All Forum Posts by: Ray Lai

@Shawn Ackerman

You're welcome. Matt's post is pretty genius. I've spoken to some of my mentors they have high net worths and no one has heard of this strategy. They buy in cash and do the 6 month refi but this method allows as little as 45 days which is a huge improvement. Matt Huber is really clever.

@Shawn Ackerman

Here's the link to the post. It's near the bottom:

https://www.biggerpockets.com/forums/88/topics/316...

Search for Benefits of a “friendly loan”

@Shawn Ackerman 

Thank you Shawn. Is your goal of 100% of your cash out in 4 years based on a rule of thumb or your personal investing matrix? I read an amazing post by Matt Huber that if you buy at 80% value and do the rehab well and then get it appraised and use his method of 'borrowing your own money from a friend' in as little as 45 days you can pull out 100% of your cash (at least in TX) because he understands the re-fi laws. You also bypass a ton of fees. If you want I can send you a message with a copy and paste from his post. I have it saved down in my notes.

@Matt R.

Makes sense, especially in hot markets. It's hard to show good returns when everyone has got to eat and I read several threads where wholesalers were only offering 80% ARV rather than the 70% ARV, and people having a hard time finding properties since competition has gotten so fierce in those markets since they've been dominating the top charts for so many years now.

Thank you for your time and best of luck to you as well!

@Anthony Johnson

Awesome Tony! Thanks for the info on using $150 a door per month or 16% of gross rents for maintenance and vacancies as a gov number that underwriters like.

I will go read Millionaire RE Investors by Keller. Appreciate the great book rec!

@Andrew Herrig

Thank you for the $150-250 figure to set aside for capital expenditures. Also thanks for confirming that 5% is a safe rule for maintenance. 

@Justin R.

Thank you for your solid information on your local portfolio's actuals that come to 6% of gross rents for maintenance and 10% for CapEx. I'm glad to get solid numbers like that, 2% didn't pass my sanity check so now I know to put 16% at least. Thanks for the caveat that it's on high-rents as well. Your rents are a lot higher than the properties I was looking at $1300-1400, so it seems I would've been severely under-budgeting those items.

Thank you so much Justin! Your examples with your numbers are extremely helpful. Best of luck to you!

@John Larson Hey great to see you make your first post on BiggerPockets! Thanks for writing such a detailed response and offering to go over how your team runs the numbers. I understand the low assumptions for vacancy and maintenance, but have 0 for CapEx does seem strange especially if servicing turnkey investors because if I didn't have the time to come to BiggerPockets and network with people, I incorrectly assumed that CapEx was included in maintenance or some other newbie investors may not even know those large future expenses at all; wouldn't it be detrimental for them to assume that and potentially wipe out their cash flow completely in a few years?

DFW looks good still but personally I'll pass on Houston due to the economic signs I've been following. I'd rather invest in a stable market than one that has booming so strongly and has shown warning signs and troubling economic data. The worst place for my personal investing would be to be near the top of a bubble in a local area where my cash flow is minimal, taxes are going up, unavoidable HOA on SFHs that only rise and may come with special assessments, and where the economic numbers are in a troubling trend. Here's the September report from the Federal Reserve for Houston area:

http://www.dallasfed.org/assets/documents/research...

You can see job growth in "leisure and hospitality" aka bartenders/servers, and massive losses in the high paying jobs that are required to sustain SFH price growth. GDP is negative for 2015 as well, oil and gas are getting hit but oil prices are going to continue to slide with the supply/demand inbalance going on daily in the world. Those are just a few data points, don't want to turn this post into a debate about areas as that will get people riled up. There are a lot of BP investors that are in those hot areas that have grown tremendously since our last bottom.

I did a lot more research into the middle of the night and you are right, 6% return is solid for turn-keys it seems. Maybe turnkeys aren't for me then, as my personal investment criteria makes it not worth it without a minimal 10% COCR. I don't want to eat up your time since it seems like turnkeys can only offer those types of returns.

Lastly, I want to say that you and Josh were very professional and I enjoyed speaking with you on the phone. I believe you do have a good reputation and you guys are extremely responsive. I was emailing with Josh late into the night last evening. I know you guys built a good reputation because the Real Wealth Network they are big time and they've vetted you all. Also I will check out the Real Estate Guys radio show and I did see you guys win the award at the conference. I did do some due diligence on your company. It is hard to find references online for you guys though through google, it's good that you won at that conference or very little does show up online. I personally would work with your team based on your professionalism and how you've handled this inquiry. It's probably hard to find good COCR as a turnkey now that DFW / Houston have appreciated so much.

Enjoy your weekend! I think your company is great, I'm just doing some due diligence as I am indeed a newbie investor and I'm trying to pick up my first properties so I can't make a big mistake. I've listened to Kathy's talks and even attended one in person, and I know the importance of timing and not getting caught up near a top. Apologies if I seem too risk averse in needing $150-$200 set aside for CapEx as I would like to be a buy and hold-forever type.

Hi Jonathan, great job with the pics and running the numbers. Hope it's a home-run for ya. Looking forward to following you on your progress :) Grand rapids should rapidly appreciate as investor money keeps flooding in. I'm looking for a turn-key there myself. Best of luck!

Caleb,

Thanks so much for your response. They were using 2% of rent for maintenance (no CapEx). Numbers seemed quite off. I just plugged in 10% of annual rent for CapEx and maintenance and it dropped it to 6.22%!

Thank you so much for taking the time to respond. Going to add ya! If you're ever in San Diego, I'll buy you a beer. I'm avoiding Texas right now because of the business articles I've been reading and also one of my mentors is selling off properties there as the appreciation there has been significant and he wants to take some off the top.

Cheers mate,

Ray