All Forum Posts by: Josh Springer

I would make sure to check this with the inspector before hand. I don't know if certain states require it, but I've seen a ton of inspectors that don't make that guarantee and it's expressly written in the inspection. Get it in writing, at least via email, BEFORE you have the inspection done. 

An example is my current residence. I always thought it was a normal thing. I asked if he was insured and he showed the evidence of it. Therefore, I assumed his inspection were insured for that. He completed the inspection, I paid for it, and went through all of the findings (I was out of state at the time). 

After receiving the inspection, the report was littered with "I do not guarantee or warrant....blah blah.... but upon inspection noticed X and Y" When I say littered, I mean every section of the house. 
"I do not guarantee or warrant the roof, but here's what I found"
"I do not guarantee or warrant the living room, but here's what I found"
So on and so forth.

Background
I was initially interested in REI around 2013, but since then pretty much only purchased my personal residences (with equity) and sold as prices appreciated. I've frequently considered rental properties, but never pulled the trigger, until now.

For the past two years, I've traveled nearly weekly for work. With that, long hours on the road, plus travel, and a family at home. I had all the standard excuses ("no time", "too busy", etc etc).

On January 14th, 2018 - I came across Bigger Pockets. I listened to a couple of the starter podcasts, then listened to Episode 247: The 90 Day Challenge. @Brandon Turner challenged listeners to purchase their first property in 90 days (I'm a little late to the game, but that was my first day on BP!). At the end of the podcast, I decided to make the plunge.  I didn't know how I was gonna get there, I just knew I was going to. So I told my family and friends, then began my journey for my first rental property.

I'd say in the first week I pretty much binged on podcasts, youtube videos, etc for roughly 6-8 hours a day (actively and passively). I picked up and read a few books as well (I can list those later if interested). 

In the beginning, I got a little distracted, because the wealth of knowledge was a little overwhelming. I even tested out a ton of different sites, looked into a ton of different strategies for investing in general. Wholesaling, lease options, seller financing - the list goes on. 

Today, March 9th, 2018 - I just closed on my first deal (54 days)!!! I had some points of frustration in the process, but mostly due to it being a first time experience (outside of personal residence).

What have I learned so far?

• Connect with a local investor group. 
  
  • Luckily, we have a very active, and very unique group. No sales pitches and no BS. Attended the meetups and met up with a lot of folks for coffee or lunch outside of the regular meetups.
• I learned what bandit signs were.
  • From billboards to the little yellow signs. I started writing down every single number and calling. Had a couple of deals fall through (sellers got cold feet), but still active with all of those folks.
• Ride Alongs
  • I rode with primarily wholesalers. This is actually where I found my first partner, but I met with lots of folks. One of my weakest spots is in doing repair estimation and really needed some eyes on with someone that had experience.
• Find local lenders
  • I was skeptical at first. I did rate shop, but really, none of the traditional lenders could match what I was trying to get. Although there were some issues in the process, my local lender went head over heels to resolve issues throughout the process. I could call, text, or message this guy almost any time day or night and he would respond quick! Good luck anywhere else!
• Lots, and lots, and lots, and lots of offers
  • I think I burnt out one of my agents, because he stopped responding after a while. I put in roughly 30 offers myself. 
• You can get deals off MLS!
  • I ended up partnering with someone who also invests. We saw a property together and he wrote up the contract for offer about 30 minutes later. We were accepted that afternoon.
• Things can change quickly in financing
  • Rates have been changing pretty fast lately. Although it might not seem like a ton, a .25% different (plus points) CAN happen in 30 days.
  • Some lenders have different down payment requirements depending on SFH or MFH. I initially approached my lender expecting a non-owner occupied SFH that fell through. I never asked if there was a difference if it was an MFH. Turns out, there is. It's a 5% difference in down
• Analyzing gets easier and faster
  • I learned some of the tricks for quicker analysis (i.e. % rules, etc). These weren't the end all be all, but gave me a good rule of thumb
  • If you focus certain areas/regions first, you already know what to expect for rents. This speeds things up, you learn over time
  • Do your best to throw ballpark figures in with pictures, street view, etc. Don't get too crazy and waste too much time. On many of the properties I saw, you really needed to be there for the estimates. Estimate high.

Deal Information

Notes: For my first deal, I opted to partner with another local to manage and repair the property. The equity is a 65/35 split, including costs and profits. 

1) Neighborhood
- Class C
- Lots of renovation, on the upswing

2) Property Purchase (Duplex - 3 Bd/1 Ba Units)

Purchase Price: $45,000.00

Purchase Closing Costs: $4,583.00 (final, includes any points, fees, etc)

Estimated Repair Costs: $5,000.00

Total Cost of Project: $54,583.00

After Repair Value $60,000.00

Down Payment: $11,250.00

Loan Amount: $33,750.00

Amortized Over: 30 years

Loan Interest Rate: 5.000%

Monthly P&I: $181.18

3) Income & Expenses
Current Rent:

• Unit 1: 0 (vacant) - 625 expected
  
  • 5k estimated repairs above
• Unit 2: 550
• TOTAL: 1175

Expected Rent (still under market)

• Unit 1: 625
• Unit 2: 625 
• TOTAL: 1250

Total Expenses:  693.84
Initial Cashflow: 481.16 (240.16 per door)

Expected Cashflow: 556.16 (278.08 per door)

@Hannah Canario

I've done a ton of shopping around conventional loans lately. Below are what I've seen pretty consistently. Keeping in mind I have good credit - miles may vary here. :)

I wouldn't recommend under 20% because then you've also gotta pay PMI.

1-2 Properties:
MFH: 25% (down)
SFH: 20% (down)

3+ Properties:
MFH: 25-30% (down)
SFH: 25% (down)

Hey all! I'm an investor myself (newer), but have some leads on properties where seller financing (free and clear) will be an option.

In total, roughly 90 units split between a few old-school investors that own all of them free-and-clear and all properties have been fully depreciated. In most cases, they're all at an age where they want to become more hands-off, and want to finance to maintain some passive income. Their plans are to liquidate their rental portfolios over the next few years.

One person, however, is interested in staying in the game, but wants to change his focus from MFH to SFH over time as well. I'm aware of most of the benefits obviously from my side and some from the seller's perspective.

The question I have: Are there ways to 1031 from properties sold via seller financing? I've looked for some resources, but haven't found anything other than general statements. I'm trying to figure out the real benefits from a tax perspective. As far as I can see, they're taking the hit over a longer period of time (and making additional gains on the interest), but not sure if they can defer those gains into another property. 

My perspective from a new REI as well and what I did to find my "mentors". Keep in mind, I travel about every week for work, single source of income for a family of 3. So folks saying they cannot find time to do this I don't (personally) feel have the motivation or have fear of moving forward.

I listened to the "90 day challenge" and decided I was going to (and am currently about to achieve) my first investment property in 90 days. I had no clue how I was going to get there, but come hell or high water, I was going to. I'll be closing on my first good deal right at that ~85 day mark. I went through about 30 hours of podcasts (WARNING: Beware of the shiny object syndrome with podcasts) and 3 books that first week. 

The SHORT summary is that I don't believe in a dedicated/formal mentorship. I value an extended network of mentors (just like I offer at work), so I can learn different facets from deep experience in different areas, instead of broad knowledge across the board. I would use 1 or 2 "mentors" as an anchor and accountability partner. 

Find one that has extended experience ("years") and another that's a little further than are you're at in your REI (1-2 years). Both sides give extremely valuable insight. 

Meetup Groups:
- Located a local meetup via meetup(.)org and BP. Went out to lunch with the group organized and a couple of out of state investors. Actually just attended my first formal group meetup last night. 

Whole Sellers:
- Jotted down any bandit sign numbers and linked with wholesalers. Contacted every single one, conveying my interests and asking to meetup or talk with them for a bit. Did some "ride alongs" to learn some of the areas and varying property conditions, estimating, etc. These guys are invaluable.

Property Managers:
- Contacted a couple of property managers. Again, conveying some of my interests, and talking with them about good market areas, where to stay away from, what vacancy rates might look like, areas they're seeing trend, rent rates, etc. These folks are more than happy to talk with you, because a solid relationship can give them good returns for PM. 

Lenders:
- Connected with a few local lenders to help me navigate and learn both the traditional/conventional strategies as well as "creative" funding. 

Flippers:
- Got to do a couple ride alongs, similar to the whole salers above. Got to see everything from cosmetic to replacing everything down to studs. 

Renters:
- Again, same as flippers, wholesalers, etc - noticing a trend? :)

Final Note:
- Not once did I have someone ask me to help out. I offered it, but in most cases, they were all interested in forming a relationship that could blossom into a mutually beneficial partnership. 
- Don't worry about formalities. Some folks like that you specifically request a mentor, some don't. Just gauge the situation. Some are extremely candid, others need a little time an rapport. 

Thanks for the information @Derek Lacy @Colte Utley . This parcel is pretty deep in the AE zone. I'll probably be passing on it. 

Hey All! First, sorry if this is mentioned elsewhere. There's so much material to dig through.

Right now, I'm considering a property thats somewhat a "house hack". The parcel contains one detached SFH and 5 units for cashflow. The catch, I need to purchase flood insurance.

My question, do you typically purchase flood insurance per unit on the property or can you purchase a blanket flood insurance policy to cover all units?

investor

a person or organization that puts money into financial schemes, property, etc. with the expectation of achieving a profit.

In that same regard, why get hung about about definitions? At the end of the day, it's a business. You're either INVESTING your money, INVESTING your time, and LEVERAGING your expertise.

Simply put, time is money. It drives me crazy that there are arguments in books that cause just this kind of confusion. I'd say stop getting hung up on definition and word.