All Forum Posts by: P.J. Bremner

@Mary White

You can actually do both with a different product. Look into a HELOC. See if there are any banks that can refinance your entire mortgage into a HELOC. The benefits are this:

• Every penny you pay towards the HELOC balance reduces the monthly payment for the following month (reducing your monthly cost - Keep in mind if you pay extra towards a regular mortgage it will pay off sooner, but will NOT reduce your monthly payment).
• The money you pay against the HELOC is still accessible at any time. If you put 100% of your cash into the house, you can pull it back out whenever you need it.
• When you find the next deal, you can deploy the capital immediately.  If you don't find the next deal, you don't have money sitting around not earning you a return.

The downsides to HELOC:

• The interest rates are variable and can increase. If you plan to make minimum payments until the house is paid off, then don't use the HELOC as you will most likely have a better return using the standard 30 year fixed.
• After 10 years, the HELOC draw period is over (cannot pull money out) so you would have to refinance and open another HELOC.

My personal opinion on this strategy is that it works really well for those who hate having money sitting idly around but may not have a ton of deals ready to go after. If you have more deals than you have money, maybe just pull the equity out depending on the interest rate. But if you're like me and 95% of the other investors on BP, you can probably earn an immediate return by paying the house off but still having access to it with the HELOC for when that deal does pop up.

Best of luck!

@Ben Volkman

I'm not too sure, my loans were only $25k by the time I graduated and the carried interest is like $800 - $1000 per year.  You guys definitely take the cake on student loan write-offs!  It's great that you were able to use it at least.  I missed out for at least 3 years :* (

On the CPA side of things, my best piece of advice is to get a CPA that is well versed in the area that you will be getting into.  If you're strictly doing real estate and working (I'm ignorant of your profession, maybe they have CPAs that can work magic for that type of work?) then you should find a CPA that specializes in those two areas or is at least proficient.  When I first graduated, I was working in the car business and used a CPA that specifically handled car business taxes (lots of bonuses and commissions).  Once I started to accumulate some property and started an eCommerce store, I switched over to a lady that is a pro with business tax returns and does enough real estate to know 99% of that field.  I can tell you, she is worth every penny!  I found her through a referral with some old clients.  They were high net-worth people that knew what they were doing so I trusted their advice without much vetting.

@Ray Harrell

Part of your job as an investor/property manager is to put the BEST tenants you can find in your property and keep the returns steady.  If you put a sleazeball tenant in because you don't screen them, you significantly increase the risk of your investment.  There are actually several reasons: first and most importantly you want background checks to make sure they aren't violent offenders, rapist, child molestor, etc. because they could easily offend again towards your other tenants or damage the property.  Secondly, you want to know if they can afford to pay for their rent.  Lastly, you want to see their credit history to see if they actually pay their bills on time or not.  If you don't put prospective tenants through this process, you are rolling the dice.  And just because they are paying now, doesn't mean something won't come up in the future.  Often times, bad tenants aren't bad from the first month or two of their lease.

It's even more important to get a "boyfriend/girlfriend" on the lease.  Why didn't they move in together when they first signed?  So maybe they are just taking that big leap and moving in together... great, so now you as the landlord get to be the brunt of their social experiment.  Most people that first move in together have problems.  Sometimes they work through them, often times they don't.  I can't tell you how many couples have moved in together and were broken up within 2 months.  No joke, the magic number is 2 months lol.  Sometimes they have fights and break stuff, or shout at each other so loud that it disturbs the neighbors.  I've also had couples that moved in together from the start and they are THE BEST TENANTS I'VE EVER HAD.  Amazing people, sweet couple, A+ for being good humans.  Anyways, the point of all this is that as a landlord, you have the right to vet these people before they move in and make decisions that are best for the BUSINESS.  We are all beholden to our investments : )

@Ben Volkman

One thing to also keep in mind when you are trying to compute your student loan interest rates is that you get to use the interest as a write off.  So your effective interest rate isn't 6.38% after the write off (unless you and your wife are making too much money - 1st world problems right? lol)

I had the same issues as you two are having and decided to invest.  I was not able to write off student loan interest my first couple years out of college because I made too much, but since becoming self employed and through the wonderful CPA magic that is "write-offs" i've been able to write the interest off once more!  I would chat with a CPA as to what your income is relative to that threshold and keep in mind that mortgage interest and a few other things *may* (i'm not a CPA, i don't give tax advice, blah blah blah) help keep you below that threshold.  I know, it seems like minutiae, but in my experience it's more about the effort and getting in the habit of taking advantage of everything at your disposal than it is to save an extra $200 per year.

I think most humans are very good at selective listening.  Their memory is geared towards the things they like (gives them the warm fuzzies) and blocks the stuff they don't (hard work is gross).  So they listen to a podcast about making $10k per month without even getting out of bed collecting rents.  They maybe hear the part where they started with little money, maybe did a wholesale deal or two and completely ignore or forget the part where the investor door knocked 1000+ homes, networked with hundreds of people, etc. before they ever got their first deal done.  They just love that blissful "10k per month collect rent, sleep in until noon, no money needed, lets just wholesale" and ignore everything else.

I can tell from my personal experience as a sales manager/trainer in a very competitive sales environment that people will ALWAYS be like this no matter what they are doing.  Not everyone, but the majority for sure.  I remember using Grant Cardone videos in a sales meeting (he was huge in the car businesses) and people would get all jazzed up, super excited to make that huge commission this weekend for the big sale!!! ...then reality sets in and they show up for work late, ask to leave early, walk customers off the lot without actually trying to get the sale.  They love the feeling of making tons of money, but hate the idea of putting the time and effort to get it.

To sum it all up, I don't think BP is at fault.  I think the general mass of humans will hear what they want and run with it.  

@Gary Harris

I'm not in your area, but would like to comment that I can certainly appreciate your being upfront about everything.  You seem legit and wish more people were like that.  I've seen some clowns post in the "New" section or "success" section about this amazing deal they just closed and how easy it was and to message him if they want more info.  LOL some people are just sleazeball douche bags.

@Kevin Crowell

I would love to take you up on your offer. I'm currently in Southern California (Inland Empire and Eastern part of LA County) and have been trying to get a property to flip, but not quite finding the right one (or my investor goggles need adjusting so I can see the deals properly). I've taken quite a bit of action, been investing for a few years, have some rentals in SoCal and work for myself full time. I've done 4 major rehabs ($50k up to $110k per project) and have a team ready to go for the flip rehab. I've got enough cash to buy at least 1 property in my local area and fund the rehab (or multiple properties with HML). I recently started a direct mail campaign and had a few opportunities to buy, but again my numbers weren't quite there so I passed on the deals. I've also connected with some wholesalers and wholesaling companies, but their deals tend to be quite anemic lol.

That's the cliff-notes version, let me know if you're interested in helping a noob like me out : )

@Val Dantzler

I too am interested in the same thing.  Not sure exactly where in Ohio, but if you come across a good property management company/flipper/wholesaler I would love to piggyback some info off of ya!

@Ben Volkman

I agree with most of what people are saying about investing first, so I won't repeat what 100 people before have.  But I would like to add one thing to consider in your decision.  In your current situation, you can save up $30k - $40k in a year so if you invest in a property and lose every penny of it, you will be set back approximately 1 year worth of labor.  This is not lost money though as you will have learned A TON from that one transaction.  Considering both of your professions, it's safe to assume you are both NOT dummies and can learn real estate 10x faster than the intense courses you had to take for school.  I think in your situation, invest because the upside is huge and the downside is pretty minor.  On the flip side, for those of you reading this that make minimum wage and maybe saved up $40k or gained some inheritance, I would probably recommend paying off the debt first because your ability to replace that money if lost would take many many many years (if ever) and paying off the debt is a guaranteed way to increase your cash flow with 0 risk involved.  Like anything in life, there is no black/white answer to these things.  It really depends on your personal situation.  Just my opinion, for what it's worth : )

@Evan P. Is this property still available?