All Forum Posts by: Jonathan Li

@Jonathan Li Congrats on your success :) Its nice seeing another young guy doing well too!

Personally you're going to need to get your hands dirty at some point. Pick up a discount property, put some work into it and do a cashout refi later.

Also get friendly with your commercial lenders. youll get to a point where they wont even ask for your DTI, W2, etc etc.

Appreciate it! Great advice, I look forward to talking with some commercial lenders to see what products they have in store!

1 Vote

Originally posted by @Justin R.:

Hello @Jonathan Li

First of all congratulations on your first several units! Everyone has an opinion on turnkeys, but you have made an educated decision on why they work for you.

In regard to financing, if you get a handful in the same geographical area, you could possibly get a blanket style loan from a small portfolio lender. I would call around, and meet us some small local bank lenders and see if they would be open to this loan. This would then move it from a conventional loan to a commercial loan, which would free up your Fannie/Freddie for future acquisitions. Just be aware that these commercial loans are slightly higher interest, shorter terms, and typically adjustable.

Doing some reverse engineering, 50 units averaging 50k a unit would place your portfolio at approximately 2.5m. If you continue needing 25% down, your gonna need 625k in capital for your down payments alone. Realistically, you could be better served finding "deals" with built in equity or force your own equity through rehab, and this would drastically cut down your capital needed for down payments.

Best of luck!!

Thank you Justin!!! I will definitely call around to get more details on blanket style loans from portfolio lenders and see what options are there. Perhaps with a slightly higher interest, and other terms, would they allow me to cash-out for a smaller LTV?

Nice perspective with the reverse engineering, I am hoping to find a way around the 25% down! I may look into rehab deals or possibly partner with someone who rehabs in the near future, but I just wanted to explore the idea of not going that route, if there are any other alternatives in my situation!

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Originally posted by @Jerry W.:

@Jonathan Li, welcome to BP. You have done an amazing amount of action in a VERY short time. I can only give advice based upon my personal experience. One you might take a short breather and see how things work. Spend some time building your systems to handle the increased volume. Make sure you have good sources for plumbers, electricians, handymen, etc. I myself tend to buy distressed properties and fix them up to rent, mostly because cash flow stinks in my area. Buying houses in my area ready to rent in most cases would result in negative cash flow. You might consider a 4 plex next. it is a halfway step between duplexes and apartment buildings. You can still use conventional financing. See how managing that goes. Let us know if you manage yourself and how your systems are set up as well. Depending on how things go you can decide if you want a 6 or 10 or larger commercial property. You might actually go one full year to make sure your rental income will count for purposes of figuring your income to afford more loans. Your DTI will need to be looked at too.

Thank you for the warm welcome Jerry! I have almost forgotten about the almighty 4-plex, I suppose they have been rare on the market lately. I believe I have a decent system set-up where I have a good handyman, plumber, and electrician who service all my units. I property manage on my own, but I understand that this won't last forever as I scale so I am continually looking for a trusting and competent property manager in the near future. I am continually tracking my DTI in which I still have 'room'.

2 Votes

Hello!

First off, huge thanks to the BiggerPockets community, podcasts, tools and depth of thread topics; I wouldn't have gotten nearly anywhere close to where I am without the existence of BiggerPockets.

I currently work a full-time job in the engineering/construction industry in Kansas City, MO. I grew my net worth through saving and stock growth throughout the years. I have always been an entrepreneurial thinker who was always experimenting interests in all sorts of hobbies and activities to reach financial independence for me and my future family. 2018 was the year to do something much different. I stumbled upon a few REI videos on YouTube, a few videos turned into probably all the videos YouTube could offer on REI. Then I purchased and read Brandon Turner's book. I took action and went PRO on BP, and it's been quite a ride since then.

Eight months ago, I decided to purchase my first investment property, a turn-key, tenant occupied duplex. No issues, tenants paid, cash flowed, minimal service calls!

The following milestones took place since then on weekdays after work and on weekends:

May - purchase of second duplex

June - purchase of third duplex

July - purchase of a triplex

October - purchase of forth duplex

I financed all the properties through conventional 25%-down loans and the properties are more or less considered turn-key properties with minor work needed. The reason this strategy started developed in my mind was that I didn't want to 'risk' running into a construction/rehab nightmare with uncertainty. no BRRRR for me :(. I also didn't have the time to set aside to do so (full-time job requires a solid 40-60 hrs/week).

I have established that my goal is to one day own 50 units or $9,000/mo ($180/mo/unit) in net cash flow to reach financial independence.

Lately, I have been feeling lost for next and best steps forward. Although one can qualify for up to 10 conventional loans, I am taking second thoughts on the large down payments.

- Do I keep buying turn-key duplexes if they appear to be a great deal?

- or do I save my money to buy a 6 or 8-unit apartment building?

- What are other financing methods which require smaller down payments and allow me to scale quicker?

Thank you in advance for all your input!

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Awesome! I'll see you there! :)

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Hello! Is this event still on? Would love to meet you all!

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8-10% CAP, 15-18% CoCROI! Love KC rentals!

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Originally posted by @Quinten Sepe:

Thanks to all for a phenomenal time and turnout!
I hope everyone walked away having learned something, made a valuable connection, and gained inspiration/motivation for the coming year.

I've posted a brief related note to my BP blog.
Check it out here: https://www.biggerpockets.com/blogs/9877/69675-mon...

Keep an eye out for an event post about February's meeting!
...and for the January meeting follow-up email.

(for February, I'll try to find an appropriate place for a related forum post, as well, so those with keyword alerts for Kansas City get an alert about the event.)

As always, if I can do anything for you, find me here on BP.

Best,
-Q

Good job, Quinten! The event was a great success. Looking forward to the next one!

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Originally posted by @Austin Fruechting:

I can walk to this one!

Me too! Looking forward to this meet-up!!

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2018 is a new year! Thank you, Brandon, for bringing the passion and interest in REI out of me!!! Through your book and videos. I really want to purchase my first Real Estate Investment in Q1, 2018!

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All Forum Posts by: Jonathan Li

Jonathan Li has started 2 posts and replied 21 times.

Post: I'm at 11 units, now what? Thoughts welcomed on what to do NEXT

Post: I'm at 11 units, now what? Thoughts welcomed on what to do NEXT

Post: I'm at 11 units, now what? Thoughts welcomed on what to do NEXT

Post: I'm at 11 units, now what? Thoughts welcomed on what to do NEXT

Post: Monthly (2nd Thursday) Plaza Meetup

Post: Monthly (2nd Thursday) Plaza Meetup

Post: RENTAL ROI in Kansas City

Post: Casual Meetup in Westport [January]

Post: Casual Meetup in Westport [January]

Post: The 7 Steps You Need to Get Started Investing In Real Estate