All Forum Posts by: Patrick Culleton

Quote from @Rodney Love:

My question for anyone that escape the 9-5 rat race is. What real estate strategy did you use?  Example if you had between $20,000-$70,000 to invest in real estate.  How would you use that to replace your income of  $7,000 a month from your job? Fix and flips, tax liens, mortgage notes,  rentals,  Airbnbs?

I would suggest going for whatever your local market supports, and lines up with your personal goals and skills. Over many years, you will likely use a combination of some or all of these strategies as you grow and try new things. So whatever gets the ball rolling fastest is the best route for you to take. There will be mistakes, challenges, and many many learning opportunities between now and retirement. So take it one step at a time but definitely make a plan to take that first step as soon as you can.

Personally, I like AirBnb/STR's and Fix&Flips for your budget because I have a number of clients who started out in these areas and were able to build up cash and personal wealth faster than the clients who started out with long term rentals. However, that doesn't mean that those are going to be the right strategies for you.

If you ARE going to pursue investing in real estate in the next 6 months, I would suggest starting by building your network. If you want to buy STR's, find agents/brokers and other investors who are already doing that in your market. Connecting with them and learning hands on is the best way to get going. Same for flipping - find a flipper that is willing to teach you a few things or maybe even be a strategic partner in the future. Or look up the brokers who are listing the flipped homes in your market and call them. Maybe you already know someone who could help put in some "blood sweat and tears" with you to help you both get there faster?

Either way, you are on the right track by asking questions and growing your knowledge. BP is a great resource for learning through others. Best of luck on your journey!

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $227,000

This was an experience for sure. My biggest takeaway was to ALWAYS keep a cool head. There were multiple parties (and wholesalers) involved in this deal, and at one point it felt like we were never going to make it to the closing table. Fortunately, cooler heads prevailed, and we were able to successfully get everyone back on the same page: closing the deal. We eventually closed and this property received a full remodel for it's eventual sale. Always stay solution oriented!

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

More deals = more experience!

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

Through a wholesaler, direct to seller's agent

How did you finance this deal?

I did my own financing on this deal, and it was a great experience.

How did you add value to the deal?

Full interior remodel and landscaping

Lessons learned? Challenges?

There were multiple parties (and wholesalers) involved in this deal, and at one point it felt like we were never going to make it to the closing table. Fortunately, cooler heads prevailed, and we were able to successfully get everyone back on the same page: closing the deal. We eventually closed and this property received a full remodel for it's eventual sale. Always stay solution oriented!

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

I am the listing broker, lender, acquisition GSD'er and team captain ;) and worked with my investor partner to make it happen

Quote from @Brian Kempler:

Hi, if I lease my house to a tenant, and the tenant has an option to purchase, will DSCR lenders look unfavorably upon the tenant's purchase option? Are DSCR refinance loans ever approved in this case?

I think your biggest concern would be the pre-payment penalty that comes with most DSCR loans. If the tenant purchases prior to the PPP term, you may be in a tough spot. However I wouldn't expect this to stop you from getting approved, but it may mean you should consider looking at alternative options or structure the deal in a way where you won't be caught with a net loss due to the PPP.

Switching from residential to commercial real estate through a 1031 exchange is a strategic move- and 1031 may be your best bet but it does require careful navigation. You can consider selling them on the MLS as a package deal or individually and put closing extensuons in your contract, but there's always the risk of not meeting the 1031 deadlines if there are any delays in the sales. You can also work with a QI and do a reverse 1031 if you have the funds or financing to purchase the commercial property first. It's possible to be easier to sell your residential properties within the timeframe than to try to identify and purchase the commercial property. Just a thought. Best of luck and congrats on your move into the commercial space!

Hi Griffin,

 It's not likely going to be easy, but it is possible to house-hack and break even or even cashflow a few dollars on a primary residence. The challenge I would have answering your question is just the last few words "current levels of inventory/interest rates"

Current interest rates are making it difficult to keep your monthly payment low enough to allow cashflow. However, if you can house hack to reduce 50%-80% of your regular living expenses in today's market, I would consider that a win. Remember that rates will eventually come down, allowing you to refinance to a lower payment. Also, rates and values typically rise over the years, so it might be better to find something today that you can house hack and cover 75%+ of your expenses, knowing in a few years you will likely reach cash flow status or at least break even on the home. Then, once you move out and do it again, you will have a rental property already positioned to cashflow for you.

Look for homes with 4 or more bedrooms, finished basements or in-law suites, or any additional space that you can rent out easily. I converted my own garage to create additional rooms when I bought my home to allow me to rent the rooms out and cash flow more. It was a no brainer for me at the time! Also keep an eye out for assumable mortgages that you can take over at a lower than current market rate. There are opportunities out there for those willing to look hard enough! Best of luck on your journey!

Sounds great! I hope to make it out there..

Welcome to Atlanta @Daniel Brantley and congrats on getting yourself off to a great start with investing! There are a few REI meetups that happen regularly, I know of one in Alpharetta this Thursday the 16th that hosts different RE professionals. DM me if you are interested and I can share the info with you.

The entire Metro ATL area is very diverse and there are a lot of different areas to get to know and love. Especially if you like to try different restaurants. But nothing beats home so I bet there are some places from Philly you will always miss. I know I miss some of my back home spots for sure..

Based on current forecasts, I am optimistic that rates will remain roughly flat for the remainder of the year. The recent inflation numbers are promising, and a lot of the big forecasters have been changing their opinions from the end of '22 to now.

We will see!

Hey Amal,

Would love to know who you settle on using as I am also interested in finding long term property managers in the area. As for recommendations, I would ask to speak with one or more current clients of theirs for feedback. If they are not able to connect you with someone, that would be a red flag to me. Best of luck!

Hello,

The difference between a real estate agent license and a real estate broker license varies by state. In Georgia, you need to be a licensed agent for 3 years before you can become a licensed broker.

That being said, you probably do not need a license to "wholesale", however there are more and more laws surrounding the unlicensed practice of real estate and wholesaling so make sure you check into your applicable state laws. I work with licensed investors who wholesale deals to other clients, and we have no issues because everyone is licensed and use the proper contracts, disclosures, etc. Always do your due diligence!