All Forum Posts by: Noah Wright

Hi Brandon! It sounds like you’re at an exciting juncture in your real estate investing journey. With a free and clear rental property and a solid equity position, you're well-positioned to leverage that equity effectively.

Evaluating Your Options

1. Cash-Out Refinance:
   • Given that you want to maintain a conservative leverage ratio of 50%, pulling out $110,000 from your property makes sense. This strategy allows you to tap into your equity without overextending yourself financially.
2. Investment Strategy:
   • Single Property vs. Multiple Properties:
     • Single Property Purchase: Using the entire $110,000 as a down payment on one property could allow you to acquire a more desirable asset or a larger property, potentially leading to higher rental income. This route can simplify management since you’ll only have one additional property to oversee.
     • Multiple Properties: Splitting the funds to purchase two properties can diversify your investment portfolio. This approach mitigates risk; if one property underperforms, the other may still generate income. Given that properties in your target area are around $250,000, a 20% down payment for two properties would indeed be achievable with your cash-out funds.

Market Considerations

• Central Texas Market:
  • The Central Texas market is strong, especially for single-family rentals (SFR). Research the neighborhoods you're interested in to identify areas with growth potential, strong rental demand, and favorable appreciation trends.

Financial Impact

• Cash Flow Analysis:
  • Perform a cash flow analysis for both scenarios. Calculate potential rental income, expenses, and any projected appreciation to see how each option would impact your overall portfolio. Look for properties with a solid cash flow to ensure your investments are self-sustaining.

Final Thoughts

Ultimately, your decision may come down to your risk tolerance and management preferences. If I were forced to pick, I’d lean towards purchasing two properties to diversify and spread the risk while potentially increasing your overall cash flow. This strategy aligns well with the goal of building a more robust portfolio over time.

Feel free to share more details if you have specific properties in mind, and good luck with your investment decisions!

(for the low 200k properties, I'd look around military bases - good demand and disciplined tenants..)

Hi Bryce! It's great to see you're making strides in your real estate journey, and attending the BiggerPockets Conference sounds like an incredible opportunity to network and learn.

With your diverse portfolio, including a fix-and-flip in Cleveland and multiple duplexes in Rochester, you're clearly on a path to scale your investments. Expanding into mid-term rentals and apartment complexes is a smart move, especially in the current market where flexibility in rental strategies can lead to better cash flow.

Networking and Partnerships

• Local Contacts: Connecting with reliable handypeople, lenders, and agents in Cleveland, Rochester, and Austin is crucial for scaling effectively. Building a solid team will enable you to manage multiple projects and properties seamlessly.
  
• Collaboration Opportunities: Since you're open to partnerships, consider exploring co-investment opportunities with fellow investors who share your vision. This could accelerate your growth and diversify your portfolio.

Legal and Tax Strategies

• Engage a CPA: Finding a CPA with experience in real estate holdings and LLCs will help you navigate the complexities of tax strategies and legal protections. This support will be invaluable as you expand your portfolio, ensuring you're optimizing your tax position and protecting your assets. @Account Closed could be a fantastic contact for you.
  
  
• LLC Structure: Ensure your properties are held in an LLC to shield your personal assets. A CPA can guide you on the best structure for your investments to maximize benefits.

Future Plans

• Utilizing Your Lot in Destin: With the lot in Destin, consider the rental potential in a popular vacation destination. Whether you build a rental property or explore other developments, there’s a good chance of a lucrative return.
  
• Goal Setting: Acquiring 25-30 properties is an ambitious and exciting goal! As you scale, continue to reassess your strategies, keeping an eye on market trends and adjusting your approach as needed.

If you’re looking for insights or potential partnerships, feel free to reach out. Networking with others who have similar goals can be incredibly rewarding, and I’m sure you’ll find valuable connections at the conference. Best of luck with your projects, and enjoy the event!

Hi Mohit! It sounds like you have a solid foundation with your real estate investments in Australia, and your strategy of buying in the right market cycle, renovating, and refinancing is a proven approach. Expanding into the US residential market can be a rewarding opportunity, especially with your focus on cash flow and capital appreciation.

Given your interest in properties that yield positive cash flow while also offering capital appreciation potential, I'd like to introduce you to a financing option specifically designed for foreign investors like yourself: Debt Service Coverage Ratio (DSCR) loans. This approach can help you secure funding more easily without the need for traditional income documentation. Here's how you can navigate this transition while considering DSCR financing:

1. Understanding DSCR Financing

• What is DSCR?: DSCR loans are designed for real estate investors, allowing you to qualify based on the property's cash flow rather than your personal income. Lenders typically look for a DSCR of at least 1.0, meaning the property generates enough income to cover its debt obligations.
• Benefits for Foreign Nationals: This type of financing is particularly beneficial for foreign investors because it often has fewer documentation requirements, allowing you to leverage your property’s income potential rather than focusing on your global income.

2. Research the Market

• Local Trends: Texas, particularly Austin and Houston, has been experiencing significant growth. Look into local economic indicators, such as job growth, population trends, and migration patterns, to gauge potential demand in specific neighborhoods.
• Rental Demand: Investigate rental demand in the areas you're considering. Check vacancy rates, average rents, and tenant demographics to understand the rental landscape.

3. Networking

• Local Real Estate Groups: Join local real estate investment groups or forums, especially those focused on Texas markets. Networking with local investors, real estate agents, and property managers can provide insights and potential opportunities.
• Attend Meetups: Participate in local real estate meetups or workshops to connect with others in the industry and gain valuable firsthand knowledge.

4. Property Selection

• Focus on Neighborhoods: When searching for properties, prioritize neighborhoods with good schools, amenities, and access to public transportation. Areas with ongoing infrastructure projects can also indicate future growth.
• Condition of Properties: Look for properties that are well-maintained and require minimal repairs. This will help you avoid significant renovation costs and keep your cash flow positive from the start.

5. Financing Options

• Leverage DSCR Loans: Consider working with lenders who specialize in DSCR loans for foreign investors. This could streamline your financing process and help you acquire properties more efficiently, enabling you to take advantage of investment opportunities as they arise.
• Understand US Financing: Familiarize yourself with the US mortgage market. Since you’re dealing with a different currency, ensure you understand the implications of exchange rates on your financing options.
• Consider Partnerships: Partnering with local investors or using property management companies can help mitigate risks and streamline the investment process, especially if you're not in the country full-time.

6. Legal Considerations

• Consult a Lawyer: Ensure you understand the legal landscape for foreign investors in the US. Consulting a real estate attorney can help you navigate zoning laws, property taxes, and other legalities that may affect your investment.

7. Long-Term Perspective

• Be Patient: Real estate investing is often a long-term game. Focus on properties that align with your financial independence goals and be prepared for market fluctuations.

Your strategy of balancing cash flow with capital appreciation while aiming for financial independence is sound. If I were forced to pick, I would suggest focusing on Austin due to its tech-driven growth and lifestyle appeal. However, Houston’s diverse economy and affordability also present compelling opportunities.

Feel free to reach out if you have more specific questions or if you need insights about particular neighborhoods in Texas! Good luck with your investments!

Quote from @Joseph Kirk:

I am looking to get into doing fix & flips. I currently have 3 rental properties and now want to move on into fix and flip...

Joseph, it's great that you're looking to expand into fix and flips, and having three rental properties already gives you a solid foundation. Here are some key tips and insights for getting started:

1. Step-by-Step Process for Evaluating a Flip:

• Find the Deal: Use platforms like MLS, foreclosure auctions, or network with wholesalers.
• Run the Numbers: The 70% Rule is a good starting point. It suggests that you should aim to pay no more than 70% of the ARV (after-repair value), minus repair costs.
  • Example: If the ARV is $300,000 and repairs cost $50,000, you should pay no more than $160,000 for the property. ($300,000 * 0.70 = $210,000 – $50,000 = $160,000).
• Walk the Property: Check for structural issues, roof condition, foundation, HVAC, and plumbing. Focus on the big-ticket items and estimate costs.
• Financing: Whether it's private money, hard money loans, or a traditional lender, make sure your financing is lined up. Factor in carrying costs (utilities, taxes, insurance).

2. Permits and LLCs for Contractors:

• Your associates/relatives don't necessarily need to create an LLC to perform renovations. As long as they pull the proper permits and are licensed contractors (if required in your state), they can legally work on the property. Forming an LLC might give them liability protection and a more formal business structure, but it's not essential.

3. Return on Investment (ROI):

• A good ROI on a fix-and-flip can vary by market, but a typical target is around 10-15% of the ARV after all costs (purchase price, repairs, carrying costs, and selling expenses). This can fluctuate depending on local market conditions and the scope of the flip.

4. Using Tools Like BiggerPockets:

• BiggerPockets has great "premium" calculators, but if you're comfortable with spreadsheets, you can create your own analysis template. You’ll want it to include:
  • Purchase price
  • Estimated repair costs (line item)
  • ARV (after-repair value)
  • Financing costs (interest, points, etc.)
  • Holding costs (taxes, insurance, utilities)
  • Selling costs (agent commissions, closing costs)
  • Profit margin

5. Spreadsheets/Templates:

• If you don’t want to start from scratch, sites like BiggerPockets and others have pre-built templates you can use to run your numbers and track your expenses. I’d suggest starting there, or if you’re comfortable with Excel or Google Sheets, customizing a simple flip analysis template yourself.
  

Final Thought:

Since this is your first flip, starting with a modest project can help you learn the ropes without risking too much capital. It’s easy to underestimate renovation costs and timelines, so always build in a cushion for unexpected expenses.

Good luck with your first flip, and feel free to reach out if you need more detailed guidance along the way!

Brandon, I totally get where you're coming from. Dealing with unreasonable reviews, especially when you’ve done your best, can be frustrating. Your instinct not to reply is valid, especially since you already have a strong base of positive reviews. Most prospective guests can indeed see through an overly picky critique.

However, there are ways to respond to critical reviews that maintain professionalism and avoid coming off as defensive:

1. Keep it Short and Professional: A brief, polite response shows that you care without getting into the details. Something like, “Thank you for your feedback. We strive to provide the best experience possible and will take your comments into account for future guests.” This reassures potential guests that you care about service quality without engaging in a back-and-forth.
   
2. Address Any Legitimate Issues: If there’s any valid criticism hidden in the hyperbole, acknowledge it briefly. This shows you're open to improvement but won’t let a picky guest's minor grievances dictate the narrative.
   
3. Avoid Emotion: Keep the tone neutral and professional. A calm response reassures potential guests that you handle issues maturely and are focused on their experience.
   
4. Future Guests as Your Audience: Remember, your response isn’t just for the reviewer—it’s for potential guests who might read it. So frame your reply as something that reflects well on you, even in the face of an unreasonable complaint.

In the end, trust that your positive reviews will outshine the rare picky one. Being selective about when and how you respond is often more powerful than addressing every single critique.

Quote from @John Patrick Lasher:

I am in the process of purchasing 3 properties all right next two each other. 1 multifamily and 2 commercial office space of which we plan on using a significant portion of for our medical practice. Coming up short on 20% capital. Would be interested in some ideas to bring that number down. 

Kinda hard to make $760,000 appear out of thin air, haha. There's hope:

1. Seller Financing: If the seller is willing, you could negotiate a deal where they finance a portion of the down payment, often called a "seller carryback." This reduces the amount of upfront capital you need.

2. Mezzanine Financing: This type of subordinate financing can help fill the gap between the primary loan and the equity you're contributing. It's often more expensive but can work if the cash flow from the properties supports it.

3. Cross-Collateralization: If you have other properties with equity, you might be able to use those as collateral to secure better loan terms or additional funding.

4. Partnership or Syndication: Bringing in additional investors or partners could help you raise the required capital. This could be structured as equity or a preferred return to your partners.

5. Retirement Accounts

6. Wealthy People You Know / Are Related To...

Good luck!

Hi Rohit,

Congrats on completing your first flip! Managing costs, especially with landscaping, can be tricky. Here are some ideas that might help:

1. Front Yard First: Since curb appeal is critical for renters, focusing on sod in the front makes sense. It creates a great first impression and you can delay the backyard until cash flow improves.

2. Mulch or Ground Cover: For the back, you could lay mulch or gravel temporarily. It's affordable and helps prevent erosion while providing a cleaner look compared to mud.

3. Partial Sod or Seed: If sod feels too expensive, consider seeding instead. It’ll take longer to grow but saves money in the short term.

4. Artificial Turf: If you're open to alternatives, artificial turf might be a long-term solution. The initial cost can be high, but no maintenance or water costs afterward.

Good luck with your project! 

Quote from @Felicia Richardson:

Hello! I need some lender insight. I bought a Duplex in August 2022. I reside on one side and I Airbnb the other. I'm outgrowing my side and I want to buy a Single Family Home.

Would I have to get a secondary home loan therefore having to put down 10-20%? Can I qualify as a First Time Home Buyer and utilize FHA or similar programs?

Thanks in advance!

Hi Felicia!

Congrats on your duplex purchase and your Airbnb side hustle! Since you already own a property, you wouldn’t qualify as a first-time homebuyer anymore, so FHA loans with their low down payments may not be an option. However, since you're planning to buy a single-family home to live in, it would be considered your primary residence.

For primary residence loans, you typically won't need to put down 10-20%. Conventional lenders often allow down payments as low as 5%, especially for owner-occupied homes. Keep in mind that each lender may have specific requirements based on your credit, income, and other factors, so you’ll want to check with them directly.

I don’t do conventionals but I’d recommend reaching out to Brandon Croucier with All Loans Funding on here for those he’s really great. 

Good luck!

Quote from @Griffin Malcolm:

Hey everyone, I'm in the refinance step of my first BRRRR and am thinking about how I can fund my next deal. I had to put about 25k of my own money into this first deal between the down payment, agent commission, inspection, closing costs, and holding costs, so I'd like to get as much of that covered as I can on my next deal. I'm familiar with how a hard money loan is structured, but structuring a deal from a private lender seems like the wild west. Is it purely interest? Points and fees like a traditional bank? Obviously would change from person to person, but I'm curious what people have used before that has been effective for both parties.

Ultimately, my vision is partnering with a private lender so I can spread my funds across multiple deals at once and scale quicker; I'm really happy so far with my agents, contractor, and refi lender, so I feel like getting a great lender would be the next step for me. Thanks in advance!

There are definitely a lot of ways to structure a deal, and several abstract factors can come into play. To make things more concrete, it helps to get specific. For example, sharing details like an example property address, how much of your own capital you're able to contribute, your goals for the property, and what your exit strategy looks like can all help potential lenders better understand the situation and make informed decisions. The more clarity you can offer, the easier it becomes to align with the right financing strategy.

Quote from @Account Closed:

Hey Daniel,

I ran some numbers for you using the Cashflow Analyzer Pro ...

 This is such an amazing community, just another example. Thanks for sharing that tool John, really fantastic