All Forum Posts by: Joseph Burell

@Tyler Sample There are pros and cons to each, just depends in how passive you want your income stream. Just some real quick things that came to mind.  

Seller Financing:

Pros: Not paying for maintenance, not dealing with tenant issues, contract is filed with the county, and can foreclose on the owner if they don't pay.

Cons: Usually smaller cash flow, can't increase cash flow as easily.

Renting:

Pros: More control on income and expenses, can change tenants at the contracts end pretty easily.

Cons: Maintenance, bad tenants 

@Deangelo Mack You can do both, sell the portfolio as a whole or do a contract for each. May depend on the quality of each of the properties. i.e. if three are good and two or not, someone may want just the good ones and you're stuck with the bad ones. But talk to the people that you're interested in wholesaling them to. I personally would do the whole portfolio and if someone offers to break it up, i'd see what they offer.

@Alliya Pinckney I've found a lot of success in first getting a property under contract and then finding the money afterwards. I do everything in an LLC and so i'll go to a local bank or hard money lender and get as much as they'll lend me. If I have to do an 80% loan, i'll start texting all my friends asking who's got $1-5k laying around to get the other 20%, and I offer them a flat 10% return when I sell or refi. Keep it simple. I've done the same thing with paying for the remodel component of a flip, because I have no monthly payments on that extra cash.

Second, as far as a bank goes. I had a millionaire real estate investor mentor tell me that, he used to just walk into a bank, ask to speak to the VP and say "Hey, I heard you got money, and I want some" lol. So, of course that's exactly what I did too! Since then, that VP has funded 3 deals of mine at 100% financing (1 rental, 2 flips) because they were under market value and the flips he did a Subject To appraisal. (commercial loans).   

What I would tell my younger self for my business is focus on increasing income and not on decreasing expenses. 

@Matthew Terry I'd just go with the $87k and $88k. If you dollar cost average (DCA) the two investments scenarios at the prices you want vs him:

$87k & $85k = DCA of $86.5k

vs.

$88k & $87K = DCA of $87.5k

It's not that big of a deal, and to me the juice is not worth the squeeze. Keep the deal because it already worked at the numbers you calculated and get to closing. 

@Chris Jurgens, run your numbers and you can find out, I use this simple bar napkin math to quickly analyze, and then if those numbers work out, I analyze in depth. 

YR1 ROI= (Annual CF + Forced Appreciation + Market Appreciation) / Total Amount Invested

Run that analysis a few years, check out your ROIs, and see if you are content with the results. If so go in and do an in depth analysis and confirm. When doing in depth you can also calculate the benefits from tax depreciation and principal reduction. 

One option, depending on how many properties you have, is to do a cash out refi into a single umbrella loan. Combine all your properties into one and take out that equity and go buy more! They will probably put it under a commercial loan, so you'd be looking at probably a 20yr Amm, maybe you can sweet talk em into something longer. And interest rates right now with the Fed increasing again will be in the 6's or so. 

Chris,

I didn't run your numbers, but i'll answer some of the other questions.

1) No you don't NEED a realtor, get a purchase agreement signed, take it to a closing agent/lawyer whatever your state has and open escrow. And you're good to go for starting due dilligence.

2) As far as financing goes you have a couple other options you can run the numbers on. First, if you haven't talked to every local bank in your area, you should. If they keep the loan in house, they sometimes will loan a higher amount. 

If you make an LLC, you can go to a local bank and put it under a commercial loan. Generally 80-85% LTV (whatever your appraisal comes out to). If your appraisal comes out where you don't have put anything down then awesome. Downside to this is that the interest rates are generally higher and the ammortization is usually 20-25 yr instead of 30. But, you could get out with nothing down. Run the numbers to see which is better short term and long term.

Another option is to bring someone in with the down payment. You can offer them the tax depreciation (payable annually), the principal reduction (payed when you sell or refi), the cashflow, or the appreciation. Or a combination of any of the above. 

Corey,

Surprisingly, alot of my investors have literally come from the elevator pitch. People ask how I'm doing and I tell them I am doing real estate investing now. I tell everyone, the barber, the grocery lady, the waitress. If the opportunity arises for me to slip in a line or two, then I do and it has paid a plentiful amount of dividends. People know someone that knows someone that wants to invest. 

Just glancing at it, I don't know if there's enough meat on the bone for me personally. I would confirm your expenses. Right now you're looking at about $50/door CF/mo. Walk through the units to identify what CAPEX you for sure need to be saving for. Pull the tax records for your taxes. Can you have the tenants pay water/sewer/garbage? Can you increase the rents to be the higher amount of the two types of units?

I think confirming and researching those numbers a little bit, will give you a better idea.