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All Forum Posts by: Kevin Hamblin

Kevin Hamblin has started 1 posts and replied 10 times.

Post: Rent is current. Tenant wants to renew. I won't. Am I nuts?

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6

@Jeff Rabinowitz

Jeff, 

This is why I stay away from traditional rentals and only do rent to own.   What a night  mare.  Glad it is working out for you, but tenants like these cost you money every time you have to send someone out there.   You are nicer than I would have been.   Complainers would be gone and rent would go up.  You may not be fielding the calls, but you still get the complaints

Post: Buying Out of State - Newbie

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6
Originally posted by @Eric DeVito:

Hello all, I am a newbie here and would like to know what steps I should take when investing out of state. Thank you.

 Eric,

You say you are still living at home.  I would recommend buying your own home first so that you can go through the process at least once before you start investing.  It is far safer way to learn the business and you can use that property as an investment to see if you can make money.  You will have lower interest rates and down payments.  

I strongly encourage you to shoot for your dreams and I wish I had started when I was a lot younger.   

Stay as close as you can to where you live when you are investing with rentals.  Not to upset any property managers, but they have no skin in the game.   They have to manage a lot of properties to make a living meaning that your property won't necessarily get the attention it needs.  

If your property is sitting vacant YOU are the one that is still making the payments, they are not going to pay you for the vacancies.  If there is a higher paying property, that is the one that will get the tenants first.  If something breaks, YOU are the one that pays to have it fixed and at twice the costs.  You pay the contractor fees and double that so the property manager can make money too. A $4000 furnace costs $8000 to be replaced through a property manager especially when you are out of state.  

You can do better without a property manager in the beginning and you will be learning the property manager side of the business and your properties will be close enough that you can handle them.  

Once you are making enough money to handle all the costs, and you get tired of the tenant complaints then hire a property manager and move to a bigger house further away.

Post: Buy and Hold, Does It Really Make Sense?

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6

Funny thing is, you can make money at real estate if you buy right and sell right.  The number of ways to buy a house combined with the number of ways to sell a house are in the 1000's.  @Toyen If you lost money doing buy and holds then you weren't buying them so that you could make money on the back side, or you were not holding them right to cash flow.  

Every purchase is it's own deal.  One must make sure the price and terms are right and you must decide on your exit strategy for any particular property before any paperwork is signed. 

The best way to make money in real estate is to do it every way not any single way.  You make your money when you purchase a property and you realize that money when you sell it or rent it.  

Flipping and fix and flipping have tax consequences on your short term income but can have big gains on your immediate income

Buy and holding depending on how you buy and hold have tax benefits but can have impacts on your immediate income but can be lucrative cash flow.  And Can have major benefits on your long term income.  

It can be a bit irritating and very misleading when someone is telling people that there is one best way to buy, sell, and invest in real estate.  

The Best way to invest in real estate is the way that makes you money.  

Be Careful of the advice you get from people on BP. There are hundreds of ways to purchase and sell a home.

If you are buying the home to live in. That opens up a lot more opportunities than if you are purchasing it for an investment.

When you are purchasing a home for an investment and even to live in for that matter, it is ALL about the numbers and the terms.

If you are going to live in the property, you can get better terms, Interest rates, less money down etc because it is owner occupied. FHA, Conventional, or VA(if you are a veteran), typically have better rates and you can do as low as 3% or less down if you are a first time home buyer. These loans can be harder to get because they have stricter requirements, but having a co-signor is a great idea.

I disagree with what some people say:  "that lease to own is a horrible way to buy", I bought my first home on a lease to own and then got financing after 3 months and made over $80,000 when I sold it 3 times on lease option. The thing to keep in mind about Lease to Own is that if you are buying from an investor, odds are that the deal is in their favor, do your home work to make sure you are getting a great deal.

If you find someone that is a motivated seller, lease to own might be a good way to buy because they just want someone to make the payment. You are not a true owner on a lease to purchase until you get title. So you are still a renter. This can be a lucrative way to buy real estate and flip it to someone else on a Sub-Lease to Own and make money on the spread.

In the case of a motivated seller, it is better to do a Owner Carry or Subject To. You then have true title (ownership) and using OPM (other people's money).

You can start a business and get a Business Line of Credit combined with Subject to or Hard Money loan with a 3 or 5 year fixed to give you time to build your personal credit. Hard Money Loans Typically have higher interest rates from 8.49% to over 16% and loan origination of 1 to 5 points. Again This is a great idea for investment properties or short term to get you into a home and then refinance in a couple of years. Remember it is ALL about the numbers and the terms.

How you buy the house will determine your exit strategy of when and how you sell the property.

If you purchase the house using your credit and with the intent on living in it, then you can sell it any way you feel comfortable and make the maximum amount of profit. If you do a high interest rate hard money loan that has a 12 month balloon you are limited to selling it within 12 months (flipping it) or refinancing it with a longer term loan(Buy and Hold).

If you do a business line of credit and Hard money loan to get 100% financing and the hard money loan is for 3 or 5 years, then you can do a short term buy and hold, sell it on lease option, for 1-2 years and you get higher rents (more cash flow), you get appreciation, You get the interest tax write off, you get larger down payment 10-15% of the future value of the house, you get the pay down of the loan, you get back end profit from the house if you buy below current market value, and you get to depreciate the house on taxes as well. 5 streams of income. 

If you do an "owner carry sell" then you get all the above streams of income except the depreciation. You still get to write off the interest you are paying on your loan but the new owner gets to write off the interest they are paying you.

So your exit strategy is determined on how you purchase the house. As a new investor please do not get into the mind set that you only have to fix and flip, or just whole sale, or just buy and hold because you miss out on many other ways to make money as an investor.

Hope this helps,

Kevin

Post: Rent-To-Own as a first investment?

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6

@Albert Melo

Albert, 

Be Careful of the advice you get from people on BP.  There are hundreds of ways to purchase and sell a home.  

It sounds like you are buying the home to live in.  That opens up a lot more opportunities than if you are purchasing it for an investment.

When you are purchasing a home for an investment and even to live in for that matter, it is ALL about the numbers and the terms.  

If you are going to live in the property, you can get better terms, Interest rates, less money down etc because it is owner occupied. FHA, Conventional, or VA(if you are a veteran), typically have better rates and you can do as low as 3% or less down if you are a first time home buyer. These loans can be harder to get because they have stricter requirements, but having a co-signor is a great idea.

I disagree with Steven that lease to own is a horrible way to buy, I bought my first home on a lease to own and then got financing after 3 months and made over $80,000 when I sold it 3 times on lease option.   The thing to keep in mind about Lease to Own is that if you are buying from an investor, odds are that the deal is in their favor, do your home work to make sure you are getting a great deal.

If you find someone that is a motivated seller, lease to own might be a good way to buy because they just want someone to make the payment.  You are not a true owner on a lease to purchase until you get title.  So you are still a renter.  This can be a lucrative way to buy real estate and flip it to someone else on a Sub-Lease to Own and make money on the spread.  

In the case of a motivated seller it is better to do a Owner Carry or Subject To.  You then have true title (ownership) and using OPM (other people's money).

You can start a business and get a Business Line of Credit combined with Subject to or Hard Money loan with a 3 or 5 year fixed to give you time to build your personal credit. Hard Money Loans Typically have higher interest rates from 8.49% to over 14% and loan origination of 1 to 5 points.  Again This is a great idea for investment properties or short term to get you into a home and then refinance in a couple of years.  Remember it is ALL about the numbers and the terms.   

How you buy the house will determine your exit strategy of when and how you sell the property. 

If you purchase the house using your credit and with the intent on living in it, then you can sell it any way you feel comfortable and make the maximum amount of profit.  If you do a high interest rate hard money loan that has a 12 month balloon you are limited to selling it within 12 months or refinancing it.

If you do a business line of credit and Hard money loan to get 100% financing and the hard money loan is for 3 or 5 years, then you can do a short term buy and hold, sell it on lease option, for 1-2 years and you get higher rents (more cash flow), you get appreciation, You get the interest tax write off, you get larger down payment 10-15% of the future value of the house you get the pay down of the loan, you get back end profit from the house if you buy below current market value, and you get to depreciate the house on taxes as well. 5 streams of income.  If you do an owner carry sell then you get all the above streams of income except the depreciation.  You still get to write off the interest you are paying on your loan but the new owner gets to write off the interest they are paying you.

So your exit strategy is determined on how you purchase the house.  As a new investor please do not get into the mind set that you only have to fix and flip, or just whole sale, or just buy and hold because you miss out on many other ways to make money as an investor. 

Hope this helps,

Kevin

Post: 20 old college dropout seeking advice about real estate (Srilanka)

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6
Originally posted by @Sadun Hemal:

Sadun,

First off Congratulations for having a dream and starting to pursuit it.  It is easy for anyone from anywhere to purchase real estate in the US.  It is a lot more difficult to purchase real estate here if you do not have any money and you are not here, but it is not impossible.   Finding the right people, and finding a way to do it even though it may not have been done before can make you wealthy and achieve more than you may have ever dreamed.  

I think that what David is trying to say, is it is better to have a college degree because it gives you more opportunities, but more than that it gives you connections, and in America you do not have to have an education to be successful.   Famous Amos of Famous Amos Cookies became a multi millionaire off his Cookies and he only had a 3rd grade education and was dyslexic.  Sometimes being educated  can hinder people because they know too much and they cannot focus on what they need to accomplish. This is especially true right now for American politicians (joke but probably true)

The point is that you must first have dream and 2nd you must follow that dream until you achieve it.  Don't let anyone tell you that you cannot do something.  Do it and prove them wrong.  Failure is the stepping stone to success.  Because each time you fail you are one step closer to success.  

Sadun, taking focused action is what will make you successful.  Never describe your self as a drop out or a failure.  Because the way you see your self and describe your self to others could be a self fulfilling prophecy.   If you describe yourself as successful that too can become a self fulfilling prophecy as well.  

Ask for help because there are always people that are willing to help people that are helping themselves.  Please let me know if I can help.

Kevin

Post: My Realtor Says I Need A Lawyer?

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6

I would call around to other Realtors and ask if it is typical in Florida to have an attorney.  I am with you, I would not want to pay for an attorney if I didn't have to.  Maybe she is talking about a closing attorney.  Her life must be hell if she has to close with an attorney every time.

Post: LLC time yet?

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6

My point was to start an LLC or S-Corp Now, don't wait.

Post: LLC time yet?

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6
Originally posted by @Travis Sperr:

@Kevin Hamblin I see you are in CO and have to chime in on the hard money comments you made. We lend to 1st timers, do not require 20% down and do not split profits on deals. 

Based on your comments I thought you were selling business lines of credit!

@Adrian Smude be careful with where you get your legal advice and accounting advice, typically worth what you pay for it. Take the ideas offered and use them as questions for your CPA. 

 Travis,

I have nothing against your company, You do a lot for our community here in Colorado, I was speaking in general,  I have run into a lot of hard money loans that are at 12% and up and charging 2-5%.  I am also not saying that Hard Money is a bad option, it is a tool that has to be used correctly. 

What are the terms that your company has?  Do you loan up to 100% or only 65%-70%?

I know you are one of the few Hard Money Lenders that don't require profit splits, but there are a lot in Colorado that want 50% after 14%apr and 3 points, wouldn't you agree?

I am speaking from personal experience trying to find hard money loans.  

Post: LLC time yet?

Kevin HamblinPosted
  • Foreclosure Specialist
  • Monument, CO
  • Posts 11
  • Votes 6

What would prevent you from forming an LLC or better yet an S-Corp that owns the LLC?

If you do it yourself it costs less than $50 each (at least in Colorado).  Getting an EIN is Free from IRS.GOV.   

This also allows you to start building Business Credit.   

One of the keys to being a successful real estate investor is to have 100% financing for your deals so you can do as many projects as you can.

An investor usually tries to get financing through a hard money lender, but the problem is it's very difficult to find a hard money lender that would lend you 100% of your purchase and rehab.

MOST Hard money lenders usually ask for at least 20% down payment. And even if you find one that does 100% financing, they will require you to have a lot of experience, charge you 12%-16% interest rate plus 3 or 4 points per project. And on top of that you have to split your profits 50/50 and in some cases 60/40 where the hard money lender gets 60% of the profits while you do all the work in finding the deal and rehabbing the property.

Business lines of credit offer an alternative solution to all this.Considered as viable source of financing, a business line of credit is a tool that most real estate investors overlook.

You use the Business Line of Credit for the 20%-30% down and use Hard Money for the rest if you need it.  

You don't use any of your own money and the property is secure.  

Even Safer way to set up S-Corp & LLC is to have S-Corp own 2 LLC's. S-Corp has no income, LLC for Property Management and one for Ownership of up to 3 properties. No worrying about Piercing the Vail.

Keep everything separate and different entities so if one gets sued the others are safe.

Kevin