for new purchases.  I plan on using cash flow from wholly-owned properties to pay down notes on future properties even quicker.  My first property will take 20 months to pay off.  

I spent an entire month preparing a legitimate business plan and tweaking it.  My team is assembled of local guys that are experts in their respective fields.  I graduated with a real estate finance degree in December 2012 and have spent the last three years saving every penny to use for investment purposes.  I just decided to branch out and diversify a portion of my personal investment fund into real estate, and hopefully it will pay off.  It's weird because although I have a degree in real estate and have spent three full years analyzing every deal I came across, I just now dove off into this venture, and everything feels totally new.  I'm a big believer in practical knowledge rather than theoretical, and this experience of purchasing my first investment property is totally new, and I learn something new every hour of every day.  It's been an absolute blast, and I am just soaking up all of this newfound knowledge.

Another thing I've learned is that there are two types of real estate.  Real estate investment and Real estate management.  Often times, it seems like a real estate investor wants to self-manage properties without any knowledge of property management.  So the biggest thing I've learned throughout this process is to be able to separate the two, and as soon as I did that, things seemed to start flowing much more smoothly.  I have spent three years analyzing deals and looking at numbers many different ways, but I haven't spent any of that time learning about property management practices.  My rookie advice (If I'm even qualified to give any advice whatsoever.  If not, just ignore this part) would be to spend a substantial amount of time on learning the property management process if you plan to self-manage.  Sorry for the long post, I'm just thrilled to be in the game, and BP has certainly helped me substantially.

I have attached my analysis from the property.

If a contract has been signed, they are legally bound to it.  I would contact a local attorney to see what kind of recourse you have.

 @Kyle Grimm Great idea.  I wish more people would do this.  I can't wait to see the finished product.