All Forum Posts by: Justin Carmack

Self-improvement through college isn't a bad thing, but I wouldn't go into debt to go to school.  Invest while you're going to school... it is possible to do both at the same time.  

I was able to obtain a college degree by using my military benefits, but the only real advantage was it allowed me to accelerate my real estate investing by providing a good income.  Basically it was a vehicle for getting more real estate.

Looks like you're in Ohio so you might check out the Ohio National Guard and see if they have a 100% tuition program.  The Guard typically has good tuition programs at state universities.  You could also look into the military academies such as West Point or join ROTC at a university such as Dayton, Kent State, OSU.  Those programs provide 100% tuition.  The military would teach a lot of transferrable job skills such as leading teams, building/utilizing systems, process improvement, supply/inventory, etc.  I would look more at the officer side instead of enlisted... I've been enlisted and officer and are very different.

Don't be fooled though you don't necessarily need college or the military to be successful in real estate.  Hustle, dedication, and self-development can go a really long way in this business.  The resources are readily available.  

Whatever you do stay engaged in real estate.  After 21 years of service in the Reserve my monthly retirement check will equal about what I would cashflow from six or seven single family properties. Of course I wouldn't have earned the money to buy the single family homes without the military and my degree.

If you go to college get a degree in something that pays money, not under water fire prevention or some useless degree. 

HELOC - Great option. Typically interest only payments while the money is out of the account. You can pull money out as needed so you aren't paying interest on a one lump sum of $75k. Even if you don't use this money I would get a HELOC. Always better to have the money "at-the-ready" should you ever need it. If you find yourself in a situation where you need money it's already too late to apply for the HELOC.

401k - I don't like this because you would have to pay a 10% penalty for early withdrawal. Might look at putting it into a self-directed IRA and investing into someone else's fix/flip business. Basically you can't directly mange if you use a self-directed IRA, but you can invest. Talk with someone that knows more that me on this subject, but it's a cool option.

Savings Account - Great option because the money is just sitting there not "working" for you.  Put the money to work and there's no interest payments involved.

Brokerage Account - Any profits would be taxed which isn't good. You have two better options in the Savings Account and the HELOC.

Personally I would use savings and in the meantime get a HELOC in case you need more cash at some point.

How handy are you with making repairs?  I'm assuming you know how to make some or most of these repairs yourself.

My advice is talk with a loan officer first.  Make sure your credit is where it needs to be and find out what the bank requires in order for the house to qualify for financing through the lender.  What I would be looking for is a house that's one step away from not qualifying for bank lending, needs updates.  I would minimize the mount of money I put down on the property and use that money (that was originally intended for the down payment) to rehab the house.

Looks like you're in the rust belt like me so there should be plenty of houses that need rehabbed and can be purchased for 65%-75% of the ARV. Buy on financing with as little down as possible, fix the house over 1 year putting 10%-15% of the ARV into the house. Refinance as an owner occupied house. Either leave the money in the house as equity or cash out refinance. Go find another house, move into it... wash, rinse, repeat.

The key is getting financing  on the initial purchase.  Know what would be a show stopper in regards to issues on the house.  You need to know what would keep the house from getting approved for financing.  You need to buy it right.  And get an AN ACCURATE ARV. Don't over inflate the numbers or be too optimistic on the numbers which new investors tend to do.

Thoroughly research the area you're going to buy in.  Know values of houses in every block of the area you're looking at.  Don't get emotionally attached to a house and make plenty of offers that may not get accepted.  The amount of money you're going to make is directly related to how good of a deal you get on the front end.  Make posts on Craigslist and Facebook saying that you're searching for a house.  Talk with Wholesalers, but run your own numbers.  Some wholesalers have the tendency to make the numbers look too good for reality.

Good luck to you!

I'm goin give you the typical... It depends answer.  

House hacking is an excellent method of getting into our first house.  I would exercise a great deal of caution buying a house that you plan to live in and turn into a rental with zero or little money down... unless it's a duplex, triplex, or quad.

I bought my first house zero down and turned it into a rental two years later.  That was right in the middle of the housing crisis and I almost got nailed because I didn't have enough equity in the house when housing prices dropped excessively.  I was lucky and able to refinance and drop my payments so I could put a renter in and break even on the house. I dodged a bullet.

You could save up 20-25% to put down on a property. It wouldn't be a bad idea to have enough money put back to cover expenses should something to wrong.  That means 4-5 months of "reserve".

Or you could do what I did when I decided to expand my business.  I made posts every day on Craigslist, Facebook real estate groups, started a website (Lead Propeller), and hustled and found creative deals.  I would recommend owner financing deals which would allow you to put a smaller down payment, possibly no down payment.  The owner holds the note on the property and you pay them as if they were the bank.  There are all kinds of creative methods that you can acquire rental properties with very little money out of pocket, but it takes hustle and a knowledge to make it happen.  Don't get into anything you don't clearly understand.

At the end of the day it depends on what you're trying to accomplish. I'm in the process of buying a multi-family (11 unit building) right now. One of the things I really like about the multi-family is the fact that everything is grouped together and it's super efficient to run. If I want to make a site visit I'm not going to drive all over the state visiting multiple properties. Additionally, you can drive up the value of the investment by brining in more revenue/profit by increasing rents, billing utilities back to tenants, making improvements which drive up rents. The value of the property is directly related to how much money you can produce. You control your own destiny in that regard. It's almost like a stand-alone town. You're not dependent like you are on SFR for neighbors to make improvements to their homes, maintain them, etc.

I was "all-in" on short-term rentals up until Covid-19, which was hopefully an anomaly, black swan event, etc.  I'm concerned with increasing regulation. I'm interested in owning short-term rentals on lake-front homes here in Indiana.  The northern half of our state is covered in lakes like MN, WI, or other Midwest states.  The areas are rural and typically aren't subject to HOAs or city politics which may have a negative effect on my ability to rent the house.  The only downside is they are far away from where I live which causes difficulty.  They're also seasonal.  Profits are much, much larger though.  There's also the added benefit of being able to use it as a personal vacation home several times per year.

For years I installed laminate flooring in houses, including my own.  I found it quite durable, but ran into significant issues with water. One of my units had something disconnect in the dishwasher and caused thousands of dollars worth of damage to the flooring.  In my own house we had the 2nd floor washing machine get stuck on the fill cycle while we were away.  All of the flooring from the 2nd floor to the basement was damaged.  The first floor was mostly laminate.  We had to replace everything.  

LVP probably wouldn't have been able to handle the water that was "raining" from our kitchen ceiling, but definitely holds up to smaller amounts of water.

LVP isn't as forgiving with flooring that may not be 100% level such as older houses.

Here in Indianapolis I buy from a store called Floors to Your Home.  They purchases the end of the production runs so you might have to buy odd amounts of flooring, but typically $2 per square foot.  About $1.50 per square foot for installation.

Thank you very much!  I contacted three local title companies that referred me to an attorney.  

Great idea. I will make some calls to hard money lenders and title companies today.  Hopefully I can work backwards to find an attorney (or other) that can help on the contract.  Thank you.

Can anyone make recommendations on a local attorney that can help structure the paperwork for a seller financing deal? I'm assuming an attorney would be the best means of putting the paperwork together? Or any experts here on BP you can point me to?

Overview:

Purchase price is $90k. The seller has agreed to take a $20k down payment (he owes $20k on his mortgage) at which time we will transfer title to me and he will hold a note on the remaining $70k. I plan to make the needed repairs, hold for a seasoning period, and refinance out at 75% LTV. Estimated ARV $160. Cost of repairs $25k.

He doesn't want to hold the mortgage for too long which is no worry for me because I need to get my money back to start another project. 

Thank you. 

I'm not sure if you've done it or not but you can find the tax records on the Indy.gov website. The record will include the owner or responsible party and their mailing address.  More than likely if they are deceased the mailing address we will for a probate attorney or next of kin. 

Here's the link... 

https://www.indy.gov/workflow/...

You can check the Indiana Death Registration System website to check if the person is deceased. 

https://idrsthin.isdh.in.gov

I would just send a letter to the the person listed on the tax record to start. They might be very happy that you contacted them.