All Forum Posts by: Justin Winn

https://www.sba.gov/funding-pr...

There are several options for leveraging SBA loans, a 504 probably being most in line with traditional RE investing. 

I would encourage you to do some searching and see if you can find a lender that does SBA loans and just talk to them about what you’re trying to do and they can guide you/educate you on what products they have.

Many have already said it depends… so the two ways real estate goes down in the future as I see it is if deflation occurs (not likely) and the dollar starts buying more for its value. In this case I don’t see a reason to prioritize one asset class over another. Although I’m sure there would be a lot of advertising for Gold, silver and other precious metals.

The second thing would be demand, but if you’re investing in states and cities with population growth then you’re ok. If your particular market has had a large exodus of people or businesses for some reason, then it’s time to move that money elsewhere.

I personally think diversification across asset classes and within RE specifically diversification across strategies and markets is key to protecting your investments.

Great question, best of luck in your diversification ambitions.

Quote from @Troy Albers:

@G. Doby Everyone says according to landlording 101 that you never let a tenant do any work. I get it, but here’s my story. I have a tenant that has lived in one of my houses for about 5 or 6 years now. He has a renovation business, but primarily just does flooring. He has now fully replaced all of the flooring in the house, completely remodeled both bathrooms, installed granite countertops in the kitchen, backsplash, installed a mini split in the master, repainted the outside of the house, added a brick paver patio in the backyard and screened it in. All of this has cost me $500 (the cost of the paint for the outside of the house). My estimate is that he’s done $50k (minimum) of work. Now on the flip side, if I ever need anything done at any of my other properties, he’s my go to guy. He has redone tile on about 6 or 7 houses, I’ve done two complete renovations with him, and he did a ton of work on one flip I did. He’s an honest guy and we have a great relationship. His take on it is this….”my wife and I like nice stuff, where we live, it’s gonna be nice”. Now keep in mind this is a nice house to begin with. I could probably sell it today for $400k. So under the right circumstances, a tenant like this can workout, but I also know that cases like mine are very rare. I’m lucky.

I’ve also had tenants that made repairs and then decided they liked the house enough to make an offer to buy…

also, all repairs prior to them buying it were discussed and approved prior to them doing any work.

Are you looking to possibly house hack? The picture you shared shows a 20% down payment. But if you're house hacking you could drop that down payment and possibly find that COC ROI you're looking for. As others have mentioned that all depends on what type of unit you're looking to acquire and a whole bunch of other variables, but if you're dedicated to one of those markets I might encourage you to consider the house hack.

Some additional things I think are important to consider is the major repairs you have projected. For my properties we make a list of emergent repairs upon purchase, and then a list of things to do when someone moves out. Those emergent repairs get fixed immediately, and the others we start saving those CAPEX dollars for. But those dollar amounts may also change the decision. As well, looking at expected tenant turn over between the two properties you're considering.

My gut tends to agree with everyone else, based on the information provided I also think I would hold it for now. But with it being an older home if you’re cash reserves are low, I would encourage you to save some for major repairs. Even if the home has been updated it’s likely to need something in the next 5-10 years. 

I’m really excited for you and the new journey you’re on.

@Shane Willis what a great problem to have. I don’t know enough information about your particular market or strategy to offer sound advice. But the two things that I think I would consider are:

1. What is your market doing with regards to appreciation, and rent rates. I know nationally rents are rising fast, so that few hundred bucks you mentioned might be double that in a few short years. As well, you may see significant appreciation in the asset itself.

2. To wholesale it, I would be thinking about how much turn over is in your current market and are you going to keep flipping and or wholesaling properties? If that is a method that you’ve got figured out in your market and you’re willing to keep rolling those proceeds into more and more deals, there is a good chance you can make more money over the long run.

I think looking at national trends option one sounds most appealing to me, but again, I don’t know your market or strategy.

Best of luck with your awesome problem.

@Greg Cook I personally think this depends on your portfolio size. I’m going to assume you’re working with a fairly robust portfolio given your question. 

My wife and I invest in north east Oklahoma, with close proximity to KS, MO, AR (also known as the four states area) we have decided that we will have one LLC per state, or per 2.5 million dollars in assets. Additionally, a series LLC would make sense to us once we achieve 3 or more LLC's.

Im not a CPA or a Lawyer, but wanted to share how we are planning our asset protection plan as we grow. I hope that helps, and best of luck.

The property managers I’ve used in the past made me feel like they served me, understanding also that they must serve the tenants as well. 

For the maintenance issues, you could also get a home inspection done. I like to do this every 5-7 years if I can’t go look at a property myself just to make sure nothing absurd has happened with the property. But in your situation that inspection report would also confirm or deny what they are recommending and if those two lists are at odds with one another, I might consider looking for a new PM.

Best of luck

I haven’t seen anyone mention it yet, but the price of the property could be the driving factor for your bank on why they are saying they only want to do a 15 year. 

I also have rentals in NE OK and some of them didn’t cost much, and same thing, the banks have said 15 or 20 year terms were what they were willing to lend on. 

I would recommend that either you adjust your strategy or keep looking for banks. I financed just over 50k on a 30 year with chase bank, so it’s definitely possible with smaller loans.

I really think it depends on if you can cover the mortgage if one or both of your new properties has a vacancy, major repair, etc. If you have the cash reserves for that, with a ~$100/mo retained earnings (what most call cash flow) then I think buying the two is a good idea for the long term. 

But if you’re going to lose sleep over it, then I would say you probably need to save a bit more until you have the cash for reserves. I’m OK with being uncomfortable, but not with being scared (aka losing sleep over a deal).