All Forum Posts by: Nick M.

Originally posted by @Aaron K.:

@Maxwell Allen I think that the poster is likely doing just one flip at a time (correct me if I'm wrong) and in that case the cash would just be sitting in the bank earning 1% interest. Also the short term and high interest of the hard money loan, means that the opportunity cost of the cash to get a return greater than the interest and fees of the HML is fairly low unless used as a down payment on another equally good flip.

 Correct. I am only looking at one flip currently. it’s my first one and I didn’t think having multiple going was a good idea. Maybe that’s not the right attitude. But I’d rather be cautious and learn from my mistakes on one than be making mistakes on multiple properties (and potentially making problems exponential) 

Made an offer on a REO property in southern NJ. See my other post on that....would love feedback: https://www.biggerpockets.com/forums/48/topics/520...

Considering using hard money lenders. Several of them require an LLC. I have a rental property but it's in my name, not an LLC. That property is in NC. This would be in NJ. I understand the benefits of an LLC. Any disadvantages? Any upside/downside to creating an LLC in NJ vs. NC?

Thanks for your help!

I made an offer on an REO property in southern NJ. Details below:

Offer price: 70k

Rehab budget: 35k

ARV: using comps in the area 165k. Going conservative and will say 150k

Goal: Probably fix and flip. May BRRRR.

I have the cash to purchase the property outright. I have enough equity in the other properties I own to take a HELOC to cover the rehab. However, I'm considering using hard money lender for the purchase price of the home. I don't want to use them for the rehab as I will be doing some of the work myself and I'm not a licensed contractor so getting reimbursed with draws wouldn't work.

I understand that I will make less money due to the various fees that come with hard money lending. My thought process is twofold: 1) I'm not sure I'm comfortable using 2/3 of my "safety net" (savings in case I lose my job, someone in my family is in hospital, etc.) to fund the purchase. 2) My goal is eventually to purchase real estate in a better area where tenants are more stable. I won't have enough cash for those BRRRRs. So by using hard money now, I prove my ability to get a flip done and start getting better rates, fewer up front points, etc. for those larger transactions later.

Curious to get other's feedback on any and all of the above. Thanks in advance!

I bought my first rental property at 23. I bought it where I went to college so I knew the market. This was back in 2000 so the lending landscape was the Wild West. I bought it as a second home (even though I didn’t own a first) so I only had to put 5% down on the 92k purchase price. So $4,600 plus closing costs. Reading that paragraph it’s no wonder the real estate bubble burst. :) I’m getting back into real estate after taking a break while having kids. So I’m in the same boat as you...trying not to overthink things. To help with analysis paralysis, read the Flip book by Robert Villani and Clay Davis. Even if you’re not flipping, it’s pretty exhaustive in its checklists, rules of thumb etc that can help shorten the analysis time for a BRRRR. You need to adjust their numbers for your local market (although I think they’re based in TX so they might be close for you) but it’s a good starting point. Good luck. I’ve put in offers on 3 houses so far. Lost one to another investor, one the bank rejected as too low, and one I find out about tomorrow. I trust my numbers and try to not get caught up in the emotion. If I don’t get the deal at my price there will be another one in the future. There always is. It’s exciting and scary at the same time. I try to enjoy that feeling. I don’t want RE investing to become bland and boring. Otherwise it would be like an office job.

Originally posted by @Alfred Edmonds:

the install is wrong on every level and can't tell if it's drywall or not because I'm getting old and blind. the joints should always be staggered and the tape looks non existent. you'd have to redo it either way but it probably has nothing to do with structural problems

 Thanks Alfred. Great point on the staggered joints. I hadn't even thought about that.

Would you just retape/compound or would you remove all the drywall and stagger joints correctly? 

I'm interested in a REO property. The one I've found looks attractive for either a flip or a BRRRR.

I'm trying to estimate repair costs and am wondering if there is a structural problem. The ceilings in the front rooms have cracks in the drywall that appear to follow the seams (see attached images). I don't think this is structural as I would think that the cracks would be more random if the house settled. I walked the outside of the house looking for foundation issues and found one crack (pic also attached). 

If anyone has seen similar behavior I'd be grateful for feedback on what their experience is. 

Thanks in advance for your help!

Originally posted by @Garrett Vita:

@Nick M. How did you find out what was going in the college, if you don't go there anymore? Because I would figure the school wouldn't post that type or rule publicly.

 @Garrett Vita, I knew about the new apartment buildings that were built on campus because there were plenty of articles written about them in the local paper. I didn't find out about the change in the housing policy until one of my tenants mentioned it to me. I should have been following events on campus using the student newspaper (they have an online version I could have gotten access to). 

You should put required notices in your leases. This protects both you and the tenants. Mine are 90 days. Gives me and the tenant 3 months to plan for moving, re-renting the house etc. Your state may have required minimums as well. If you don’t have one, you should put a clause in the lease about sub-letting the property. That would provide some protection from the Airbnb situation. Putting total strangers in the house that have no responsibility for how they treat it is concerning at best and dangerous at worst. Regarding the family that’s staying behind...Do you know someone who speaks their language? If not, you may have challenges. Additionally, they may not understand the lease you’re asking them to sign. That’s a tough call. If the problem tenant is moving out and they pay the rent on time and take care of the house it’s tempting to roll the dice. However I can see some pretty challenging attempts at sign language if repairs need to be made or something goes wrong. :) Raising the rent is always challenging. You definitely can’t raise it to market levels all in one fell swoop. You may lose tenants that way. Or at the very least diminish the relationship you have with them if they stay. You can build in increases annually at a small % every year. Explain to them that costs are rising (RE taxes etc) and give them plenty of notice so they can plan for it. Good luck!

Always keep an eye on what's going on in the market around you.

My first rental property was 2 blocks from where I went to college. Easy! I have a guaranteed pool of potential tenants who want to live off campus for larger rooms, less restrictions, etc. For 3 years, it was. 

But in my 4th year of owning it, the university poured millions into new on-campus apartments that weren't being lived in (for all the above reasons). So they changed the rules and instead of only requiring freshmen to live on campus, they now required freshmen and sophomores to live on campus. Overnight (or what seemed like it) my pool of potential tenants was cut by 1/3! After that it got much more difficult to find tenants and I ended up getting students I wouldn't have normally allowed in because I just wanted some rent coming in. 

After 2 years of struggling to collect, I sold the property. I made a 38k profit on the sale...but I learned a good lesson about keeping up with what's going on around my houses.