All Forum Posts by: Joe Salimao

David,
Your quote:
"Like buy and hold when you start... Crazy stupid."

Could you explain what you mean by this? I am a new investor and this is my strategy.
Joe Salimao

About two months ago I was interviewing a realtor and they told me that i wasn't going to find a lot of good deals in this market. He said it is very difficult to find foreclosures now and when you do they just aren't budging on the price.
Never seen him again and hope to keep it that way.

Hi guys,
Here is my question.
How does one build a rental portfolio of say 30+ properties without tieing up your own money in the process? This is my goal but I see that it may be extremely difficult to get in and out of a property at <70% LTV. The reason I use 70% because this is the current max of a refi set by Franny/Freddie.
If I don't do this I don't see how I could get out without leaving my money in the property. If I left mnoney in say 10 properties I would be out of cash completely.
Maybe I can find mortgage companies that refi at a higher rate but this will of course affect cash flow. I can also look for subject-to deals.
I hear a lot of people say landlords only need a property at 80% LTV minus repairs but I am assuming they are leaving money in the deal.
What do you experienced investors who have a large number of properties do? Do you just have a large amount of cash to tie up?
Thanks for being patients.

Brandon,
That sounds like a great deal to me. After the rehab you will only be in to it for 43K (~57% LTV). If this numbers are all accurate I would say this is a very good deal, of course you should have a realtor give you comps and check the repairs out yourself.
Sounds to me like you have enough room in there to flip it but again it depends on how accurate those numbers are. Even if you have to hold it for a little longer due to the slow market you should be fine. If it is in a decent neighborhood a lease option would be a good plan or maybe even a backup plan if you can't sell it within a certain length of time. I think lease option is a good strategy but I think it should be in a decent neighborhood where you are more likely to get tenants who will actually qualify for a loan in the future. I don't know what neighborhood this is in but I can guess by the type of area by the ARV.
Let me know how you make out.

I know a really savvy investor who told NEVER, EVER invest in a property for the appreciation. He told me a true real estate entrepreneur doesn't count on appreciation they count on making money going in an making sure it produces cash flow so it is a performing asset rather than a non-performing asset.
This is his opinion but I do happen to agree with it. I see appreciation as a little bonus if it increases more than current rate of inflation, which is a big if with the way this government prints money.
Make your money going in and make sure it is a performing asset. This is especially important when you go to get a loan for your next deal. If the first isn't negative cash flow are they going to be willing to offer you another loan?

I am an Electrical Engineer for Lockheed. May sounds cool but it isn't. Looking at slowly moving to REI full-time.

Travis,
So you actually made 20K on the property and it cash flows?

Yeah I really don't get the mobile home thing either. You still have tenants and tenants who are still probably going to give you some troubles at some point...we're not talking about renting in upper class neighborhoods.
I think he may be referring to the maintenance costs which are probably lower in mobile homes. With this said you really don't get any appreciation so you have to weigh the lower maintenance and no appreciation with higher maintenance with good appreciation. I don't think it is close. Appreciation on SFH would out weigh the other scenario.

I have looked into them but they are too expensive for me at this point. I do think they help but the cheapest ones I saw was like $70/month.

Jon,
As always your posts are very much appreciated.

I will look over the 50% rule and apply it into my business plan.

I am not sure if I want to do the PM myself. I am a little nervous to do that to be honest. I think I will start off with a PM.

While fix and flips are a very good way to make a living they do not produce long-term wealth. They can produce immediate wealth but when you go to retire then what? My rentals are my retirement plan and the flips will serve as my job which produces some immediate wealth for me. Could I live off of cash flow from 25-30 properties? Probably, but how well? Now when these homes are paid off I am golden but while they are just cash flowing it won't put where I want to be and it won’t provide the lifestyle I would like to provide for my family. I could just keep obtaining more and more properties but I am not sure how many I actually want and also not sure how I would get around the 10 properties/person rule.