All Forum Posts by: Michael Krupp

Hi Timothy,

Sounds like you did well, congrats! I just have some questions which may lead to some things you may want to consider.  You financed this with a conventional loan?  Were the 2 units already rented? Did you do any work to the units?  How did you deal with lead certification, lead safe or lead free?  Is the 3rd unit ready to go? Will you be managing the property yourself?

Hi Reginald,

I would suggest similar to the above and continue learning and exploring the various options.  Definitely networking would be a key for me as you should look up local investor meetups and go talk to as many people as you can to get others views on what you are questioning. Breaking things down could help, and where you start does not have to be where you end up.  You just need to find one area that excites you and begin your journey. 

Wholesaling is a business unto it's own, while many tout that you don't need money to start, you do need time to devote to it, and money can help to follow up with letters, cards, and calls. Here you basically work to find off market properties to flip to another investor for a quick fee without having to rehab it yourself, though may investors end up finding properties for their own investing, so off market marketing is what it becomes to source your own deals rather than fighting the majority looking as multiple listed properties.  

Rentals and BRRRR go together, and multi family fits here too. Not everyone likes to be a landlord, so do you? Are you looking for passive income first? Are you going to manage your own properties or hire someone? Flipping is for short term cash flow and capital gains as you know. This also entails a lot of project management, design, and more.

There is no reason you cannot have a diversified strategy, you just need to start somewhere. Once you meet some other experienced investors and get their take on all this, you will likely find a place to start.  You may even find a mentor or someone you can shadow or a partner if you so choose. 

It either begins with finding a "deal", a property that will make sense as either a rental or a flip, and the numbers will likely point you in a direction.  Or, you start marketing for properties to see where that takes you.  Whichever way you choose to start is the right way, there is no wrong answer here, just get started! You can do this!

Hi Jermaine! Great question with so many options. Lots of good advice already. As a veteran investor of 20 years, here are some of my humble thoughts to get started.  These are not in order.

1) Get involved with local investor groups, go to real estate investor meetups, network and meet people. You will find many people willing to share and advise. Just do your due diligence and make sure you connect with ones that are vetted and real. You will learn so much having your feet on the ground in your local market. You just have to be careful who you connect with and make sure they are what and who they say they are.  You want to network with everyone you can, though you want an experienced investor with a track record that can guide you.  

2) You will need to build a team. Find a good realtor or two that work with investors. Find lenders, contractors, suppliers, property managers, etc.

3) Find an experienced investor that is willing to help or coach you, you’ll be surprised. If you find the right person, it would even be wise to pay them. The right coach will teach you how to make money in this business which is priceless.  They will also greatly expedite your learning curve. Again, make sure you vet them.  You might even try to intern with someone experienced who needs help in their business.

4) Make a detailed plan, you may need help here. I can’t say flip or rental is best to start, it depends upon what you want and what type of deal comes to you first. You can with help minimize the risk on either one. Rentals are great to build passive income and flips for short term gains. Wholesaling is another option, though don't mistake it as being not needing funds and doing part time.  This is a business like rentals or flipping.   Decide where to start, it doesn’t matter, just start!

5) Learn as much as you can. Spend time on bigger pockets, lots of resources here. Read books, podcasts, audio, etc. Network at events, seminars, etc. Just remember, you cannot learn how to do this from books, you need action!

As Grant Cardone says, 1) Invest in yourself 2) Invest in others that can help you 3) Invest in your business.  This is just skimming the surface.  I wish you good fortune and if I can help in way, reach out.

Please join GRID Baltimore meetup on Wednesday August 28th, 2019 at the DoubleTree Hilton in Pikesville. We will be discussing the keys to building wealth with rental properties.  

Hi Janiel, I apologize for I am not completely clear on exactly what you are trying to accomplish, if you can help clarify your intentions and goals. You own a free and clear property, what is it worth as-is and fixed up if need be? Did you take the HELOC out on it or another property? Is the down payment for another property that you have in your sights, or for a future property? Are the HELOC funds to make repairs to the free and clear property you own so you can rent it I would assume, not flip it? Depending on the property, your financial and credit situation, and your time frame, the loan options would vary. If the property has a solid rent to debt ratio or DSC Debt Service coverage, and is in a decent area, there should be multiple options, especially if your credit and financials are good. Even if not, with a good DSC, you should still be able to get favorable terms on a long term rental loan. I assume you are also looking for cash out from this property to leverage into other deals?

Hi Patrick, I am a local hard money lender as well as an investor with rental properties. You said the purchase price was under $50k, what will the rehab cost be, and then the value after rehab? I would have to assume most properties in the Baltimore area being bought for under $50k, will need some work. Based on these numbers, you might have more options than you think, though you likely will need to find local funds, such as smaller local banks, credit unions, private investors, or hard money. As you do more properties, you will need non-conventional sources such as these. If the ARV is under $50k, and in rougher areas, then those are surely more challenging. We do those 60 month fully amortizing loans on a case by case basis depending on the property and borrower. There are a few of us in the area that do these, and at the end of the 60 months, you own the property free and clear. While these are more expensive, they accomplish the goal and the rent should still cover the mortgage and throw off a little cash until you pay it off.

@Stephanie Salas

That’s an option though again it all depends on your specific circumstances and goals. You would still need to learn all about that which to do properly is a lot of work and does take time and some money, You will need more than a book, that’s why the network and meetups are so valuable. I would highly suggest starting there too.

As Grant Cardone and many others say, Rule #1 Invest in yourself, there is no better Investment. If you are on Bigger Pockets asking questions, then you are already in one of the right places. There are so many resources here and so many knowledgeable people. There are many options to learn and get started, as everyone is different and learns differently. Reading books, listening to audio, podcasts, attending REIA's or other real estate investor meetup groups, or even doing a $200 seminar could surely provide a few nuggets or two that would be of value. Fortune Builders definitely has a lot of valuable information and as long as you can afford the $200 investment for weekend, then you have only that fixed amount to lose and everything to gain in my humble opinion. If that was your only $200, then you have to consider all of your options with other educational resources. If you were asking about spending $25k, then that is a totally different question to consider. I believe networking is a tremendously valuable resource to get started in your local area, and you will find others with experience, that will likely be happy to share with you as well. You may also find a local coach or mentor that may be able to help you expedite your learning curve should that be something of interest and within your financial capability. I give you credit for being here and asking questions. I would spend more time here looking up this same topic and about getting started with investing and you will find many more valuable ideas, books, podcasts, and experienced individuals with a wealth of knowledge to share. Best wishes to you.

Hey Patrick,

I have a lot of rentals myself and am in the midst of researching lenders for a longer term refi.  I am talking to both Lima One Capital and Lending One. They both do 30 years fixed rate loans on multiple properties at reasonable rates 5-6% and fees 1-2 points, all subject to borrower qualifications.  I have not found local lenders willing to do this, though there may be some that do 10-15 year fully amortizing loans.  I think the fees these national lenders charge are reasonable and it is likely worth it to accomplish the goal.

Hi Robert, As a local hard money lender in Maryland over the last 10 years, we typically lend 90% of the purchase price and 100% of the rehab costs up to 65% LTV based on the ARV. Borrowers therefore typically need 10% of the purchase price PLUS closing costs as their cash in the loan. The rehab costs should account for materials, labor, and project management along with contingency funds if you have the room to factor that in. We lend on both flips and rentals, there is not much difference to us with a loan. On either type of loan, you definitely want to make sure you have your team in place, realtor, contractor, tenant placement or property manager, etc. Understand lead paint laws and how you will deal with them and your comfort level.

The key piece for us on a rental loan, is to be relatively confident that the investor has the ability to secure a take out loan. So the investors credit, income, and assets, matter as well as the expected DSC or debt service coverage of the property,  ratio of loan debt to rent. Most banks look at a specific % of like 1.2 or better or something like that, though it varies.  I am not sure what exact things you want to be cautious of, though make sure your lender is transparent with you about all up front costs, with no hidden fees.  I know lots of investors that got hit with unexpected fees at settlement.  I would highly suggest you use a local lender rather than an out of state hard money lender, for they will know the market and be able to offer you a more hands on approach preferably with some guidance should you need or want that.  I am happy to answer any further questions here or via message or email.