All Forum Posts by: Payton Pearson

Investment Info:

Single-family residence buy & hold investment in Beavercreek.

Purchase price: $230,000
Cash invested: $4,000

This is a single-family home in an upscale community, just 8 minutes away from one of the largest malls in Ohio, particularly Dayton.

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

I'm a military veteran, and have access to VA loans which require 0 money down (100% leverage). You are allowed to purchase one property with a VA loan per year, so long as it's an upgrade from your current residence and/or in a different location. I was looking for a very good property that was genuinely an improvement from where I was living, and had to pounce quick due to the tight market. I got this for $20,000 under asking. It's no doubt worth much more.

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

I submitted a simple offer through my real estate agent (property was agent owned as well), and it was accepted within a couple days.

How did you finance this deal?

VA loan financing. I am thinking I might remove all leverage in the future, but for now, it's helpful.

How did you add value to the deal?

I am currently in the process of fully furnishing the residence, and will be living in it for a significant portion of the year. Sale required repair of the chimney and a few windows, paid for by the seller. That alone was a value-add of approximately $4,000. I may fence in the massive backyard in the near future.

What was the outcome?

I now own the property, and am getting it fully ready for Airbnb. Once it's ready, I'll be able to Airbnb it for between $225 and $350 per night! It's an incredibly nice neighborhood on 0.5 acres! I already listed it only partially furnished and it's already renting out for $80/night.

Lessons learned? Challenges?

Sometimes you just need to go for it and don't split hairs on the initial profit. Also, you get what you pay for. This property being super nice leads to super nice tenants/guests. They will pay more for renting the property, and take better care of it. Not only that, but through Airbnb, they are much more likely to communicate with you and give you decent reviews.

YOU GET WHAT YOU PAY FOR... USUALLY.

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

Colleen Carr: real estate agent
Steven Leopold: property manager
NFM Lending: loan provider

My suggestion is save every last scrap of money you possibly can--MAX PERFORM your income.  This means, develop a budget, minimize all expenses possible, and maximize all income you possibly can (though, don't work yourself into the grave).

Hustle in your job for 5-7 years working out this strategy, saving all money you can, and then move on from it after you have a nest egg of anywhere from $250,000 or more.  If you were investing this in real estate the whole time, it will have grown into a nice monthly passive income stream for you, hopefully of 3-5k+/month.  At this time, I think it would be prudent for you to start transitioning out of your career if you don't love it.  With every dollar of replaced income achieved, reduce your workload that much, until eventually you have fully replaced your employment income and you can quit.

You'll have to do commercial loans at this point, more than likely, as the FM loans tend to care deeply about W2 income.

 Thank you, I'm glad I could help.

 Thank you Rodney!

 The seller knows that you will increase your bid and to what amount depending on competition.  It is against the law for them to try and rig it against you.

 Thank you!  An escalation clause is a document that states you will escalate your bid up to a certain limit if someone outbids you.  Seller has to provide bonafides if they tell you that you were outbid.

Being a military veteran myself, I would recommend joining if nothing else to develop discipline, professionalism, and attain a decent resume for future prospective employers. But, unless it genuinely is a calling for you, do not stay in any longer than 4-6 years. You will get all VA benefits after that time frame, will have discovered what direction in which you want to take your life, and will be far more mature.

If you so desire, you can continue afterward in the reserves.  It offers much more flexibility in where you live, as well as how much you may desire to work (number of drill periods is up to you, past the one weekend per month).

You can go to college afterward and use your GI bill to pay for it.

 Exactly!

Sometimes you have to just take the leap--especially if your mental health (which will affect your family relationships) is at risk.

I was military for 12.5 years.  When I finally read the writing on the wall that I wasn't going to be attaining the goals I set out to attain, that road blocks were being intentionally placed in front of me for no apparent reason, I decided to work towards separation.  It was a long and arduous process, and if you want to know more about it some time, I'll tell you all about it, but long story short I am now in the process of being honorably discharged with a Master's in electrical engineering and readying myself to move back to California.  The world is my oyster, and I'm long-distance investing with a great team in Ohio!

Go for it man.  That is, of course, if your wife is okay with it.  50 units should be around $10,000/month, right?  I mean, you have 50x-ed your stability in the market with the number of doors you have.  Even during recessions, rent rates don't change a whole lot.  So, as long as you're not planning to sell any of your properties if we hit a recession (for example, if you don't have a balloon mortgage that will essentially require you to sell to stay profitable), then you are even more in the green to leave your W2 at this point.

The goings on in the world should teach us one thing above almost anything else: family is the only real thing that matters, aside from God.  You NEED to cultivate those relationships, build your legacy.  For that reason, I hope you have 10 more children.

 Yes there is indeed.  I make it very clear in the Airbnb house rules for the guests to respect the other side's tenants, as well as respect quiet hours after 10pm.  If problems arise, I will have my property manager address the tenant's grievances.