All Forum Posts by: Jonathan Oh

Purchasing a rental through a TKP is no different from purchase on your own. You can do whatever you want with the equity you build. But like @Amanda G. stated, it can be difficult to pull a HELOC from an investment property. But I have heard of investors doing exactly that, so if it is something you absolutely need, then shop around for lenders that'll work with you on that.

@Raj Kannan Take action my friend. Like a lot members already said on here, there is no bad time to invest. I believe that there are good times and great times. Focus on a market and get educated. This is a long term play. People that bought at peaks decades ago are doing fine now if they held onto that property.

@Jesse S.

There could be several reasons for this. One could definitely be what you're thinking - overly-eager investors who are afraid they are missing out on deals. And they assume because it is "turnkey" that the property is free of any issues. But they may also be some investors who knows the market very well. For example, I invest in KC and generally know where progress is occurring and where rental demand is strong. I also know, which areas are safe and which areas should be avoided. If I get an address, sqft, beds, and baths of a property - I can quickly figure out market rent and see if there is something to pursue. If there is, then like many of the BP members above are saying - reserve it and put contingencies in the contract making sure that the tk sellers have indeed completed all the rehab they stated. Also, I don't know about how your tk providers handles things, but the ones I've purchased through accepted backup offers. Deals do fall out, so keep an eye out for that. You have to accept that competition is fierce right now, but don't let that stop you from picking up properties that you like.

Hope this helps. Feel free to message me if you have other questions.

@Brendan Connolly It might help to let BP members know where the properties are located and where you are looking to invest. 

1 - Cash out refinance, HELOC (Never done myself, but I have heard it can be difficult to get), or just get financing. I get the impression that the 4-plex is doing well so I personally wouldn't sell it.

2 - Whether you go with LLC or not, is a question that only you can really answer. Do you own a lot of other assets? If you do, how comfortable do you feel having them exposed? You should consult with your lawyer and make that decision based on their advice and your tolerance for risk.

3 - I am not a huge fan of paying off properties especially if I just have one. In your case, you would be tying up most of your capital that could be used to expand and diversity your portfolio. If something happens to that 4plex, all that capital is at risk.On the flip side, you have a property free and clear with much higher cashflow. You will likely be able to weather any downturns if you keep the units rented. So again, this comes down to your risk tolerance and your goals.

Hope this helps. Feel free to message me if you got more questions.

100%. I own a rental built in 1910, but it was in great condition. It's been over 2 years and it has been cash flowing great without any major issues. It is very possible to have a house built in 1900 in better shape than a house built in 1980. It's all about how well it is maintained. Think about the White House. It was built over 200 years ago, but it still stands strong today.

@Johan Yang For older homes, you want to consider checking for lead-based paint, asbestos, tube wiring, lead pipes, etc. You can find a bunch of resources about what to look for in renovating older homes on BP. I think a lot of your concerns will be addressed with a solid inspection. The inspector will have best idea on what issues will need to be addressed and what is ok to leave alone. And don't think you have to replace capex items based on an average life-expectancy. For example, an HVAC can last only 10 years while others may go beyond 20. And since things will go wrong, always factor in maintenance and capex reserves when analyzing your deals.

If you're worried about not being able to expand as quickly, then taking some of the equity out would be a good choice. If you're a conservative investor, maybe consider pulling out cash for some, but not all the properties. We are in the latter phase of the current economic cycle, so be careful of maxing your leverage. @Bobby Stener makes a good point in that there is a time to play offense and a time to play defense. But you need to make that decision based on the market you're in and what you're comfortable with.

BTW, I don't know how you're holding the title on these properties, but if they are all under your name you may want to consider transferring these into LLCs. Owning these free and clear make you a juicy target in the case of a lawsuit.

@Rodney Phillips BRRRR involves much more work and risk, but if done right it can expand your portfolio much quicker. But like all the members above are saying, you have to decide whether you want to take on the workload because it is a lot of work. I don't know where you plan on investing, but if it's out of state, it's going to be even tougher to pull off. You're going to need to build and manage a good and trustworthy team remotely (unless you plan on flying out every week). Not trying to sway you in any way, just giving you things to consider. People find success in both routes so it all comes down to what you're comfortable with.

@Richard Gray III Nothing is stopping you from getting pre-qualified while you do you look at deals. You should know what you can qualify for, otherwise, you're just wasting your time. And when you do find that property you really like, chances are there are 10 other investors going after it. If there's a pre-qualified investor that offers a similar price as you, why would seller want to go with you if you can't guarantee that you have the funds? Have the financing in place so you can pull the trigger quick.

@Sean Howell

The insurance and taxes seem a bit high, how did you come up with these estimates? You may want to double check with county and get quotes from insurance companies. And as far "Sweet spots" goes, it all depends on the market. I'm not too familiar with Memphis, but in other markets, you can find solid cash flowing properties under $150k. I think it'll be difficult to find a 1.5% rent-to-value at those higher price points, if you're only finding 1% on the lower priced homes. But again i'm not actively invested in Memphis, so don't let me discourage you from looking for them.