All Forum Posts by: Nicholas Z.

@Sean L.Davenport is a great place to invest. I have two properties there currently. You do need to be careful about the area you invest in and, as you know, the PM you use. I’d also be very wary of buying turnkey in the area. I escaped what turned out to be an awful deal before it closed (my own horror story) and just decided to go it myself and had better luck and found better deals. 

Feel free to PM me for more details if you’d like. 

@Karla Olivares I’ll also DM you who I use. 

Investment Info:

Single-family residence buy & hold investment in Davenport.

Purchase price: $65,900
Cash invested: $5,000

Single family home (3 bed, 1 bath) in Davenport, IA

What made you interested in investing in this type of deal?

Looking for more buy and hold rentals.

How did you find this deal and how did you negotiate it?

Found on the MLS by my realtor. Offered $8,000 below asking price and we split the difference.

How did you finance this deal?

Commercial mortgage plus a loan from my line of credit for the down payment.

How did you add value to the deal?

Replaced gutter system, fixed up the yard including trimming trees back away from the house, updated plumbing.

What was the outcome?

Now my third rental property.

Lessons learned? Challenges?

This was the first property I bought that needed work right away. That was a stretch for me as I had to figure out how to prioritize the fixed and how to negotiate the deal based on that. I still probably overpaid a bit but it appraised for $70,000, so I ended up ahead anyway.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Elijah Grant is my realtor. Blue Grass Bank is my lender.

@Nick Meland Sure thing. If you decide to look into Davenport, feel free to send me a message. I'd be happy to give you the lay of the land.

@Nick Meland I’m a quad cities-focused investor. Davenport has high rent demand thanks to a lot of blue-collar jobs (Purina is a big one, Amazon is also building a new distribution center) and students (Palmer College - top chiropractic school in the country). There are a lot of older homes that you can buy relatively cheaply with high rent, but you won’t get a lot of appreciation (figure 2% or less per year). On the other hand, it’s fairly recession-proof, so you’re unlikely to get wild swings down, too. 

if cash flow is your primary goal (which is mine), it’s a great place with a lot of possibilities. If you’re after appreciation, it’s best to look elsewhere. 

I just recently started lending on real estate projects. While it's very exciting, there's a lot to keep track of. At the moment, all of the details of each loan I'm making is kept in a spreadsheet. That is fine, but I'd really like something that could look at my account and have me specify the loans I've made and which transactions belong to which loan, and then help me track outstanding loans, monthly payments, etc.

Has anyone come across software you'd recommend for this?

@Matt Lyons thanks for sharing. As a new QC investor I would have assumed any city in Iowa would be preferable to Illinois. 

@Bob Okenwa thanks for the insights!

I discovered I could get access to a couple lines of credit recently, so I went ahead and opened them. Then I realized I wasn't quite sure how to use them to invest in real estate. From my research, it seems like the options are:

1. Buy the property with the LOC and forego a mortgage. This has the upside of a lower interest rate than a mortgage, ability to offer cash, and faster payoff due to simple interest vs. amortized interest. The downside is that the interest rate is variable, the loan can be called at any point in time, and I can't write off the interest because it's not a mortgage.

2. Buy the property with a mortgage and use the LOC for the down payment. This one seems to be popular, especially when combined with commercial mortgages that don't worry so much about the seasoning of a down payment. I tried running some numbers on the properties I own, and all of them I couldn't afford the principal + interest on down payment as it completely wiped away my cash flow. I could, in theory, just pay interest each month, which would preserve cash flow, but then I'm not really getting closer to owning the property and I still have the issue of the variable interest rate and the loan being called at any time.

3. Buy the property with the LOC and then refinance into a mortgage. I suppose if I wanted to make a cash offer on a property that I could get a mortgage on, it could be advantageous to pull the funds from the LOC, buy in cash, and then refinance into a mortgage and pay off the LOC. This is particularly appealing with a BRRRR (which I haven't done yet) but could be applied to anything.

Do these make sense? Is there any other way to use a LOC that I haven't mentioned? And is there any smart strategy to treating a LOC as an interest-only loan?

@Nikita Jain  

@Aj Parikh

Weird! The city didn't come out in the post for some reason. This is in Davenport, Iowa.

@Dena Puliatti in this case, the city has trash collection and the tenants are responsible for putting out their own trash, but I will definitely add this to my list of things to check on new rentals. Thank you.