All Forum Posts by: Noah Chappell

@Fakal Azeem I wasn't clear.. is the 2M like a residential jumbo loan, or commercial? I'm assuming residential.. I'd be very careful when you're starting out with a lot of money, because one misstep and you could go tumbling in the wrong direction and not be able to recover, whereas with a smaller loan you could absorb the cost of an error more easily. If I were you I'd start with just a portion of the money on 1 or 2 smaller value add projects, ideally close to home, to get your mind around the fundamentals, then scale from there. Another good option if you're hoping to be as hands off as possible would be a triple net lease commercial deal targeting strong fast food chains, etc. Even here however, you'd need to do a good amount of research first, and build up relationships with brokers in that space, etc. 

@Jimmie Perales @Tim Swierczek is a great broker and really great all around guy, never minds bouncing ideas around, etc. I've also had a good streamlined experience with leader one. Kim Burke is great, I think she started her own company now, just google her name. 

@Tristan Toliver I'm not the expert on HELOCs and have only used cash out refi's. My understanding is that HELOCs are similar to a credit card seeing as the idea is really to use the funds temporarily, and as such the term is shorter and rate is higher than a refinance, which essentially has the same terms as a mortgage. I'm not sure if HELOCs can be recalled early if the bank is in distress, but I've heard concern about this. In general I've seen investors tend towards the refi when they need long term financing to put into another property. Hope that helps! 

@Andy Maben congrats and welcome to this exciting market. Let me know if you ever want to connect by phone to bounce some ideas of one another. 

@Tristan Toliver congrats! Sounds like your Baltimore property is a money factor, based upon its rate of appreciation. If it were me, I'd cash out refi to where it was cash flowing enough to break even with reserve for repairs/ maintenance, then take that equity to a higher cash flow market, or sub market within the same city. I definitely think it'd be a mistake to get rid of this asset right now. As said above if you 1031 you're forced to identify your new purchase in 45d, and give how hot things are there's a slim change you'd find something worth the money, so you could buy a sub par asset, or be stuck holding the money and eat the capital gains - could be a mess. 

@Jonathan Messinger as others have stated, many Midwest markets would fit your criteria, think Ohio markets, Indianapolis, Des Moines, Milwaukee, etc. 

Keep in mid that the idea of a great cash flowing property far away that gives you that monthly mail box money may be enticing, but it's probably not the reality. A lot of Midwest properties, especially the affordable ones, have been neglected and are located in less than optimal areas. It takes some real local knowledge to determine which block buy on, what degree of rehab you'll perform, etc. Also this crazy market has caused the experienced investors to hone their skills even more. If there's a property that looks good, it's very likely many local investors have picked it over already and chosen to leave it.. 

Remember you'll be tied to the place you buy property for the foreseeable future, and you need to be comfortable interacting with that place continuously, at least in the beginning, probably traveling there but at the very least virtually/ by phone. I'd pick a local market where you can find reasonable deals, maybe Buffalo, NY, and become an expert in that market. That my give you the competitive advantage to be successful given how crazy things area. 

@Zachary Dorff congrats on getting started, you won't regret it! My 2 cents would be to start locally and focus on building the core skills from the beginning that will make you a successful investor. You have decent money, and I think that can be dangerous, because it can allow you to be sloppy and avoid fine tuning your abilities. For ex with 100k down you could swipe in a pick up a 10 unit in Milwaukee that looks good on paper, but no local investor would touch. 

If I were you I'd act like I didn't have much money, then go for a rough property in your area, or maybe an hour away. C area. Go for something with pain points but potential for profit in terms of cash flow and appreciation. If you can do a deal or two like that, and you have some money as well, you'll be dynamite going forward into bigger projects. 

@Moly Yang Melissa at Servion is great on the commercial side, as is Becky at Entitle. West title is willing to think outside of the box.. Hope that helps!! 

@Corey Cox I'd probably focus on the seller financing. You could do interest only for maybe 5 years until you're bankable and then refinance. What I would do is call every credit union in your area, maybe 15-20, and ask what commercial/ portfolio loans they have available. Often a banks will allow you to seller finance up to 10% of the DP of these, so you'd only be on the hook for that. If you really pinched for cash you could even get a personal loan from someone you know to pay your remaining 10%, maybe a 5yr interest only from a self directed IRA you could pay off with the cash flow. I'm assuming this would be a 700-900k portfolio, so 10% would be 70-90k which you'd need too come up with. It would be a decent amount of work, but I agree it would be life changing if you could take it down.

@William McCarthy I don't see any huge flaws with your premise. Seller financing might be your best bet, otherwise known as contract for deed. You could also do a lease option to lock in the price and assure you have exclusive rights to buy it when the time comes. Involving a RE attorney or title company from the beginning might be smart so that you have all your ducks in a row when you present options to the seller. 

I might think a bit more about the price of this asset. Take this with a grain of salt given I don't know your area at all. At a 0.7 rent to price ratio I can't see how you'd be cash flowing. For me to consider this it'd really need to be a strong appreciation play, right in the path of progress, etc, or a place you want to be your long term primary residence because you personally like living there, otherwise I'd personally focus on a more distressed asset at a lower price I could add value to. Just my 2 cents.