All Forum Posts by: Joel Florek

@Steve Vaughan Good call on the in state tuition. I was able to graduate from a great in state school and have only $20k in debt. Its a lot better then my friends who graduate with $40k, $50k or even more. Many people have a cable bill that is more expensive then my loan payments!

@David Dachtera I agree with you for the most part. But given you seek out a reputable program you can get those in school, although it is still painfull with the noise. I was very fortunate to go through a great finance program through Michigan Tech Univeristy. We learned the ins and outs of the finance world including managing a $1.3million portfolio. Yes this was only stocks and bonds and I think they could have done a lot more with personal finance but I would say my education got me 70% of what I needed to know and I filled in the other 30% to be competent and able to be confident closing real estate deals.

@Katie Schlickman Good advice!

Absolutely stay in school. I just graduated, and to be perfectly honest there is a lot of crap in school you will never use. The 4 years seemed to drag, but you also get an experience out of college that fantastic if you seek out opportunities. I traveled the country and the world needing very little money out of my own pocket for all the trips. Those are things that I will remember my whole life.  

In the real world it is nice to have something to fall back on. If something ever happens in life I know I can grab a corporate job with a great benefit plan and make my $70k a year no problem. With more experience in life that salary potential only goes up.

That being said if real estate is what you want study finance, accounting, and if possible go after a real estate degree from a school that has a great program. I personally am very happy with my finance degree because I can speak investments with the people who have money and can help me close big deals. Since I know their language but am young, have some experience and am willing to get my hands dirty older investors ready to sit back and let their money work for them  through me.

As Katie had said though, I wish I had gotten more involved with local real estate while in college other then just helping to renovate/flip my parents homes. I really wish I would have gotten in with the local developer/residential multi family property owner. If I had that type of management under my belt and could have been in on watching him close deals to build 30 unit and 50 unit complexes in AAA location real estate I would be a lot more comfortable understanding the moving parts as I try to close current deals.

Stay in school but be a hustler at the same time and build your business. School will seem to get in the way but being able to do both is important. It will speak leaps and bounds more then just quitting school and doing real estate alone. I'm not saying you cant quit and be successful, but the merits of saying/showing you committed your time and financials to furthering your education says a lot about your character that certain people in the world value tremendously.

I have been working to evaluate a deal for 16 units on a lake in the town I currently invest in. All financials have been reviewed and I have toured the property for a first inspection. I am confident in a purchase price between $570k and $610k for the building (owners are asking $700k but have been for 2 years). I have a bank that is willing to finance the deal between 4% and 5% for 20 to 25 years with a 5 to 7 year balloon. The bank is willing to lend with $120k in assets tied up. That being said in conversations the bank would be willing to lend on a 15% down payment. I have other assets that would cover the $30k to $40k in additional guarantees so I am looking for an investor to bring $90k to the table.

I would prefer to keep equity control and find an investor willing to lend at 7% to 8% depending on the amortization period and balloon. If someone could help give advice on how to find people like this or know of someone who may be interested that would be a huge help!

I am also open to other suggestions on closing the deal so please provide any advice you have.

Currently I have an investor who is very interested in the property and would like to go 50/50 with me if he decides to continue. He would loan me 50% of the down payment and we would split income at the end of the day, although I would get the property management fee as well along with some of the maintenance labor.

If anyone would like to know more or can help please advise or reach out to me. Numbers on the property are below. These are based on actuals over the past 3 years and projected moving forward. The Refi 1 column is used for expected 5 years down the road when I refinance the property. I have an excel sheet where I can play with different types of financing both initially and use a more conservative estimate during the refinance. This allows me to make sure I am not setting myself up for a bad day 5 years from now if things slow down, interest rates go up and money at the bank is tight.

@Taylor Marvin @Dave Foster @Kyle J. @Bill Exeter Thanks for the reply's. 1031 has been a concept I have heard of in the podcasts but never read up on at a very in depth level. Thanks for the quick crash course. As for my original thought... I guess I will still be paying Uncle Sam!

On another note. If you get a chance please take a look at my other recent post. Here is a link. This is the hot item that I am working on right now.

https://www.biggerpockets.com/forums/311/topics/249426-looking-to-secure-financing-for-16-units

I currently own a fourplex and am working to buy additional buy and holds. My strategy for purchasing forces me to be significantly leveraged in a property. I would like to pay down those debts as fast as possible to a more conservative level and I am particularly good/experienced with renovations and would like to use flipping as a way to generate capital and reduce my debt. Can I 1031 the proceeds from a flip into an existing property that I own as a way to reduce debt?

I have been working to evaluate a deal for 16 units on a lake in the town I currently invest in. All financials have been reviewed and I have toured the property for a first inspection. I am confident in a purchase price between $570k and $600k for the building. I have a bank that is willing to finance the deal between 4% and 5% for 20 to 25 years with a 5 to 7 year balloon. The bank is willing to lend with $120k in assets tied up. That being said in conversations the bank would be willing to lend on a 15% down payment. I have other assets that would cover the $30k to $40k in additional guarantees so I am looking for an investor to bring $90k to the table.

I would prefer to keep equity control and find an investor willing to lend at 7% to 8% depending on the amortization period and balloon. If someone could help give advice on how to find people like this or know of someone who may be interested that would be a huge help!

I am also open to other suggestions on closing the deal so please provide any advice you have.

Currently I have an investor who is very interested in the property and would like to go 50/50 with me if he decides to continue. He would loan me 50% of the down payment and we would split income at the end of the day, although I would get the property management fee as well along with some of the maintenance labor.

If anyone would like to know more or can help please advise or reach out to me 

Just bought a 4plex about 4 hours north of Milwaukee and here are my numbers for your reference(I rounded up my dollars for simplicity)

Purchase price of $125k

Renovation of $12k (out of my pocket)

Rents at $2300 total(expected to be near $2450 in the next 3 years)

Utilities $250 a month average (Have a plan to reduce down to $175 a month)

Insurance and Tax $500 a month(pushing for a reduction down to $400 a month)

Maintenance $150 a month

Debt Servicing on $100k  is $700 a month (bank loan of 5.25% for 20 years)

Debt Servicing on $25k is $200 a month (personal loan at 8% for 20 years)

Total monthly expenses are $1750

Monthly cash flow with full occupancy is $550

At 15% vacancy my ROI on $12,000 of my cash is 20.5% annually. I expect vacancy to be closer to 10% based on current tenants and local renter demographics.

Please note I do not factor in property management into my numbers at this time. I manage the property currently but plan to hand it over in the future when my debt servicing is reduced.

@Brian Moore Thanks for that information.

On receiving money under a loan as a promissory note. Are there restrictions on receiving money from non-accredited investors or other restrictive rules or is it a pretty open financing opportunity given you complete the paperwork?

@Jessica Monroe

I would love to know more about what how you were able to get your family excited about giving you money to get going. Right now I have my parents who were excited and able to help me pick up my first 4 plex but I am wanting to go buy more. I have a 16 unit building that I want to buy right now and trying to find the best options to do it.