All Forum Posts by: Matt Castle

If you have a million in cash, use as little down payment as possible and leverage up with our current lower rate environment. Keep 100k minimum cash in reserves for emergencies. 

If you're preapproved for a million dollar loan, then buy selectively trying to find a good balance of cash flow and property appreciation. Since it's your first deal, probably not advisable to borrow as much as you're allowed. It's a marathon, not a sprint. 

Disclosure: you said "scare me" so here goes. 

• Foundation issues
• Termites
• Floods
• Inadequate insurance
• Insurer fails to cover damages
• Water leaks - old pipes breaking leaks and tenant caused leaks
• Falling trees
• Drug dealers moving next door
• Meth cookers
  
• Squatters
• Copper thieves
• Looters stealing anything of value (furnace, appliances, etc)
• Multiple evictions back to back
• Slip & Fall scammers
• Tenants bring in people not on lease
• Property Manager is inadequate or worse disappears/incapacitated

I've been in REI for 19yrs so not much I haven't seen, experienced or personally bite me in the assets.

@Peter Baudendistel I'm seeing same results in Knoxville and Oak Ridge. Cash flow isn't great, but it isn't bad either, and you get the benefits of a strong economy with favorable demographics. 

There are a few cash flow hotspots I've located, but sellers generally know what they own is a hot commodity, so investors generally have to pay up or rehab rundown properties to get the eye-raising cash flow. 

There are quite a few mortgage products specifically designed for investors without DTI metrics included. All you need is a good FICO score, 20% down payment and the rental property has proven income.

Think about the risk to the landlord/owner. Vast majority won't allow subleases, and this is subleasing x 100. 

If financing is the primary hurdle, find a mortgage loan officer in your area and ask for a 15 minute meeting. Ask to review your finances, maybe do a soft credit pull, find out your strengths and weaknesses and go from there. You may be able to get approved with a low credit score and not even know it. 

If you can't, at least you know for certain and can take the first steps to getting on the right path. You first have to diagnose the problem before you can fix it. 

I would also suggest finding a duplex with at least one tenant so that income can be counted toward your income improving your debt to income ratio. 

Start by searching local economies and local people who will assist you. A great deal isn't a great deal if you can't find good people to help you find, manage and maintain your asset(s).  

Look for solid growth economies, property values that haven't doubled (or worse) in last 2 years, demographics, population increase/decrease and check the job boards to see how many openings local companies are advertising (one of my favorites). 

After that, it's all about building a team. 

Detroit and Asheville NC used to be good markets, but they're likely similar to Orlando, being too pricey and hard to find deals. I work the Knoxville TN market and has a fairly decent MFR inventory but depends on what you're looking for and price points. Hope that helps.

@Jennifer Rysdam I had this conversation with a Nashville, TN, apartment complex investor a few days ago. 

My ideas: 

1. Focus on fixer/upper complexes. Setup MLS alerts with an agent so you're notified the instant one pops up, get it under contract sight unseen and then go to work.
2. If you're uncomfortable with the numbers, keep your powder dry and wait for your opportunity. Chasing investments isn't the same as making investments. 
3. Look into different markets. I'm not saying buy out of state, but look into different cities or rural areas around your chosen areas. 
4. Find a different asset class. If apartments are overpriced, do you have any other alternatives? 

My first reaction is to read your Management Agreement. If they stated they will do one or more of these items, and then failed to perform as agreed, then you likely have a case. 

I'm not a lawyer, but it sounds like a pretty easy negligence case. 

I'm not an attorney, but if your lender wants to use a trust, perhaps it would be possible to move the property into a land trust, then have the LLC own the land trust. You name will still be on the chain of title, but at least you'll have LLC protection and some anonymity.

It can get complex and expensive, not to mention the lender can get very antagonistic, so speak with an attorney and get the lender's blessing before you make any final moves.