All Forum Posts by: Mark C.

Hi,

I have read some stories on the subject for retirement with real estate and from what I can tell it is an individual perception or choice on how.

I have ~6 years to 65. My wife 13 years to 65. We both have low end 6 figure incomes in non-real estate careers.

We have 10 rentals 9 of which are still financed, net cash of about ~$4200 per month. We both have decent savings in our 401k's. Also have some multi-family investments with partners that we expect to be sold over the next 3-5 years. 1031's would be used for dispurse of equity.

I expect to roll out my 401k to a self-directed at the end of this year and populate it with rentals also. I anticipate using withdrawals after 59-1/2 to also help pay down rentals.

We are at the real estate level where Fannie/Freddie will only finance up to 75% ARV.

I have no problem with access to hard money 10% no points/1yr term.

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I am in income preparation mode for retirement and in a bit of a quandary about how best to reach our cash flow goals. Finally the question posed.

Does it make sense to pay off each of the current properties or save that same amount and pay cash for a new one as we reach a purchase amount. Due to FNMA rules we could purchase more with larger down payments creating a larger cash flow. At best(saving) we could only purchase or pay off 1 every 18 months. After retirement I would become qualified under IRS rules as full time investor.

Our goal 20 properties paid in full at retirement.

Have I thought this out correctly? Just not sure we can get to 20 paid off unless we change our strategy.

Been reading the thread and just another angle I had presented to me that contradicts the too many properties headache. A guy down here in Dallas, Tx started doing rentals ~8 in the 80's. However he suddenly had a light bulb moment and started buying them mostly all cash almost any condition, never fixed them up and did owner financing on them all. To date he has over 50 properties, and does not manage any of them. He's near 76 and he has a few left that were financed but hes got close to $35k per month coming in. Also to date in the past 30 years hes only had 1 paid off. Interesting business model he has and to hear him speak about it, its quite simple and sometimes comical.

Hi,
I have a brother-in-law and unfortunately he's going thru the whole separation/divorce. He has a house that is not in a good state. Needs roof, Needs sewer line replaced, needs carpet, paint, etc, everything is dated. The soon-to-be-ex thinks the house is worth $210k. Current note is 159k Perhaps if it were in picture perfect. Area is Columbine Circle, Thornton CO 80241. Single story upstairs, also unfinished basement,2 living areas, dining room, I would estimate about 1900-2000sqft upstairs, 3-2-2 built in 70's. Y'all probably have the infrastructure to estimate repairs better than I. I doubt that either one has the funds to repair it though. But soon-to-be-ex doesn't have a clue with realities of the situation.
Can I get someone up there to run some comps.
Appreciate it.
Thanks
Mark

Hi,
I went down this same path and ran into the exact same issues. When you are first starting out fannie/freddie will look at your loans with your personal name attached to the note. THE LLC has no documented income. You can put the title over into the LLC after closing, but recently had to change 3 of mine back to my personal name to get them refinanced. lol. To, date I have had only one property financed in my LLC's name a portfolio loan, mainly due to the length of time I have generated income thru the rental business in the LLC. IT does not show up on my credit, however banks still review you income taxes for 2 years and theres no hiding any assets that do not show up on a credit report. Lately theres been a new legal instrument called a series LLC. IMO this is just another fancy way for accountants to make more money doing your now very complex taxes.

Not entirely a correct analysis. Both are now cash flowing, but the politics of partnerships, the hastles of dealing with tenants who dont actually appreciate what you're prividing, their propensity for litigious claims, city inspections and code issues etc. etc. etc. Funny how most people paint this rosy picture of MF.
I also have several fellow investors that are also in hit or miss MF and some have even been given back to the banks. It has definately been a learning experience.
It has just been my observation that when I rehab a home and I get a tenant that is moving up from apartments they are so appreciative and bend over backwards to help take care of the property and payments on time with text message confirmations.
I guess what I'm saying is I'm not comfortable with some people in that industry. Just my opinion.

If I had the money FOR ALL CASH and I was sole principal for MF. I might do it. But something to remember. Your income from a MF would likely be the same amount as what you would pay a full time property management firm. 5%. Most people are not gonna have the ability to just jump straight into a 300 unit deal and earn some big $$. YOu would have to stay above 80 units if you want to maintain a full time property manager and maintenance guy.
The competition is fierce, you're always out there having to offer concessions to compete with the guy down the street. The people you're dealing with, will pick up and move in a heartbeat sometimes without even a notice just to get $40 bucks less in rent. Now add on top of that the lawsuits if they hurt themselves. They love to sue. We had one lady try to sue us because she says the bedbugs ate a hole thru her leg. We had another lady slip and hurt her back on some stairs. We had another family on the 3rd floor not watching their little one he either climbed over the railing, or thru it or sibling dropped him over the railing and he fell 3 stories. Luckily he landed in some shrubs. No injury but, no witnesses though so they are sueing us because the bars on the railings should have be 4" instead of 5". The medical industry helps aid all this too. Claimants will drive all over town racking up medical bills to file a suit against you.
And then theres the financing of a property, a whole other story. The hoops and requirements that Fannie/Freddie/HUD can make you jump thru to get long term financing it increases exponentially over SF. Sorry but I could go on and on.
SO yes, I like the control and stability of SF.

As I am in MF deals as a passive partner and sometimes a principal I have to admit I have a bad taste in my mouth with respect to MF.
I started in 2 value plays which took 3 years to get refinanced and have barely seen squat in quarterly distributions. The first one I think we over paid for and had to vote out our lead partner and put in a major property management firm, but its 95% occupancy at 95%.
The second we just refinanced and was able to pull a little bit out at closing. Its also sitting around >93% economic. IT took over 3 years on both. Also invested in a package of 3; a yield play but with the down turn and location of these properties we will be lucky get 50% back with no distributions. Altogether 200k invested and I keep kicking myself in the backside when I think about how many SF properties I could of had. I learned real quick 2 things. Partnership(loss of control) is bad and the headaches of MF. I would take 100 SF and maintain the control I have, better tenants and better cash flow as they are paid off than MF. I am sure some have had a better experience but not me. Like you my wife and I both work so we roll everything back into the SF in hopes of paying them off one by one with that snowballing, picking a few along the way before retirement. All I can hope for now is someday a big payday if we can ever sell these properties and use that cash to buy more SF or pay some off.

Hi,
IMO you sound like you doing everything right. I am jealous. I started in 2008 and only have 8 and flipped 2. May I inquire as to what amount of starting capital you had in the beginning? Are you still using it with % down?
Hard money->fixed? hard-money->portfolio?
I always see these great stories but would love to know how much you started out with in capital.
thanks

Has anyone ever used www.auction.com? It appears to be another way to purchase properties but it seems to have more risk than even from a wholesaler with no chance to view the properties. Has anyone used this organization before?
thanks

I totally mis-understood the terms he was offering. It was 80% of cost or appraised value. Plus its a 5 year balloon 15 year terms.
A line of credit is being offered upto $125k. So In other words, to draw the entire $125,000 would require a total cost/value of at least $156,250.