All Forum Posts by: Pete Harper

@Damon Holley I’m organizing a BP group in Palestine, TX. Our first meeting is going to be November 14 at the Pint and Barrel in Palestine. We’d love to have more East Texas investors.

@Joshua Mclendon

I’m organizing a BP investor meetup in Palestine, TX. We are having our first meeting at the Pint and Barrel in Palestine in November 14th. You are welcome to join.

@Rob Massopust

I have not seen GRM used in a long time. You see it mentioned in some of the older real estate investing books from the ‘80s. I'm curious if anyone is currently using it to value SFH and small MF. What in your opinion is a "good" GRM?

I guess the 1% rule is a crude version of GRM. 1% rule ~ 83 GRM.

@Joe Villeneuve

Here is another good reason to pay cash then refinance. If you do a 1031 exchange you need to put all the cash equity from the sale to avoid paying taxes. Then after you purchase the property you can refinance and pull 75-80% of that equity out tax free to buy other deals.

That is what I’m doing. I sold property, 1031 exchanged into a 4-plex, refinanced to pull 80% of my original equity out, put some of that equity into a duplex, we are renovating the duplex and will cash out refi that property next year pulling all my original equity out. Using this method I’ve been able to cycle the same capital through three different properties in two years. If I’m smart with my future purchases I can keep this going for a long time. If I did this with conventional 25% down financing I will have parked all my capital after a couple purchases. I would also have lost 25% capital to taxes on the original sale.

BRRRR baby BRRRR.

@Jeffrey Klawitter

That is exactly correct. Last year I was able to transfer a property I purchased in my personal name with a FannieMae loan into an LLC. At first Wells Fargo tried to refuse until I sent them the link you referenced. You have to be persistent but it is possible.

@Johnathan Rodriguez Killeen has its good and bad points. There is a lot of rental inventory and you can still find 1% cash flow deals. Compared to other central Texas markets rents are low. A 2BR/1.5BA townhouse rents for $650. The same unit in Bryan/Collage station rents for $775. You need to pay close attention to neighborhoods. A block or two makes a huge difference. If you are from out of town get an experienced agent to help you. Or talk to a PM and they will advise you what areas to invest. There has been a lot out of state money in last couple years driving prices up.

@Bruce Lynn To use any of these services you need to have a bank account, smartphone or computer. None of these guys have any of this. I spoken to them about it. I explained it costs them more money to buy a money orders while online is free. I might as well be speaking Greek. I have the 20 somethings set up on the online system. Older folks no way. Money orders are the best solution. Drop box would be for checks and money orders. No cash.

@Bjorn Ahlblad. I think I’m going to give the lock box a try. I can secure a armored box to the side of the building in a visible location. That way I can collect the rent without having to hunt them down.

@Mary M. Believe it or not but there is no local 7-11, no Starbucks or Walmart in town. We are talking small town East Texas here.

Ok, I have a dilemma. How is the best way to collect rents if the majority of your tenants don’t have bank accounts. I know it is hard to believe in this day and age but there are a significant number of people who do not have a bank account. They are used to doing everything in cash. Most don’t have smartphones or other gadgets. All the latest Gee-wiz technology is foreign to them.

I’ve finally convinced everyone that I don’t take cash. Their solution is to buy a money order at the corner store. I tried getting them to mail in payments but it takes over a week to travel the two miles from the apartments to my PO Box. I know we’ve all heard the check is in the mail but in this case it is true. All local mail is sent 70 miles North to Dallas where it is processed and sent back to the same post office where it was sent. Finally a postmaster places the envelop in my PO Box. With the time lag we are well into the month before I can be sure rent was payed.

My current solution is to stop by and pick up rent in person. This works for four units but Isn’t going to scale to the 12 units I close on at the end of the month. What are my options? I don’t want people coming to my house, I don’t have an office. What are your thoughts on a lock-box on site? Any other suggestions?