All Forum Posts by: Justin Winn

This sounds like you may become over leveraged if you’re trying to take on more debt to buy notes. But I don’t know what your financials look like. If you’ve got a good process and you’ve got reserves in case you don’t get paid in accordance to your note then I don’t see why you couldn’t take a fixed rate personal loan, or similar product. I personally would not want to use hard money or other high interest debt because it only increases the risk and reduces profits in this scenario.

I hope this is helpful, and best of luck no matter what path you take.

I’m also under the impression it has to be like for like, meaning real estate into real estate, no cross asset class contamination. 

One other thing to consider is how long you’ve held those investments. Anything purchased within the past 12 months, gains realized will be taxed at your annual income rate what ever that is for you. Anything over 12 months will be 15% as capital gains.

I am not a CPA, or tax professional, so please consult with a professional to ensure nothing I’ve said is outdated or inaccurate.

Best of luck as you move into RE.

There are several variables that could make the numbers you said sound correct (loan term and rate). However, I'm curious why you want to put 25% down, and if you are using a HELOC then do you have additional cash reserves you can use in the event of an emergency? If not, then I might encourage you to wait until you have access to more capital. Also, keep in mind that a HELOC is a moving target when it comes to interest rates, and with rates on the rise currently, I personally wouldn't want to carry that for more than a few months 3-6, in this environment because you could go from 1-200 to negative in a few months.

I hope I addressed your question.

One thing I would recommend based on your post is to figure out how much money you need in reserves for your market and how much you would need for a down payment. Equity is great, but equity doesn’t necessarily protect you when a tenant doesn’t pay or a roof needs repaired. A healthy balance of cash on hand is dependent upon the strategy and the market.

My wife and I own a few C class properties and have determined for us, we feel most comfortable with six months mortgage plus one major repair as our reserves. But we expect low turn over. If our market had high turn over, or our strategy produced irregular income we would lean toward 12 months mortgage plus a major repair.

I hope this is a useful framework for something to consider.

Many states want you to have a real estate license in order to serve as a property manager for other people, so I would start with confirming your states requirements. If that is the case then factor in the cost of maintaining your license to determine if it really makes sense with the low volume of properties you mentioned.

I also work a day job and manage my own properties, but I also have help. So I would look at friends and family that you trust that you may be able to share some responsibility with. Maybe they field the calls and you handle marketing, financials, etc. In my case, my parents field the phone calls, and call the vendors, I run the financials, marketing, etc.

Finally the last thing I would consider based on your post is the capacity for my vendor list to keep up with an increased volume of work orders and your ability to follow up on the completed work. Do you have multiple vendors for plumbing, HVAC, etc? If so, vendor throughput may not be a concern.

@Quynn Costello it’s been a while since I lived in SC, but I would think you could call some of the property management companies in that area and offer to pay them a small consulting fee if they can help you. That may save you some time on researching this problem and hopefully you can keep from taking this to a lawyer, but that may be where this ends up.

I might also consider how much time is on the lease and if the tenant is likely to leave when the lease is terminated or not. But this is more of a judgement call for you to make.

Best of luck with this challenge.

I would encourage you to think about places you can easily access, or where either you or your friend have a network of other people you can rely on to help or occasionally check on your investment.

There is also an out of state meet up group that meets monthly there in Long Beach. I would encourage you to go to a few meetings with them, look for a network and maybe even check cities where you have direct flights out of John Wayne Airport so that if you need to go check on the property you can go and come back with relative ease.

If Tulsa, OK or El Paso TX end up on your short list feel free to reach back out to me, those are the two markets I’m in.

I’m curious about the construction permits required for your neighbor to build this garage. Isn’t the point of getting those permits for the city to identify problems like this and make the reenforcement of the sewer line a part of the scope of work to approve construction? I could see most cities missing this, but I would also assume if you voiced your concerns to the department approving the permits, then maybe they can take responsibility for telling your neighbor to upgrade the sewer. Unless your neighbor isn’t getting it permitted, then that’s a whole new issue.

I don’t really know what the answer is to your question. But it’s a unique situation, great question, and I hope someone else knows the answer.  

In my opinion there are two big reasons you would want to get your real estate license as an investor. First, would be if you’re doing a lot of volume with purchases or sales of your properties. The second would be if you want to be a property manager, many states require the license to be a PM for other peoples properties. Maybe a third reason would be as a side hustle to raise some extra cash for investing, but there are typically a lot of fees to maintain your license, so I don’t think it’s worth you’re time and energy in most cases.

I hope that helps, and best of luck on your journey.

The two markets I’m in have pretty good opportunities for MF. Tulsa, OK and El Paso, TX. El Paso has a university, military base, and a lot of new jobs coming in from Amazon and other distribution centers being built here.

If you have any questions about Tulsa or El Paso feel free to reach out.