All Forum Posts by: Max Shaw

It's pretty entertaining going back to read old posts and goals I set a few years ago.

I looked this post up only because I sold this house a few days ago. This house really did everything I could have asked out of it. I'm going to outline what all I have done since this property leading up to the sale below, not to brag, but to give a real world example that all of this can work. You just have to jump in and trust the numbers and the process. 

As mentioned in the OP I bought under market at $100k but it appraised for $125K I was able to pull out my down payment and buy my 8th house. With the 8th house I was also able to cash out refi and bought a tri-plex. So this 1 house has made the acquisition of 4 other doors possible up to this point. But that was 3 years ago.

Since I have owned this property I have had it rented for a decent amount, cash flowing monthly and no repairs needed (this wasn't by chance I knew all of the mechanical items had been in great shape) . That's a little over $6k in cash flow - Not a ton, but decent for something I have little money in.

When my current renters decided to move out I thought now might be a good time to sell as from a demand perspective this house has always been on the low end compared to my other homes. I put around $2500 into it, sprucing it up and making sure I would get top dollar... Which I did - full list price after a week on the market. $149K. The kicker is it only appraised for $144k so I came down to this price.

I took the money from this property and I am closing on a much nicer and newer home with a much higher rent and more cash flow in a few days. I'll have some money left over in my 1031 exchange so I'll most likely find a 2nd property to purchase shortly.

So in summation this one house has allowed me to:

• Pull out my down payment and purchase a 2nd house immediately 
  • I cash out refinanced that 2nd house to buy a triplex shortly after

   Now I'm selling the original house and buying two more houses

So, in the end I acquired 6 doors (almost 1 million in property) made $3,500 cash flow ($6k - $2500) and paid down my LOC in the process    

It's rewarding to see the 3 million dollar goal by 2020 in the OP as I have already surpassed that and the new goal is now 10!

@Jace Carlock This is a great area to invest. As Dustin above said, you shouldn't have too hard of a time finding properties that hit your numbers, you will just need to jump on anything you find quick. I recently sold two of my SFH to purchase an apartment and had both under contract within a day of hitting the MLS.

To be a little more specific about locations, I really like west Fayetteville and Centerton right now. Houses tend to be slightly cheaper and the rents are still solid with lots of demand. Fayetteville demands  a little bit higher rent than the cities to the north in general. East Fayetteville is great as well with top notch schools you just need to be on the look out for foundation issues as a lot of those houses are built on rocky soil. 

Shoot me a PM if you want to chat more. Best of luck to you.

Thank you everyone for the information. I am going to look at an apartment next week. Hopefully its something that the numbers work and I can use the 1031 to purchase. It's pretty hard to find good value in my area right now, but I bet I will come across something in 45 days.

Hello All,

I have a question that I can't seem to find a clear answer on.

I have a single family property that my wife and I purchased with a partner. All 3 of our names are on the note. We currently have the property under contract to be sold. My question is, can I take my wife and I's 50% profits and roll it into our own property using a 1031 or will we have to all (all 3 owners) use one 1031 exchange account to purchase a property and continue the partnership.

Does that make sense?

Thanks in advance for the help!

Max

Impressive. Congrats, those all look like great deals. You are well on your way.

What is your end game? Do you have a day job you are trying to replace or is it just added income for you?

I always like seeing what people are doing in the "forgotten" states here in the middle of the country.

Clearwater construction did some work for me a while back. They did a great job.

That's pretty standard when you are talking about lines of credit. I have one with these terms. It's handy for quick access to funds. If you want to access your equity and keep the property you have to pay for it one way or the other. The trick is to purchase another property to service the debt and make a little cash flow for you too. I wouldn't let the loan terms prevent you from growing your portfolio. Just don't over leverage.

This a great idea I keep something similar in Excel and share it with any new banks I meet with and they really find it helpful.

What would be cool (this might be out there already), a few before me touched on this, is a snowball amortization section. Something that would calculate the loan amount left for each loan, do the amortization for you, and gave you the option of adding additional principle to the loan. Once the loan was paid off you could pick which other loan it would take the excess cash flow an add it to and so on . I have a crude version I created, but its not dynamic. I'm still in the acquisition phase of my business, so this isn't something I would use right away, but once I hit my targeted number of properties I would look to pay them off using this method.

@Vincent Crane

Thanks for playing devils advocate.

It is a thin margin indeed, my current goal is to pick up houses, that I at least break even on while managing myself (this house has the thinnest margin of any I own to date due to 100% borrowed money). I'm looking to grow my portfolio with properties in desirable neighborhoods with built in equity from day 1, that will be paid off by my tenants. I walked into this house with around 25k in equity and its turnkey in a good neighborhood that will attract good renters. I probably won't purchase much more until the market comes down a little or hopefully a lot. Cash flow isn't #1 priority, while obviously I care about it and I do not want to use personal funds to support my real estate investments, I'm looking to grow my total portfolio by acquiring and having tenants pay my debt. When its time to retire I will have a nice paid for revenue generating portfolio. 

@Roland Thomas @Mike Whitehead @Linval T. @Brian Brzycki @Patrick Allen

Thanks guys! Its been fun being able to grow.

@Michael Noto

Its not super uncommon for banks to perform their own "flips" in this area. The economy is really strong thanks to The U of A, Walmart (and all the vendors), JB Hunt, and Tyson being in this area. Even during the recession, the market was decent. I listed the property yesterday for $1,025 on Postlets, I have already received 7 responses. Should have listed it for more I guess. The rental market here is out of control. I have not had a vacant month in 2.5 years in any property, people move out Friday and in on Saturday. Its great right now.

@George P. Rough numbers look like this

PITI $650 (20 year AM)

LOC $130 (20 year AM)

CAPEX $100

VACANCY $50

So that puts me at $95 a month after all is said and done. Obviously not setting the world on fire, but with $0 money coming out of my personal funds and growing my portfolio with nice, easy to rent properties, it fits my niche.