All Forum Posts by: Matt Nico

 

@Adam Zach      I love this post...haha. I have thought the same thing.

My Answer: I believe that engineers are some of the smartest people there is as a whole. The schooling required is usually math-based and teaches us to solve problems. And then we start working 60+ Hours a week for a boss who is collecting a huge profit off of you, and realize its a problem. So we look for a solution out of the work grind. 

And then we find real estate, where the skills required to analyze and execute a deal are based on math, numbers and problem solving...go figure.

Also for a lot of us, it helps that engineers are usually good with their hands. I can fix anything now a days. I do my own electrical work (after learning about circuits), Air conditioning (after learning about Heat transfer), and even something as simple as treating a pool is just a simple chemical equation.

I love real estate. It lets me use my engineering degree just as much as when I was an engineer......

Happy Housing,

-Matt

@Joe Cassandra: Love your post man. Everything you said is the truth.

1 tip I have for any landlord big or small is to explain and understand expectations up front:

What I do with any tenants (not just during COVID) is when we sit down to sign the lease together, I go over it in detail. We eventually get to the part about late or missing payments. I explain to them very specifically for at least a few minutes what will happen if they do not pay rent. I let them know that I'm polite, I'll communicate with them, and try to help them. But ultimately I am running a business, and I have worked with my tenants in the past if they undergo a hardship. I'm not a bloodthirty tyrant. But I also have to follow my lease.

Above all, I make them understand that while I do not want to file an eviction on them, if I don't have the rent by the 3rd, a late fee will apply. If I dont have it by the 5th of the month they will get a pay or quit 3-day notice. If they don't pay by the 8th, I will file an eviction. And this eviction will stick to your personal record for 7-10 years of your life, and it will make it almost impossible for them to rent anywhere.

Every single tenant that I have explained this too has never even attempted to skimp on rent. All of my tenants are great people, and I treat them as such.

If you have tenants that are not paying rent, explain to them that if they do not pay, you will file an eviction on them, and it will haunt them for the next decade, as it sits on their record unable to be wiped away. If they reply with.... 

"The government says you cannot evict me", reply with 

"They say I cannot evict you right now. Once this rule is lifted, I will file the eviction. No matter what. If you do not pay, you will not live here."

 

 Hey John,

My advice to you would be to buy a house and live there. If you buy a house that you dont live in, the loan products available to you are much different. To give a realllllllllly quick example:

Houses that you plan to live in for at least 1 year: Conventional 5% down, FHA 3% down. Interest rates for these are currently in the 3.8% range. This interest rate would depend on your credit score also.

Houses you want to have as just a pure rental:         20%-25% down payment. 5.5% interest rate (and thats the starting rate). 

You can see how much cash you need to get rolling with living in the property vs. it being a pure rental.

My advise would be to take advantage of the live-in loan products. Go get pre-qualified at a bank, find a realtor, and go shopping. If you are a younger guy and dont mind living with other people, id say do a house hack. I did this for 4 years. It isnt the best situation on earth, but its allowed me to scale bigger and better. 

If you want more privacy or your family needs more space, try to find a 2-4 unit place. Live in one yourself and rent the other 1-3 units out. 

You learn by doing. I'd suggest buy a book on rental property management, and do it yourself at first. This way, when the time comes to find a property manager, you know whats going on, and not just believe every word they tell you. 

Same thing with contractors. Learn how to do things yourself to a certain degree. If you learn how to hang a ceiling fan, and you get to the point where you can do it in 30 minutes, but then a contractor charges you $100 in labor to do the installation of a ceiling fan for you in the future, you can be pretty sure you are getting taken advantage of.

Hope these tips help you. They are fairly easy and actionable I feel like.

Happy Housing,

-Matt

 

@Jeffrey De Los Santos

Its super fun to put together a seller finance deal because you can make any terms you want really.

Here are some answers and tips for you:

Yes it can be done with no money (and low money) down, but I think these are fairly rare. I just bought a house on Thursday using seller financing, and he wanted a $5,000 down payment on a $262,000 purchase price. That's just under a 2% down payment for reference. I would consider a <2% down payment as "No money".

To tell you how I pulled this off, you have to understand that if you put such a small down payment down, usually it comes at a tradeoff. In my particular scenario, the seller asked for a high interest rate. For me, when I ran my numbers with the high interest rate, the deal still worked, so we were both happy.

Here is my deal specifically. I wrote a post last week about it if your interested. Its labeled "Post#1, seller financing in COVID-19 Market." I also have rehab pictures.

Purchase price: $262,000 with $5,000 down. So $257,000 of the money is the note.

Term: 18 months of interest only payments.

Interest starts at 6.5% for the first 4 months, and goes up gradually from month 5-month 9, where it caps at 10%.

I have contacted lenders already, who have given me a conditional pre-approval to re-finance out of the sellers deal after 6 months of seasoning. So I have 6 months to rehab the property (it will be done in 1 and a half), rent it out, and then I can refinance into a lower interest rate at a 30 year fixed. So In the end, I will probably never see the 10% interest rate. Its just a safety on my end.

I hope this deal gives you an idea of the creativity you can have with seller financing deals. If you have anymore questions, shoot me a PM.

Happy housing,

-Matt

 

@Javier Cuevas Santos, your situation is very simple. If I were you, I would go get a business checking account. All of your rents and expenses flow through that account all the time. No matter what. Keep your rentals completely separate from your personal. With only 1 rental property, there is no need for quickbooks yet. Use an excel spreadsheet to start out. 

Once you get rocking with 3 rentals or so (I started doing this when I had 3 rentals), I would abandon the spreadsheet, and upgrade. I personally use Cozy for payments. These payments go directly into my business checking. From the business checking, I have quickbooks linked up to it. 

Quickbooks Tip: Dont use the "Classes" creation. They limit you at 40 I believe. What to do is separate every property you have using the "Customers" section. This way, when you go to do a profit and loss statement and balance sheets, you sort it by "Sort by Customers", and you will get each property listed out separately. Your accountant will thank you. If you want an example, shoot me a PM and I will send you a balance sheet of my rentals.

Good luck!!!!!

-Matt

@Jordan Rhoads, congrats on wanting to get into the Real estate with your HELOC. Thats smart to use "The loan you give to yourself". If I were you, I would check out the Orlando and Tampa markets as well. I have 4 properties all in the Orlando area, and they cash flow great. The only catch is up until now, I have had to leave a good bit of money in my deals, but the ROI on the cash flow i'm generating is amazing.

In your example with your 80k HELOC, I would probably use it to buy 2 really nice cash flowing properties, and then use the cash flow to recoup your money. Buying 1-2 homes and then kind of standing pat would allow you to get your team together also. You can test out realtors, property managers, and contractors.

Hope this helps.

Happy Housing,

-Matt

HELLLLLLLOOOOOOOOOOO BIGGER POCKETS!!!!!!!

So I thought that with the whole economy, COVID 19 doom and gloom forecasting out there, it would be really nice to highlight some of the positives in my own personal life, hoping that they will rub off on yours! 

Today (and for the next handful of weeks), I am going to be creating a series of posts highlighting a transaction I just completed using seller financing. The banks wouldn't lend, so I had to get really creative in finding a deal that would work for me in today's market, and I am going to share with everyone how I execute, and what I do with my property.

Finding The Deal:     So I began telling everyone I know in December of last year that I was looking to buy another property. Fast forward a couple months, and my neighbor gives me a name and a number of a gentleman in the same development with 4  homes that he is looking to sell. I give him a call, and a week later, we meet at the 1st property that has just been vacated by horrible tenants (see the pictures of the trash). The home is a 2,250 sf home, 5 bedrooms, 3 bathrooms, with a pool and a spa in the backyard. Its located in a small community in southern Orlando, FL.

Negotiation:      We agreed originally at a $272,000 purchase price. To be honest, this may be a tiny bit above what I thought the house was worth, but if overpaying by a couple thousand dollars to acquire a new rental was what it took, then I was fine with it, as he was going to be financing the deal for me. After the inspection, a few very bad things came up, with the air conditioning being non-operational and the roof being very old and potentially having a couple leaks. I already had a new AC unit and a new roof planned into my budget, but I was able to negotiate a $10,000 reduction in price, down to $262,000          

Final Numbers:      $262,000 purchase price, with $5,000 down. The mortgage of $257,000 will be carried by the seller for a maximum of 18 months with interest only payments for the duration. The Interest rate starts at 6.5% for the first 4 months, and then creeps up by 1 point each month until it reaches a max of 10% in month 9. I agreed to the increase in interest rate because I am extremely confident that I can refinance this asset once rehab is completed, but even at 10% interest, I cash flow $200 a month.

Preliminary Rehab:          The rehab for this particular project is a bit complicated. The plan is to take the floor plan and split it in 2. I will be building a mother-in-law type of suite on the one side of the home, breaking it into a duplex that is a 3-bed, 2 bath 1250 sf home on one side, and on the other will be a 1000 sf 1 bed, 1 bath studio with the 5th bedroom converting into a home office or spare bedroom for the studio tenants. 

So for the rehab, the plan is to replace all of the major components of the home: New HVAC unit (with additional duct work), new roof, new pool equipment, and an expansion of the driveway.

Smaller items will be to redo all of the bathrooms, frame up walls to split the home in 2, and a new kitchen in the studio.

Final Thoughts:    I hope everyone enjoyed this original post. This deal is a culmination of all of the new skills I have been learning in real estate, from getting a real estate license, to learning and listening to the podcast on BP, and reading what everyone is posting.

 I will be posting a new thread every week with my updated projects on the home, as well as hopefully answer any questions anyone has in the thread!

Happy Housing,

-

-Matt Nico

 

@Mary K Hi there!!! These properties are Single Family homes. Very large 6-7 bedroom properties. I self manage (and am thinking about starting to hire people) and to be honest with you I do deal with a lot of problems on a weekly basis, so thats why my cash flow is so high. But I have a lot of fun with it!

I get a lot of requests just like to to ask how my deals cash flow so great....If you are more interested in one of my deals, I am actually buying another property with seller financing on Thursday (In 3 days), and I am going to type up a big post and share with everyone how I execute a rehab (with photos). Feel free to give me a follow and you will be able to see one of my deals in action :)

Happy Housing,

Matt

@Roi Horowitz

Buy a house with a 5% conventional loan. That gets you in the door for less than $20,000. Fix it up and live for free while having tenants pay it down. And keep saving your money. $50,000 can get you 2 great cashflow homes in Florida

-Matt.

@Esday MI Flores

If you need a hand in central Florida let me know. I have 3 rentals now and am expanding to 4 next week. I cash flow (at least) $1,500 on each property.

I am an agent and can manage (or find you one.). There are some really great deals available right now (which is why im buying).

Good luck!

Matt