All Forum Posts by: Nathan Hillier

Hey,

I'm a Calgary local, investing in the US looking to network with investors interested in learning more about US real estate. Currently i'm flipping properties, buying and selling rental properties, and wholesaling deals in Memphis Tennessee, New Jersey, and Dayton Ohio. Please let me know if you are interested in meeting up over coffee and networking. 

Thanks!

Congratulations on your first rental!

Ive also just purchased my first rental, in Dayton Ohio (technically my second, first is still under renovation). 

Buy price: $43,500

Monthly Rent: $1,050

How do you like Memphis so far? Im currently completing a flip down there and excited to see how it turns out. Rental properties in Memphis is something id like to get into because of how steady the market is, you cant beat it. What made you want to invest in Memphis?

@Sam Shueh That's an excellent point about the extra tariff charges increasing cost of materials and appliances. The extra costs will absolutely bite into profit, and is something i should start planning for. Thanks for the response! 

@Steve Vaughan I'm going to have to agree with you on this one. Especially starting out in the peak of a market, its probably best to buy cash. Thanks for the input! 

@Caleb Heimsoth The question is more towards flips and not so much rental properties. I'm sorry if I made it sound like i'm talking about refinancing rentals. 

Good point though with interest rates, as they start to raise above 7%, maybe look at buying with cash, it makes sense. As it is now, we plan to refinance our duplex get our equity out, and still have a solid cash flow as long as we can get locked in under 7%. 

But now its the question of leveraging our flips and how to do so without being over leveraged, and getting out of a deal safely. 

@Phillip Denny I think it comes down to my lack of knowledge as well as risk tolerance when it comes to leveraging flips, and how to make it out alive if all else goes wrong. More of that fear factor and getting caught being over leveraged during a correction - and a drive to stay in the market for the long run. 

It's a hard position to be in, as leveraging would drastically increase the volume of deals we could pursue, but we risk losing lots, if not everything by over leveraging. How can you find a healthy balance - or tips on structuring a leveraged flip to limit risk and profit loss in the event of a correction. 

@Michele B. Thanks for the reply! As for rental properties, leverage makes sense either way, and I feel it more or less comes down to the deal itself. If there's room to refinance out will still good cash flow, than great. If not, hold it without a mortgage and gain a greater cash flow. 

But you have a great point, I must decide what the time value my money is worth to me. Right now it's hard to answer. I would love to make quick money through leveraging flips, but i'd also like to be around after the market corrects itself. I guess i just don't see a healthy balance between using hard money and flipping homes.

If i had to rephrase my discussion: Strategies to balance risks/rewards when using hard money on flips. 

Hi guys, just wanted to have a discussion about leverage. 

With my business just starting up no more than 5 months ago, and acquiring three properties; two flips, one duplex - located in 3 different states, I am looking for your opinion on leverage. Since we are so new, and the market being at the peak levels we are seeing today, we know a crash is coming.. so why leverage? 

(Don't worry about our rental, only want to talk about flipping)

My thought process; Since our company has been able to creatively fund an amount of working capital that allows us to purchase with cash, at-least two/three flips, we shouldn't risk maximizing our potential gains with leverage. I know strategic leverage mixed with appreciation can result in serious gains, but the same occurs when deprecation and leverage mix, resulting in serious losses. For this reason, along with "Time in the market is better than timing the market" - Warren Buffet -  by not timing for the market crash and hoping we will sell at the peak, and moving slower to see another market cycle by not leveraging - is why I don't feel leveraging flips is worth it in our current position. 

As well, our strict buying criteria gives our company lots of room to go over budget on rehab, sell at a discounted price, or hold for a longer term because we pursue deals with great spreads and buy cash. We also will be aiming to pursue flips that we know we can rent out and hold with a positive cash flow in case of a market correction. 

... Most of these key points above are limited, if not impossible if we leverage. With higher holding costs due to hard money payments, we have a lower profit take home, forcing budgets to be tighter, and break even selling price to be higher. As well, cash flowing a property that is leveraged with hard money is very hard to find, if not impossible for us at the moment. 

In conclusion; I feel with the market the way it is today,  between our available working capital, knowledge, and resources, our company is best suited to pursue flips that hold huge profit spreads and low holding costs resulting in the ability to sell quickly, or rent out and be cash flow positive by not leveraging. 

Do you guys agree? Disagree? And why?

I appreciate the time guys! Thanks for the input. 

@Chris Mason That's a really great trick, and I had no idea an agent had to find a lender that would do the deal. Ill look into it and see what i can manage to get. Thank you for your input! 

@Nathan Rude Ill be sure to contract them and see what happens, thank you!

@Kevin Pruitt I will most definitely look into it, thank you for the lead! 

Hey BP, just wanted to reach out and ask if anyone knows about refinancing a residential duplex if its ARV is around $80,000 in Dayton, Ohio? Would this be possible?

The reason why i ask is because my current deal may fall short when we get the property appraised - Some valuable lessons learned here with not getting a proper ARV, and now questioning if the appraisal will follow through. My team and I have reached out to multiple banks and lenders, and have been told we cannot refinance our property if its appraisal is under $100k. Can anyone confirm that this is true for most if not all banks and lenders?

I appreciate the help!