All Forum Posts by: Account Closed

Correction : I see the business credit aspect has already been mentioned. Thanks Albert!

I think it's helpful to view CC's as a tool to get the job done...a very sharp dangerous one! The beauty of CC's is that they're fast and no questions are asked - ideal for an ambitious beginner seeking to cut their teeth. Also, much of the discussion is limited to personal CC's and not business cards, many of which do not report on your personal credit (unless you miss a payment). The concept sounds great until something goes wrong - then you're screwed!!  How about this - think about employing a strategy using CC leveraging ONLY if you have the liquidable cash at hand to bale yourself out if something goes wrong. It takes time to save that puke of cash but once you have it you can feel more confident about leveraging CC's. Not having a proper realistic exit plan is equivalent to giving your future self the middle finger!

Alexis - go with the stable, historically-proven neighborhood. Anything up-and-coming in DC is either already exhausted or occupied by developers with certain entitlements/crony relations with the city. I would stay out of DC and focus on areas immediately outside the city in Virginia. Your cash flow will be tight the first 2-3 years, but will improve as property and rent values increase. Also, one added value is that 2-year leases are very common for Arlington/Alexandria. You'll have a better opportunity to score a quality tenant who will occupy your unit longer if you go that route. I would argue that's preferable over rolling the dice on a neighborhood that is waiting for re-development (from which you will draw lesser quality tenants from). Just my thoughts - .  -  Jonny

Hi Alexis - I'd like to put in my suggestion for the Fairlington neighborhood. It's at King St and I-395 in Alexandria (technically Arlington). The major benefit is that it is a well managed HOA, many local conveniences, nice range of units (some very large, other 1bd 1bth). Prices are in your range. Also, it is a 5 minute bus ride away from the Pentagon making it an ideal place to live for incoming military families. If you were to buy a house there and rent it out, you would have a large pool of quality tenants. I am a realtor/property manager who lives there and this neighborhood is my specialty. I'd love to offer my service to you in any way helpful. Thanks, Jonny Reck

Hi Josh- just in case you might need a property manager, I would be happy to serve as yours. I live in Alexandria and would charge 8% of gross rent and 1/2 of the first month's rent for new leases. Let me know if you're interested.

Hi everyone - I would value any helpful input on this scenario:

I've recently utilized an approach set forth by Ali Boone in her article, "How to Best Structure a Partnership for Investing in Rental Properties". She mentions a partnership setup where a partner puts forth the required down payment. The other partner involved (who does not have the capital to provide) assumes the proper management of the property. In return for the capital contribution, the partner is given ~30% off the top of the Net Income. After that the partners split remaining Net Income 50/50.

I've presented this to a variety of sellers (more accurately their brokers) and it has been met with much interest. I have offered the seller the position as a passive partner - the property being held within an LLC or within a GP/LP relationship. My intent is to have them sell the property to the business entity (ie, me and the seller) and for the seller to provide the down payment needed from the proceeds of the original sale.

Can anyone give insight as to how to pitch this to lenders? How does closing work for a scenario like this? Would I have better luck working with the seller's bank that holds the current mortgage (ie, they know the property and seller)?

Thank you!

4 units or less is a different story...

Assuming you are referring to 5 or greater units, then the answer is no. The best you can do is 83.3% for market rate properties. Also, keep in mind that there are scores of additional (expensive) fees and a very long application process. See various sites and lenders that talk about FHA 223F mortgages: https://www.hud.loans/fha-223f/

Thanks everyone. We can chalk this one up as "don't do it through conventional lending unless you look flattering in orange jumpsuits"!  I appreciate everyone's thoughts and feedback. This is one amazing value-add resource that BP provides

@michael le - you're very right! Banks have total freedom to approve or deny at their discretion. My thoughts were more toward the federal requirement for appraisals to be made and the influence/power the appraisal carries in the acquisition process. I can't help but 'feel' (@Tom Mole!) that instead of being available as a helpful tool that gives clarity to the buyer, the appraisal is more the determinating factor for value (as opposed to demand). Maybe more opportunities for deals could be made without the power appraisals have been ascribed by regulators? Just thinking. Your thoughts? Thanks - Jonathan