All Forum Posts by: Luke G.

I also wouldn't worry about it, I doubt they'll follow through with it.  

Quick fun story.  I bought a 4-plex in early April, one guy didn't pay rent in May and my management company sent him his late notice at day 4 with 15 days to vacant before we evict.  Sent numerous phone calls, texts, e-mails...etc.  No response.  He left the building and told the other tenants he was leaving and never coming back.  We put our 48 hour notice on the door and walked into a bomb.  The electrical had been turned off, so you can imagine the smell from the fridge.  I'm talking hoarders 101, spilled chocolate milk laying on the kitchen floor, cooked mac n cheese, and literally stuff everywhere.  I hired a cleaning crew to remove everything and assess the damage, I'll need new appliances and new flooring/paint throughout, will likely cost me in the 4-5k range.  

He came back yesterday and asked where his stuff was (my tech is rehabbing another unit in the building)?  My tech told him at the dump and he responded with I'll be taking you guys to court, expect something from my lawyer (I'm sure deadbeat tenant has a lawyer on speed dial).  My tech just simply responded with the business card of the lawyer we use and told him all future communication needs to be through him, we have everything documented.  He had maybe 20$'s worth of actual items there.  Surprising when you don't pay your rent and you leave the place uninhabitable that we didn't store all your crap free of charge. 

It's an incredibly easy answer for me; my family- ability for my wife to quit her job when we have kid #2.  Not because we are going to start using our cash flow, but because the real estate is doing well enough where it doesn't need my cash anymore.  in 10 years ability for us both to not work and do whatever we want with our kids, when we want.  

@Jordan Lucas

I didn’t pay off the debt. I make significantly more investing in real estate than I would have if I had put that money towards paying more on student loans. I didn’t have an insane amount of loans like a lot of my classmates however. Get a high paying W2 job and real estate investing becomes significantly easier.

I'm on the long route.  I went to grad school and am actually a physical therapist by trade.  I wouldn't recommend that profession with the W2 income compared to the amount of student loan debt, but I definitely would recommend something with a higher W2 income such as engineering.  That solid W2 makes underwriting a breeze when you get to that point.  Despite the student loan debt I've managed 38 units, and another 30+ units with a partnership in the last 2.5 years of investing.  Eventual end-game is take 2 travel contracts a year to maintain my PT license while still growing my portfolio and enjoying watching my kids grow up.  You can certainly go the straight to agent route, but that's a choice for you my man.

Until you have that high W2, read, read, read, and listen.  This website and the podcasts created here are your friend, as are Real Estate Guys Radio, best ever real estate Show, and Rod Khleiff are all great podcasts as well.  This stuff really is not that complicated for the people that take the time to educate.  You're already asking the right questions, you'll be just fine.      

The anti-MLM on Reddit is worth its weight in gold, I see the huns are out in full force defending it to the bitter end as they always do.  These types of businesses are notoriously predatory, generally people that sign up for this nonsense are ones who can't afford it in the first place and it generally gets out of hand...quickly.  You're not an entrepreneur, you're sponging off of friends and family who have no choice other than to buy your overpriced crap for a while so they don't feel bad.  There's a reason pretty much everyone fails, the distributors are the ones buying the product, not actual customers.  In a normal sales position, the salesman aren't buying the cars, customers are.  Two very large differences in those business models. 

You can argue it's not all day, but if you need to try and explain to people over and over again that it's not a pyramid scheme...it's probably a pyramid scheme.  Just know 90% of the population is laughing at you and wishing you would get off social media and stop bombarding them.  Oh I haven't talked to you in ten years, I would love to hear your sales pitch about your crappy overpriced essential oils that are completely worthless.    

anti-mlm gold right here.

https://www.reddit.com/r/antiMLM/

@Shaun Weekes.  Thank you, I usually refi into commercial, so thanks for letting me know on the fannie/freddie guidelines.    

I'm not a newbie but I'm still trying to learn, I've been buying rentals for the past 3 years while working a normal W2, and currently am the sole owner of 38 units across the state of WI.  I'm curious to see what other people would do if they were in my situation.  I have a property under contract that I'm getting a great deal on, seller is retired and lives in FL and wants to get rid of his last rental in WI.  Before the high and mighty stealing your equity group jumps on me, he literally said to me I just want enough cash to pay for a new pool, there's no such thing as low-balling me (interesting negotiation tactic but I'm not complaining).  So I offered him 30k cash for his new pool and he accepted.    

Purchase price: 30k cash (needs a new roof so an additional 7500 will be invested).  Current rents are at 675$, but it is pretty easily a 900$/month house.  No, it's not in the ghetto either, I own quite a few in the area and it's working class.  

All other major cap ex expenses have been taken care of, has a newer bathroom, newer kitchen, electrical updated etc.

As it sits it will likely appraise for 65k with a new roof.  I'm well aware of how to analyze deals, so please don't ask if I've accounted for cap ex, insurance, vacancy etc.    

Once I buy it I will do a cash out refi, but I can't decide for what terms.  I have 4 options the way I see it.

A.)  Cash out full 65k refinance on a 30 year fixed (4.6%), cash flow= 291$'s.  Cash out Money-  14.5k

B.) Cash out full 65k refinance on a 20 year commercial (5.85%), 10 year fixed, cash flow= 183$, Cash out- 14.5k

c.)  Cash out Refi but only 37.5k to re-pay my own cash on a 30 year fixed (4.6%) Cash flow= 400/month, cash out- 0

D.) Cash out Refi but only original sum on a 20 year commercial (5.85%), 10 year fixed, cash flow- 342/month, cash out- 0

I'm leaning towards A unless someone can talk me out of it.  The main difference between C and A is basically the return on that 14.5k is around 10% if just leave it as equity, I've yet to do a deal that doesn't double that.  B and D obviously have higher equity pay-down, but smaller cash flow.  Most of my properties are on commercial loans, but I still have availability of 30 year terms.     

Second what @Bob Woelfel said, once you have one or two commercial bankers that are solid, don't chase the extra .25%, especially on smaller deals less than 2-300k. I now have two primary lenders I work with on all of my deals, they're both aware they always have at least one other competitor, but not 10. On my last deal I thought one lender was starting to creep up his interest rates further than what they should've been, I simply gave this deal to lender #2. Lender #1 wasn't upset, if anything it gave him some ammunition when going to his board to get me a great rate on a 1.2 M dollar deal 20 bps less than what he quoted me on my previous one (300k) in order to keep getting my business. And this is on an 80% LTV, with a 20% seller note. I'm at a point now where I keep my PFS up to date for my own personal use, but my lender's no longer require it or care, we have a history and they know I'm not buying irresponsibly.

Don't rate shop consistently, once in a while is fine to make sure your lenders are staying with market rates, but don't get greedy with it.  I'm at a point where I don't worry if I'll get approved for financing, I know I will, and that is really quite powerful when it comes to this business and negotiating deals.  

@Terence Brown, I simply ask for a mortgage. I have a LOC on my primary, but it is simply there to have access to quick cash if I have a rehab go over budget or something of the sort. All of my mortgages are 20 year amort's, balloon's due anywhere from 5-10 years. I keep significant cash reserves and pump all cash flow back into properties forcing appreciation. In your case you may be better off going the LOC route as you're a flipper and that would likely give you more flexibility for what you're after. I on the other hand am strictly buy and hold so you need to do what's best for you! Good luck man.

Your local lender's/small banks will be your best bet. I only own my personal home in my personal name. The rest are in LLC's, most will require a personal guarantee on the loan. It also will open up a LOT more flexibility with financing deals. I have 3-4 banks that will go 80% LTV, even with a 20% note of seller financing. Blast some e-mails, most will be no's, but some will be...maybe. Being organized and having a strong personal financial statement will help as well.

@Sam Hopkins

On what planet is he paying nothing for it? This isn’t a low or no money down deal. Why do you keep saying it’s costing him nothing? That 35k is coming from his own personal bank account, he’s paying that amount and after all expenses are paid (if everything goes perfectly) it nets him 70 bucks/month. Which by 99% of people on here that aren’t after appreciation is a pass 10 times out of ten.

Your return on investment is so off base I don’t even know where to start. He would need 138k of repairs to lose money on the deal? What? If he has a 10k repair that needs to be done at month one, who does he send the request to, his renters to pay it? Of course not, it’s coming out of his own pocket, it would take him 11 years of using his cash flow to pay himself back.

I have a 1.2 million dollar portfolio under contract that has a rent roll of 18k/month , that doesn’t mean my take home is 18k. Expenses are a very real thing which you don’t understand for whatever reason.

Have you ever done a deal? Because if you haven’t (which based on your responses on this thread I’m guessing you haven’t) I have a few properties that I’ll sell you right now and will give you the exact same rent to purchase ratio as the one above me.

OP feel free to Pm me and I can tell you a few of the markets that I invest in, but you should pass on this one.