All Forum Posts by: Juan Lizarazo

Hi! So, I have 4 properties. What do you guys use for book keeping, to categorize transactions and generate Profit and Loss reports for your CPA? 

I am using stessa, but I am wondering if there is something better out there I should look at, easier to use. 

Use other's people money to make you money. 

You have cash and cash rules. You can get at least three properties with that money. 3 down payments of 30k plus some closing costs. Then you are spreading the risks in three properties vs buying just one. When one is vacant the others make up for the mortgage payments. 

You can also be aggressive and make a cash offer, under asking. Don't pay list price or asking price. Everything can be negotiated. For example asking is 95k, offer 85k or 80k all cash. Then you can do delay financing and cash out 75 percent of the appraised value (usually after repair value). So you get a good discount and cash out to repeat the process. Now add BRRRR to that mix, you can cash out with the after repair value and have all your money back in your hands to repeat the process.

Yes, you need to build a team first, a good realtor, a great property manager or management company with a great network of contractors and vendors. A trusted title company. A great mortgage broker and local bank to get the best loan terms with the lowest fees you can. A trusted property inspector. And one insurance broker to get her best terms and policy and coverage on the property.

You can build your team without leaving the house, but that's very important! Start with a good realtor and ask them for recommendations in their network for the rest. It's a great start. 

Its not easy, I've been trying to enter the Ohio market and I am still out of luck finding a good property manager there. Many don't respond, or call back which is a red flag as if they do business like that, imagine giving them keys to your properties.

Build the team first! 

You can just use a recent pull if you bought something recently. Or provide them with at least the credit score which you can get for free from your Credit card, most provide these days the free credit score check. Or use Credit Karma (free, no credit pull). So at least they know what they are dealing with prior to an actual pull. 

There is no silly question! never be afraid of asking! we all have been there. 

So, when you start working with a realtor, you don't pay anything out of pocket. You can do the tours and place the offers. Once the deal closes, that's when realtors get paid. At that point you will also pay a brokerage fee, it is usually a couple hundred dollars and it's baked-in your closing costs. 

The seller is the one that pays the commissions for both buyer and seller agents. Usually 6% total of the sales price, between the two.

Regarding touring the houses without intending to buy, I would not recommend this. I'd say, look at the online pictures, some houses have 3d tours. Run the numbers and determine if it would make a sound investment for you. 

Please do not waste a realtor's time if you don't intend to place an offer or buy a house. They make a living off their commissions and touring homes for you would be a lost opportunity cost for them as they could be touring homes for clients that intend to buy so they can make a commissions and have income.

1) You report $0 income, or any loses if you did have expenses for the business. The filing, it depends on how you are taxed, sCorp, disregarded entity, etc.

2) I don't understand the question.

Ultimately, just talk to your tax advisor / CPA. They can provide tax advice and tell you what and how to go about it, it won't be hard, they do this all the time for a living.

They work great! As an out of state investor, I never visit a property I make an offer on.

All virtual! I asked my real state agents to take videos for me so I can re visit the property though those videos anytime and pause and inspect whenever I want. I ask them to video call me once they are done so they can walk me through it and tell me their thoughts. The videos help so I can re visit the moment and make a decision whether is to make an offer or back out during the inspection period after I get the report. 

Real state agents are happy to do this. At the end of the day, they are working for you to close the deal so they can earn their commission. They don't care if you visit the property in person or virtually. They care that you find a property to make an offer on and that you close the deal after that. They'll make anything they can in between to help you close the deal, so they get paid.  

I don't think you are ready to start making offers but you are on track. 

Get pre-approved and figure out how much you need for your down payment. Are you planning to house hack? I don't know about Canada but here in the US if you intend to occupy the property, you can put as little as 5% down. If that was the case, you need at least 15k for your down payment for a 300k property.

1.Get pre-approved, know how much you can afford and how much down payment cash you need.

2. Pick a market, pick a few neighborhoods

3. Analize the deal and make sure you will make money: Rental income will cover all expenses, vacancy (reserves), capital expenditures (reserves), property management, property taxes, insurance and then it will put some money in your pockets.

3. Start making offers.

I have to go with DSCR. Commercial with balloon payment ARM 5 or 3 doesn't sound too good.
Those seem to be the only options I have. I checked with two brokers that work with a lot of lenders.

I can't do conventional at this time. I know you are in TX and this is for an Ohio deal, I am curious though what are you offering to your TX clients these days with DSCR? 

Hello beautiful community! In the ever-evolving landscape of investments, I'm curious to hear about the strategies that savvy investors are currently employing. I am navigating the financing of a deal via a DSCR loan and have encountered an intriguing decision point.

The options I am presented with are as follows:

1. 1. Opt for an interest rate of 9.125%, which would result in decreased cash flow and a larger payment amount, with a lesser contribution towards principal. However, this option provides the advantage of only a 1% prepayment penalty for the first five years.
2. 2. Choose an interest rate of 8.5% (no point buydown) but accompanied by a steeper 5% prepayment penalty, which reduces by 1% annually. The core distinction between these two options, other than the interest rate, lies in the varying prepayment penalty scales: 4% more for the first year, 3% for the second, and so on.

With the latter option, my cash flow is healthier in the present context. Although one might think of refinancing as a viable approach when rates drop, predicting such shifts in the financial terrain is, unfortunately, beyond our skills—it could be a year or even a decade away.

I would love to gain insights into how many of you are structuring your financing in today's market. I am inclined towards the option offering a lower rate, as it provides a superior cash flow in the present and future, I will make more money starting today and my tenants will pay off more principal sooner. Nonetheless, should I choose to refinance within the next five years, penalties will invariably factor in, and thus any refinancing would necessitate a significantly more favorable rate to make it worthwhile.

Your valuable perspective is greatly appreciated. Thank you in advance for your insights!

@Account Closed has pretty good rates right now (Lower than other lenders I am working with). Still in the 8's but better than the 9's.

Talk to him and compare with multiple lenders and brokers, you'll find the one that will work for you and your unique situation.