All Forum Posts by: Paul Shannon

If its your primary residence, you don't need to wait at all.  Start the process.  The bank will appraise the property and you'll get 70-90% of the value as a line of credit.  

If its an investment property, you'll need to have it season for 90 days at least most likely.  These loans are a bit harder to find, but they are out there.  Any bank will want a first position lien. 

Tough to answer without more background....what are your goals? - preservation of capital, growth, income? Active vs Passive?  I'd get a good handle on risk tolerance so you're investing rather than gambling.   

Then consider a diversified balanced portfolio.  Is $70k part of larger sum of money that's already invested, or is that the whole?  Some have mentioned investing as an LP in syndications.....great idea as part of a portfolio, combined with other assets/classes.  But if $70k is your net worth, then that will likely get you into maybe 2 syndication deals, and that doesn't sound too diversified.

If real estate is where you're heads at, maybe BRRRR. Keep recycling that $70K through value-add. Refi and get your money back. Rinse repeat. ?

Welcome to Indy - the poster child for D class property marketed as opportunity!  I'll shoot you straight...As a resident of this city and investor, there is absolutely opportunity.  But as a few locals have commented, its street by street.  The nature of the market - high cash flow, high income to rent, and job growth, makes for a attractive MSA, but please do your research. 

If you get on a buyers list, validate the comps that are sent for god sakes.  Validate the rehab costs being quoted.  I'm on 6-8 buyers lists and the inventory are straight tear downs.  Cash flow is overstated, but its there a little, but who's taking the risk here????  The buyer.  You will buy  but you'll never sell without a major overhaul of the property.  Look at the cap ex on a 100 year old property.  That's what's being marketed. 

Budget for these factors with eyes wide open and you can make a lot of money.  There are targets on out of state buyers.  Just be aware.  

I would say no until you've managed rentals locally.  Once you know what it's like to manage at least a rental or two.  

You need to be able to manage the manager, per se.  

Would you give your money to someone 1,000 miles away to manage the most critical, make or break outcome of your investment (PROPERTY MANAGEMENT) without understanding first hand what that job entails. 

Maybe you'd call me conservative.  Maybe I'd call you crazy. 

You should invest out of state, but you have to take baby steps first or buyer beware.  

@Bryan Berrios

Thanks for your service Bryan!  Great thought process with house hacking in mind.  I wish I would have used this tactic.  There's a limited period in your life when house hacking makes "life sense" (pre-kids etc.).  Take advantage.  Wealth is compounding...starting sooner creates momentum and it starts rollin down hill....house hacking is a brilliant out of the gate strategy.  

The sweet spot is buying assets that are already cash flowing in current condition, but have a value-add component.  Single or multi family applies.  With multifamily, it's almost easier, because you can force appreciation.  

I'd like to buy low cap rate, with a potential growing income stream, applying a higher reversion cap rate that still has upside from my cost basis at that valuation.   

@Remington Lyman said it best.  You need to evaluate multiple MSAs for viability, but amongst those prospect cities, where you find you best relationships and those that can remedy your deficiencies is where you'll end up investing. 

Find someone to source your deals, close your deals, and manage your deals so you can scale in the markets you target and you'll find your niche. 

There's pros and cons to buying all cash.  If you strictly analyze the financial side of the comparison, using leverage will show greater returns over time.  However, there's more to personal finance than numbers.  You have to weigh your risk tolerance.  

One middle ground option is to have leverage on some properties and have some paid-off in cash, but for the one's that are free and clear, take out HELOCs or business lines of credit against them.  It allows you to mitigate downside risk, but also have credit available to capitalize on opportunities.  You only pay for the money when you need it. 

Interest rates are super low and we are capitalizing by using leverage to buying inflationary assets. Powerful combo no matter who's in charge.  

With a divided government likely, I'm less concerned about policy change.  

Best defense is to diversify.  Predicting the future is foolish.  Stay the course and protect the downside.

@John Stoeber what did you decide to invest in?  Its a question I'm pondering now myself.  I'm 1031 exchanging a few properties and looking to move-up.  I've got enough to buy a mid sized 40-50 unit apartment solo in my market.  Some investors I trust with more experience have advised me to stay small...1-4 units, which is where my experience lies, or go big ie over 100 units.  The economies of scale are there with the larger properties - professional management, onsite leasing, etc.  Whereas the 40-50 units are difficult because its third party PM and you have a lot more turnover in that asset than you would with the 1-4 units.  

I'd have to partner to move up to 100 units or syndicate.  Not against that, but feel like I need the experience and track record of the mid-sized asset to gain credability and confidence to move up to larger.  

Any advice is appreciated.