All Forum Posts by: David Hedges

Probably $1M in cash. 

the $1M in equity is OK, but would require refinancing or HELOC to free it up. Even then you can't tap into all of it.

With the $1M cash, there is the potential to buy up to $4-5M in real estate, assuming you can find deals that work with 20-25% down. 

@Kevin S.

I like that you found a mentor. I’ve done some mentoring in the past, and I typically do charge, though not much. I fear that someone might try to take advantage of my time and use that fee, though typically minimal as a way to keep them conscious of time.

I’ve also had a college student that I’d asked to do some charity work as payment for my mentoring.

I'd go over it with an attorney, but the way I always sign when it's associated with my LLC is just sign my name, and put the role after. like member or manager.

check out Truly investor capital. I've used them for a few of my properties. They sounded like they probably could lend for something like that. 

https://www.trulyinvestorcapital.com/rental/spr

I'd say it depends on the local market, but it's very common to have at least a stove and refrigerator in a rental unit. I've had a couple of exceptions in this, where the tenant had their own and had requested to use it instead, but that was only once or twice in the past 10 years. 

Outside of that, unless it's a STR, I'd base it more on what my competition is offering, and might consider adding something if I thought it might drive better rents and give me an edge.

The only other item I've seen is investing outside the US, there are some places where it is more common to have fully furnished apartments for rent, even for long term. 

it is mostly from what I've been seeing in activity in my STR, and in talking with some friends who manage restaurants. They've seen a similar decline in volume of traffic.

It'll likely pick up again at some point, I'm hoping that this summer will be much better than last year was. 

low or no money deals are out there, but take a bit more work, and ones that work are hard to find. Most are probably going to require creative financing. 

I had one that I was able to pick up last year. I'd purchased it on a land contract, paying interest only for the first 5 years, with the ability to extend another 5 years if I'm not able to find favorable financing to refinance within that time period. Based on the growth in that area, I suspect I will be able to refinance within the 5 year window and not require any cash into the deal. 

Based on the prices, now seems like it's probably a pretty good time to buy in Galveston. 

There are a lot of people who bought during the pandemic that are now trying to get out. 

Tourism in the area seems like it's been dramatically down over the past year though. Last summer I didn't see bookings all through the summer months, and typically by now I'd usually already most of march booked up, but not this year. 

I use a property manager there. 

Quote from @Sam Booth:

Quote from @David Hedges:

I can't think of anyone I know who falls into the millionaire category who has not used debt at some point in time. In their business and in real estate, leverage used responsibly will move you along much faster and open more opportunities than what you find if you don't. 

The key to this would be using debt responsibly, though. Plenty of people have gone a bit too far with leverage and had disasters when the market changed and they could no longer make payments. 

Totally agree. What do you think a proper leverage amount is? 40% equity 60% debt? Just trying to get a benchmark for being conservative about debt.

I don't know if there is a proper amount. Your reserves, income, and comfort level all play a role in this. some may be OK with 60-70% if income is good and there are good reserves to handle an emergency, others may be good at 30-40% leverage. 
I wouldn't focus so much on the leverage aspect of things, as much as I would cashflow, and that I'm buying in a stable growing market with positive cashflow. If you have cashflow, there is some room to make mistakes. 
Where leverage will likely get you is in situations where you are doing no money down or little money down deals, and have little or negative cashflow. These could even be in a market where values are appreciating quickly. if you get caught at the top of the market, have an event happen that eats into your reserves, get a bad tenant, or just about any other event could take you down. 

If your taxes were relatively simple, it really depends on the CPA and their staff, but if it was only what you mentioned, I'd have expected it done sometime in March. 

I also haven't ever had a CPA who demanded money upfront. In my experience, they may give you a price upfront, but they don't expect payment until they are done.