All Forum Posts by: Matthew Hunt

So, if you invested $50k into a value-add deal, and it's now worth $100k, you have to look at your cash-on-cash return. Let's say it's at 10% after the value add ($5k per year). Sounds like a nice return, BUT, you actually have $100k in equity at this point, so you're actually only making 5% on your money. If you can cash out and invest it into another deal with 10% cash-on-cash, now you're making $10k per year, and getting a true 10% return on your money.

That's just another way of looking at, what others have said, is "maximizing your ROI." Of course not all deals are created equal, so you have to look at them individually, and also consider what alternatives may be available in the market at the time.

Yes, the deal sponsor makes a significant amount on the sale, but it's often the best scenario for passive investors as well.

I decided to refinance my loans to get a lower interest rate. I'm on a 10-year payoff plan, but am working on a plan to get it paid off in 5 years. If I'm able to do that, I think my long-term amount paid will end up being less than I would have had with loan forgiveness. The other thing I thought of, knowing I wanted to invest in real estate, is that my income will increase, probably to the point that I'd end up paying off the loan, or at the very least, make the 20-year loan forgiveness not even worth it, and end up paying more in the long-run. On my current plan my payment won't go up, no matter what my income is. Of course this is all speculation, but nonetheless, I decided the best option for me was to just get the loans paid off as fast as I can and not have to worry about them anymore.

Now if you're working for a non-profit (I'm not), then I think the 10-year forgiveness plan is totally worth it, and likely the best option. You'll just have to make sure you stay there for 10 years! For me the 20-year plan was just too risky. A lot can happen in 20 years, and the payment doesn't cover the interest, so the balance would be even greater in 20 years than it is now. Also don't forget that you'll be taxed on the amount forgiven. It's probably different for everyone, but for me I don't think there was much of a difference in the total cost of the loan if I paid it off in 10 years at the re-financed interest rate vs. the 20-year loan forgiveness on the PAYE plan, and even less of a difference, if not cheaper, if I pay ahead and get it paid off in 5 years.

I'll be at the seminar this weekend, who else will be there?

Just an opinion, as I'm kind of in the same boat as you, and have never flipped a property or bought an apartment building, but I'm not gonna bother with flipping. I see much more profit in the long run in multi-family. I plan to put together a syndication so I can buy at least 60 units so 3rd party management is included in the valuation. I do already make $100k/yr however, and will be putting $50k of my own money into my first deal.

I have a couple questions:

1. For those who do out-of-state deals, I'm curious if you are flying out and looking at the property, or are you buying sight unseen? If you're looking at the property, are you doing this before putting in an offer (seems like that could get incredibly expensive), or making your offer contingent upon inspection?

2. Has anyone used any of the crowdfunding sites to find investors? They seem like such a great idea, I'm just not sure how many investors are actually using them. "CrowdStreet" was one that I ran across last night, and I've seen others.