All Forum Posts by: Liam Goble

Keith, I already replied to your other post, but I was initially unsure if I should ask questions that may have been answered 1000 times on the page. I finally got up the courage to ask my questions and no one made fun of me and most people pointed me in the right direction. I would suggest you ask away and people will direct you to the knowledge you need.

Good luck with your REI endevours.

@Keith Evans Your take home pay is awesome. I GROSS just under $50k/year from my day job and have managed to pick up three rentals with a fourth under contract over the span of about 1.5 years. Now, that being said, I am maxed out at this point and I need to deleverage slightly before I can begin purchasing more, unless I can get another investor on board.

Your plans certainly seem reasonable. I assume you're taking into consideration everything for the homes: taxes, insurance, vacancy, repair reserves, expenses (CPA, utilities, permits/fees), property management, etc.

The way I have been able to purchase my investments in such a short span, is to purchase investments which need significant improvements, complete the improvements myself (I'm a contractor as my day job), rent the unit and then refinance to pull cash out.

In addition to doing that, I went to friends and asked to borrow money. When I asked to borrow, I gave them my preferred lending terms, so they knew I wasn't trying to simply take their money and run.

For my deals, I started with the cash from my friends to buy a house outright ($18,500 purchase; friends cash was secured with collateral OTHER than the house). I then refi'd the house to pull cash out, and bought two duplexes. I fixed half of one of the duplexes (ripped out subfloor, walls, rewiring, etc) and just completed the refi today. I already had a third duplex under contract, just needed the cash to close.

The only change I would make to your plan is that I am partial to small multifamily buildings (2-4 units). I find the cash flow from these units is significantly better than for SFH. Example: My SFH cash flows approximately $100/month after mortgage, etc. My improved duplex cash flows a hair shy of $400/month. When I improve the other side to that duplex, the cash flow should improve by another $100/month.

@Steven Haskins If you get a chance, maybe you could post the numbers for the deal so others can provide some guidance regarding the deals (Realtors are good, but sometimes don't understand all the ins and outs of REI). You may even find some investors on BP that are interested if the numbers are good enough.

From the seller's perspective, there are probably some costs he will bear during the transaction (transfer tax, recording the mortgage, attorney fees, etc). At the very minimum, you should offer to provide enough as a down payment to cover those costs for him. If I were him, I would not be too stoked to offer 0% down AND pay to transfer my property to someone else.

For my first deal, I approached a few of my friends and asked for a loan (a total of $20k). I structured the loan to be 10 years at 5% and used some personal stock from our company as collateral. Have you considered asking friends/family for a loan? I would advise to NOT ask for gift money, or money w/out strings. Place strings on yourself so that others can see you're serious about this investment.

Aside from friends and family, other ways to raise cash (please note: these aren't necessarily great ways to raise cash), Raid your 401k or IRA (watch the tax implications which may be partially offset by depreciation from the property), Can you do a cash advance on your credit card? Can you offer right of first refusal and try to crowdfund the down payment (first refusal just buys you time to get the funding)? Given your credit score, you would actually be a pretty attractive loan prospect on these crowdfunding sites (prosper.com, etc). I don't know the payment terms, so read carefully.

@Steve Endress Thanks for the info. I would really appreciate any information you have on those areas. I had been thinking about Indy or Memphis, but a lot of people been discussing many of the cities in TX. I admit, one of the turnkey companies I talked with in Memphis mentioned that in order to finance any of the properties they were offering would require significant down payments (30-40%) because the appraisal would not come in high enough to support the 'purchase' price. My initial reaction is that the asking price is too high if the appraisal won't support the sale price. Maybe I'm wrong and just don't understand investments at a distance.

This outfit from Memphis also listed potential cash flow from these properties, however, with the sizable down payment, the cash-on-cash return is back down to the 7-10% range, which is again quite possible with REITs or even some strong LLPs (EPB, KMP, KMI) or traditional blue chip stocks (T).

** Disclosure: I'm Long EPB and KMI. No interest in KMP or T and no plan to start a position within the next 30 days.

@Mike D'Arrigo I was actually listening to a previous podcast of your radio show that had been shared to me by another investor a few days back. Your show pushed me to begin seriously considering out-of-area investment. I guess I would like to quantify (maybe I mean qualify) my statement regarding "Market doesn't matter". I should have concluded that statement "so long as a few conditions are met: the area is stable or growing (no Detroits) and the numbers work with out fudging your projections".

For me, my current objective is cash flow. The issue I have with my local market is that the 'best' available opportunities are returning ~6% cash on cash. I can get that amount of return with REITs. At 6% it will take me a really long time to become financially independent! Because of the lack of return on my investment, I'm actually going to be starting a flip in the near future, because that's all my market has to offer right now.

I'll get in touch to get a copy of that report. Thanks for taking the time to reply.

@Stephen Doyon I hadn't considered the size of the population in regards to mentions of Portland ME. State College has approximately 50,000 people with a total of about 100,000 in the entire county, so I am familiar with a city the size of Portland. Interestingly enough, according to Zillow, both State College and Portland median home sales are approximately the same.

I actually wonder how much the age of the population and speed of adoption of new technology (BP) affects the demographics on BP. For instance, I know that within my local area, very few Realtors or investors know of BP. I've discussed the benefits and resources on BP, but to my knowledge, no one has joined BP.

Stephen or @Geoff S. , would you have a recommendation for an investor friendly Realtor in the Portland area?

Thanks.

@Geoff S. The trail series looks fun. Unfortunately our currently planned trips fall between the Scuffle and the Breaker. I've always wanted to run an ultra though, so maybe I just need to train for the Pounder.

Maybe next time my wife and I are in your area we could grab coffee/beer in Portland or on Chebeague Island.

@Geoff S. I agree with your sentiments regarding location of the BP members. I'm sure Brandon or Josh could figure out a way to make a really cool map showing how many members are from various areas of the country.

I see you're a contractor as am I, are you an investor as well? I helped start a design/build company in State College, PA. I now oversee the day-to-day operations for our MEP, insulation/air sealing and renewable energy crews (which is actually only one crew right now; we're planning to expand to 2 - 3 crews this year). My current work is not quite my cup of tea, which is why I want to grow the division this year.

I currently live in State College, PA, but my wife and I have considered a move to Portland Maine. All of our investments are in our local Pennsylvania market and I have no experience with PM or turnkey companies, however I am exploring both options currently.

I see a lot of discussion regarding out-of-area investing in different Texas markets, Indianapolis, Chicago, and Memphis markets. Ultimately, if it's simply a buy-and-hold investment, the area shouldn't matter too much, except that I want the right amount of stable growth coupled with consistent job growth. For my wife and I, we would enjoy taking 'business trips' to Portland, ME to look for additional rentals or to inspect the units we would own.

When I read through most of the BP posts, I see very few references to any markets in the North East. Is this because the NE is that much more expensive when compared to other markets? Is it that most North East REIs haven't found BP yet?

Any thoughts would be appreciated.
Thanks in advance.

Sorry, meant to include what @Steve Babiak mentioned. You don't have any expenses (utilities, trash, snow, lawn care, etc) included in your analysis.