All Forum Posts by: Liam Goble

@Justin Campiotti Welcome to the BP community. I was like you and didn't introduce myself until yesterday, even though I was using the boards fairly frequently.

As part of my contracting work, my company provides Energy Audit services to both SFH and MF properties. Given the CA market, you're probably head and shoulders ahead of the improvements we suggest in the Pennsylvania market, but from an energy perspective, there are significant improvements through some simple energy improvements to the property.

Good luck with your investing!

@John McCormack I just went through a reappraisal of a duplex I own. I provided all of the paperwork for the rent roll ($1170/month total income) as well as rebuild costs. The appraiser did not even consider the income approach or the rebuild approach, strictly the comps.

@Marco Santarelli Thanks for the advice. I admit that my investment focus has been evolving over the past few years, but my 'friends' haven't evolved over the same time period. I really enjoy my 'stock' friends, but they simply don't understand REI or cash flow. Right around the time I started REI, my contracting company (it's an employee owned company, I am one of the founders), hit a cash crunch, so I quickly learned the advantage of cash flow vs. equity.

I've been looking at your website, I'm intrigued by some of the properties you have for sale, especially in the Memphis area. I spent a very brief weekend there this past September for a Bryant factory tour. Quite an intriguing area.

@Mehran K. Thanks for writing back. I'd like to connect to discuss your experiences investing out-of-state. The State College area is able to post pretty good ROI, but when I see some of the numbers for out-of-state investment w/ property management, the ROI is simply amazing. Part of my success will hinge on investment out of my current market. Do you have any posts you could point me to which would start me on the path to out-of-state investment? Thanks.

Hey all, I'm a relatively new investor in the State College, PA area (home of Penn State). I've been using BP for about three months since I found it from Pete at Mr. Money Mustache and simultaneously from a Google search for "50% rule".

I'm a contractor by day (current focus is insulation/air sealing and mechanical systems), but my goal is to be financially independent by 2017 at the latest. I established that goal prior to my knowledge of BP and the ability of investors to significantly speed up financial goals. I'm driving hard with a rather singular focus on my goal.

I want to be financially independent by 2017 for three reasons: 1) my daughter will be 5 and I want to be around for her as she is growing up, 2) I want to hike the Appalachian Trail with my dad and 3) I've learned that life can be very short and I want to experience so much of what this awesome planet has to offer.

After running all the numbers, short of catching one of those crazy dot com stocks in the late 90's (and selling before it's too late) or starting something like FaceBook (or probably Bigger Pockets!?!), I think REI is the way to go.

I feel that 2014 will really show me if it is possible to exceed my previously stated goal. Most of my purchases have been by using equity or personal cash positions. I plan to work with more investors and branch out from my current fix-and-hold MO to include some flips. Because of investors, I should be closing on Flip #1 by Feb 7.

My buy-and-hold strategy has had me purchasing local SFH and small MF properties. I am intrigued by @Ali Boone and @Mehran Kamari's posts and podcast and am currently considering buy-and-hold investing outside of my local market for slightly better return than the local market. I'm just trying to find more information about exactly HOW to accomplish out-of-the-area investments.

I think BP is awesome and it's so nice to be 'surrounded' by like minded people. Most of my colleagues and friends think I'm crazy, foolish and on the wrong track. My family (parents and siblings) have finally come to terms with my plans; my wife is entirely on board, so long as I'm home for dinner. I've come to realize that my colleagues and friends simply don't have the right mind set for real estate investment -- even though they have no problems investing in the stock market. I really take comfort knowing there is an entire community that doesn't think I'm crazy.

@Matt Pitschman Yes, I did do exactly what you said, except the cash I received was enough to pay for the entire house in cash ($18,500). I offered my preferred terms, figuring they would negotiate (they didn't), so I got $20,000 cash at 5% for 10 years. For this specific transaction, I wanted the lowest payments possible to keep cash flow as high as possible for as many months as possible, so I offered to pay all the interest in a lump sum, once per year, rather than spread out over the year.

For this specific instance, I took the $20,000/10 years/12months = $166.67/month. I then pay 5% on the remaining balance, so my first interest payment was 5% x $20,000 = $1,000. Year 2's interest was then $18,000 x 5% = $900. Year 3 is going to be $16,000 x 5%....etc.

At this point, I have more stable cash flow, so I think I would either ask for variable payments with the minimum being 'interest only', or try to extend the payment period, but you may find that difficult given the specter of higher interest rates in the future.

In another instance, I am working with an investor to complete a flip. The investor is putting up all the cash and I'm putting up the project management and any labor intensive work (painting). I'm paying interest only on the investor's cash (to be paid at closing). When all the dust settles (no pun intended), we will close the flip and out of my earnings, I will have to pay the investor Xmonths of interest at the rate they are getting from their bank (about 4.75%). This flip should cost approximately $50,000 in total, assuming we hold for 6 months, I will owe about $1,100 for the access to the cash ($50,000 x 4.75% x 6mos/12mos). This $1,100 is in addition to the regular profit they will receive. My Realtor feels the house will be worth ~$85,000, so after holding costs and closing costs, we'll be splitting about $20,000. Out of my $10,000, I'll owe the investor the $1,100, so my net will be about $8,900.

There are many different methods for finding money for investment. What has worked for me is to develop a sales pitch. The sales pitch should show your investors how much money you need from each of them, how much money you will make with the property and how they will be paid back. Ideally, you would have some collateral to put up for the loan.

My first investor deal was with two guys at work. I offered 5% for 10 years with a minimum investment of $5,000 (I didn't want to have 10 $500 loans to pay back, paperwork headache). Because we are an employee owned company, I was able to use my company stock as collateral.

When I met with the guys, I met with them each individually, explained what I wanted, how it would be paid back, where I would get the money to pay it back, what the property looked like, recent comps, recent rent for the area, etc. I gave them a semi-flexible, semi rigid deadline to let me know; I didn't want to apply too much pressure, but I didn't want the deal to get away. After a couple of days, they both came back with a 'yes'. One of the guys lent $15,000 the other $5,000.

I feel that part of the whole package is to make sure I'm good for my word, so I've made the agreed upon payments (as expected). I will be making some additional payments this year.

The loan I described above was a personal loan, but I purchased the property through an LLC (I'm in State College, PA). There is good and bad to this arrangement: The good is that the money is simply listed as owner investment to the bank and on taxes. The bad is that when I pay these guys back, it's listed as "Ownership Disbursement", which I believe has different ramifications from a straight loan payment.

@Brandon Gamblin I'm actually starting my first flip in the next two or three weeks. We've got a signed agreement, just waiting for one contingency to pan out. I'm a contractor by day, so I have a team of sub contractors that I normally use during my normal course of work. Some of those guys will be working on this flip for me. I would recommend really good word of mouth referrals that you follow up with an actual visit to some of the contractor's work/past jobs.

There is nothing inherently wrong with college students, they just have to be ON TOP of their game. By nature, they're young and ambitious, but probably lack experience. You don't necessarily want them to get that experience on your job

I have had better and better luck with smaller and smaller banks. It seems counter intuitive, but the larger banks have more strict rules because they are working for the share holders. My 'normal' big bank is charging me 6.06% on 5-year commercial ARMs. I discussed my situation with two smaller banks, and the smallest bank was able to put an give me a proposal for a 5 year ARM at 4.70%.

I have also developed a proposal and brought the deal to people I know had cash they were looking to invest. If you could pay someone $700/month and take home $800/month and have none of your own cash in the deal, it's probably worth it IMO.

I generally stick with Zillow because of the map search function and the ability to click through to the listing website. Maybe Trulia offers the same service, but it doesnt seem as intuitive as Zillow does (at least for me).

@Patrick Reagan I'm a contractor. When clients approach me to have work completed, they will interview me and ask for references. I freely provide both and will generally accompany the prospective client to the reference projects for review.

One of the biggest things to remember is that beyond the hard numbers is your connection with the contractor. If you and the contractor don't 'click', no matter what their cost or how stellar their references, working with the contractor will feel like pulling teeth (unless all the references specifically state "great work product, but terrible to work with").

My company will win contracts, not because we are the cheapest, but because we are able to work with clients on a human level.