All Forum Posts by: Lee Fuhr

If you're self managing, can you explain how you handle the cleanings after each reservation? This is a sticking point for me. If I don't live close enough to the STR, how do I know it's beautiful for each guest? I'd love to hear how you're tackling this detail! Thanks for the wonderful information!

We'll offer a warranty if they request one.  The insurance policy to cover it doesn't cost that much, but we don't offer it up front.  One thing we will do on winter flips is add a landscaping clause in there so that in April or May, we'll come back and reseed the yard and give them a $200 allowance to purchase plants and we'll plant them if they want to.  It doesn't cost us anything really to offer this, but it makes the ugly winter yard look much more attractive to a buyer - they sort of don't look at the yard much because they know we'll fix it up when the weather is better.

@Brian Eastman thanks for your help!  You're right, re-reading my first question, it included a typo which made it confusing, but I have since had that question answered.  Many thanks!

@Dmitriy Fomichenko Thank you so much for this valuable information!

@Eliot Coulter if I were in your shoes, I think the multi-family homes will be your best ARV over a shorter period of time. We have a real estate agent on our team who is a local from this area, born and raised, and he can tell me what areas are on the rise and what areas aren't. Having someone on your "team" like this is absolutely invaluable. Pay them a fee for every investment property you purchase, even if it's an off-market deal. I pay mine $1,000/property for off-market listings. He specializes in property values, neighborhood knowledge, and the ability to tell us what the property will appraise for if it was in tip-top shape. He shows us probably 20 houses for every one we buy, so that $1,000 is chump change for the access and expertise he brings to each of our deals.

I'm also a member of several Real Estate Facebook groups and would be happy to add you - these groups are wonderful for quick questions and general knowledge. I would also recommend you get connected with your local REIA group - most have a Facebook group where listings are posted and questions are posed. Mine has been an invaluable resource as I have learned the basics and networked in my local area.

Having read this, and considering rolling my IRA money into an SD IRA, here are my remaining questions:

1. Does the SDIRA have to establish its own LLC where funds are directed, or can it be a private funding source for an existing IRA?

2. Can the SDIRA fund part of the deal with the rest coming from hard money? For instance, if I bought a house priced at $100k, the hard money lender funds 75% of the purchase price, can I use the SDIRA money to fund the remaining 25% plus closing?  Or is that a big no-no?  If it's allowed, how do I structure it? (see question above)

3. When I'm ready to refinance into a conventional mortgage so I can use my SDIRA to fund another project, how is the IRA paid off? I'm sure people are doing this as BRRRR investors, I just seem to be unable to find the missing links of the process to put the whole picture together in my head.

Thanks!

VA loans are great if you plan to house hack and live in your property. They've recently become much more strict about "checking to be sure you actually live there", so you'll want to play by the rules if you're going that direction. Also, purchasing a 4-plex is absolutely the best use of your VA money. Rent out the other 3 units to cover all expenses plus cash flow. As a general rule, any good financial manager, advisor or accountant will tell you to have 6 months in liquid assets to cover any unforeseen damage, maintenance or bills if you lose your job (you never know). It used to be 3 months, but the smarter answer is 6. BUT, don't let that dissuade you from getting into a property sooner rather than later - you just have to be more diligent about saving back a larger percentage of your income for a longer period of time (think Ramen noodles instead of steak dinners) until you have that cash buffer.

Last, as a financial advising professional, let me leave you with this.  There are several high interest accounts these days - and I'm talking 0.5% as opposed to zero in a regular savings account at 0.05%.  Push all your liquid assets into an interest bearing account like this so it's not wallowing in the "no interest" zone.  It's better than nothing!

Good luck, feel free to reach out if you need any more help!

Lee

It's all about ROI for me. If I was putting my money in the stock market, on average, I'd be earning 6-10% over the long haul. But if I control the money by putting it into cash flowing properties, I earn several times that over the course of 30 years. Plus, being highly leveraged on properties is a good thing if you can borrow back at 3-5% and use that money to fund projects that would otherwise cost 10-12% interest with a private lender. If the property you've owned for a long time is giving you equity that you can use to invest in other properties, and the area is appreciating, I say hang onto it, keep it highly leveraged, and use that money to invest in other projects. Once the mortgage is paid down to a level at which I can draw a HELOC off the equity, I can continue to use the equity in the property to purchase more and more properties, refi them, wash, rinse, repeat. Just keep using the same money to grow your portfolio. As long as each property either cash flows and/or breaks even (but only if it the market around it is rising, giving you an equity bump), then it's cheaper to hold properties you already own than sell and move the money around. Plus, you extend the life of your capital gains tax and all the closing costs of buying and selling. But if you're running the numbers and that property isn't earning you either equity or cash flow, get out from under it and move on.

This!  All day long.  The millionaire next door will never actually "look" rich, and that's what allows them to "be" rich.  Status symbols just detract from the goal of getting to that place where you have enough money that you can care less about how much stuff costs.  I can't wait to get there too!

I almost never offer on properties that have just recently been listed.  I specifically sort my searches by day on market in reverse, so I'm only looking at the properties that have been sitting.  Sellers get more and more likely to accept a lower purchase price the longer it sits.  Never offer asking price if a property has been sitting.  And don't get emotional about it - if the numbers work at $50k, offer $45k or $48k, knowing you have a little wiggle room, but then be willing to cut bait if they won't meet you at $50k.  Real estate as a profession has to be about the numbers.  If you put your heart in it, you'll end up paying more, and that can spiral out of control and then you aren't making any money.  Get emotionally attached to the property AFTER you've successfully closed on it for a great price - never before.  Good luck!