All Forum Posts by: Kevin Douglas

Hey Forester - Direct mail is a numbers game. One thing that has worked well for me is spreading my budget over a 5+ touch campaign where I send mail to the same list multiple times to stay top of mind and create some familiarity. Typically I have seen results after sending several mailings to the same person. 

@Nicholas L. - I appreciate the input! I would love to double-click on what you said last. What would you do with $300k cash given the environment? I'm sitting on quite a bit more liquid than the $300k and am having trouble knowing what to do with it, other than putting it into ETFs and some Telsa stock (lol). Traditional buy/hold opportunities don't really exist anymore given interest rates and cap rates typically falling below the level to be profitable, plus having control over the principal is pretty important to me. Also, not looking for something that is super hands-on.

I appreciate the input @Jacob St. Martin

@Jacob St. Martin@Jacob St. Martin@Jacob St. Martin@Jacob St. Martin@Jacob St. Martin@Jacob St. MartinI should have added that I'm focused on growing my cash balance without risking the principal, that's why I'm not putting this in my stock portfolio or taking on additional risky investments with these funds. Additionally, BRRRRing and flipping is a full-time job despite what a lot of folks might argue, and have been there done that and am currently focusing my time on other things. At the end of the day, if I need to access these funds before the payback period, I can sell the property or put another mortgage on it....Open to other ideas, but that's what I'm currently considering paying off the mortgage or putting it in short-term bonds. 

   @Jacob St. Martin@Jacob St. Martin@Jacob St. Martin

I completed a successful BRRRR a little over a year ago. I have some cash and I'm trying to decide if I should pay off the mortgage and enjoy the extra cashflow or if I should keep the cash I have in bonds. Obviously, the decision I make should be based on my goals, blah blah blah, but from a ROI perspective, I'm curious about your thoughts on and Analysis. Below are the details:

Property Value: $480,000

Mortgage Ballance: $297,516.83

Interest Rate: 7.1%

Rental Income: $4,365

PM: 8%

Repairs: 5%

Regular Payment: $2,900.36

 - Principal: $258.74

 - Interest: $1,774.23

 - Tax & Insurance Impound: $867.39

Current Cashflow: $897 (Annually $10,764)

Cashflow if mortgage paid: $2,930 (Annually $35,160)

Payback period on mortgage payoff: ~8.5 years (assuming no rental increases) 

Return: 8.19%

What am I missing / not thinking about? (note I'm not including vacancy because the units are in a very desirable location and below market rent, the last turn I had was less than 2 weeks)

Would you pay off the mortgage or put it in a 4%+ short-term bond? 

Nice property! Tight margins considering a hard money loan. I would be curious to hear the profit on this one. Typically ~2% origination fee, ~10% interest, taxes, insurance, commissions and closing cost would all eat up a lot of that margin. How did all of that look on this deal? 

I would 100% keep the ADU. With prices where they are at, you will fetch more from an owner occupied buyer. Even if the numbers don't make sense for an investor, owner occupied buyers will pay a premium for a home that helps them pay the mortgage. For renovations, put your money into bathrooms and kitchens for top return. Also address and maintenance issues that might come up on an inspection, typically a handy man can do that stuff for little investment. If you are planning on doing a renovation, in this market, if you don't have the skills to identify issues yourself, I would get a pre inspection and knock offs items that pop up. Good luck!!

If you are considering taking on a renovation project, I would flip a property vs BRRRRing it and raise your cash position. I have renovated and refinanced a bunch of properties in the last year and have come to realize BRRRR investing is just flipping without the large profit margin.

Hey Dave - Great post! I love that you are getting into the game. 

IMO, I wouldn't necessarily count on appreciation. We are currently seeing the market turn and it might be years before prices to get back to the recent highs. Take a look at is COC ROI on a deal by deal basis. If you can still qualify for a conventional loan, maybe at 5.7%, look to see what your cash return is after PITI, I also include management, repairs and vacancy in my model. If you get a better return with a mortgage vs. holding it in cash, go with the mortgage. Look at all your options at different down payment levels. Usually a lower LTV will lower your interest rate... Also remember, conventional loans can be refinanced once rates drop back down...

Personally, I can't get conventional financing anymore because I own to many properties so I use a private lender that has a 30 year product... They are offering 6.5%+ even with low LTV.... So I recently I just kept the cash in the deal and am experiencing a 15% return in just cashflow, much better than what you can get in any passive investment...

Interesting point @Nicole Heasley Beitenman - What do you see replacing cars? 

@Juan V Lopez - how is the search and evaluation going? I’m actively doing a deep dive into the car wash business model and have a big chunk of capital allocated to start making offers on properties when I’m ready. Have you learned anything else interesting so far? 

I think @Nathan Gesner has great advice. I’m going to start calling around to local businesses and see if I can generate any leads!