All Forum Posts by: Richard McLain

John: Thanks for reaching out. I sell out my inventory so quickly, that you just about have to order something. I don't like to close in my LLC and then turn around and sell it (to avoid doubling the title and finance costs); however, with a larger rehab, I go ahead and close in my LLC so that I take the risk of the larger rehab. I am working on a Del City property right now and have done full paint, roof, miscellaneous repairs, and now refinishing hardwood floors. Let me know if you are interested: 4017 SE 11th Street, Del City

@Joe Ort, The very best & smartest thing you can do is to be nice to your tenant in a professional way so that your tenant will stay I your property at the end of the first year. Maybe you can negotiate a modest rent increase, but unless your taxes & insurance go up then you really don’t need to raise the rent. Make your tenant feel special. Fix the small stuff. Go out of your way to make it a good experience for your tenant. Then get them to stay 3 years, then 5 years, then 10 years. All this to say that HIGH OCCUPANCY at the end of the day is BY FAR the most important factor in this business. Most of the other “financial engineering” is bunk. That’s the long answer. The short answer is that it’s not about YOU. It’s about the TENANT.

@Sarah Cowns Hi there.  I advise you to start "working the problem backwards" at this point by making appointments with community banks and see what THEY think of your financial situation as it relates to your business plan, because you will need a Lender to finance you.  Depending on what they tell you, you can react accordingly (stop, wait or go).  Putting a house under contract without knowing your financing is reckless at best.  You can try "conventional" financing from bigger banks (the benefit of getting a 30 year fully amortizing mortgage), but that's as painful as a root canal in my opinion.  Right now, your combined INCOME (yours and your husband's) is by far your BIGGEST ASSET.  My guess is that you should knock out the debt NOW even though it is only 0% because (1) it currently hurts your credit score; and (2) paying it off will impress the community banks.  You can tap that 0% credit card reservoir of cash LATER for doing the repairs on your new acquisition when the time comes, then pay it back.  More later.

Stephen:

In addition to my other real estate activities, I am also a Hard Money Lender in Oklahoma City, through my company:

RMAC Lending, LLC. Let me know if I can be of assistance.

Richard McLain

Sure.  I am heading out on a vacation tomorrow, returning to the office on Monday, November 19th.  That’s Thanksgiving week tho.  Maybe we can visit by phone the week of November 26th.  

@Nathan Gesner Yes, as a matter of fact, flying down to Cozumel on Sunday for 6 days of R&R.  Hey, I earned it!

@Tyrell Rutledge  A little over 15 years ago I purchased a "We Buy Ugly Houses" franchise, so I got almost all of my houses from those leads.  I am a Development Agent for the company, so if you want to know more, just let me know.

@Ray Johnson I've thought about your suggestion.  But if I ever got into a cash squeeze, it is much easier to sell a few houses than it is to sell an entire apartment complex.  I probably don't make as much money as the apartment guys, but it happened the way it happened.  There are special liabilities and risks in owning an apartment complex.  I've had three separate house fires in 16 years (nobody got hurt), and in all three cases, the damage was covered by insurance (two were a total loss).  So I've diversified my income as well as having diversified my risk.  If I want an apartment complex, I would probably buy an apartment complex in addition to my houses.

@Ayne C. I don't think the community banks cared, but I certainly didn't want the personal liability exposure, so I always put title in my LLC. I think the banks EXPECTED them to be in an LLC. You need to get out and talk to bankers. Maybe a "credibility packet" of your experience, etc, might help. I have not heard of many people getting stuck on this step, unless there are underlying credit issues you are facing (or have faced in the past). It's just a matter talking to enough bankers to find the one with the appetite.

@Ayne C. In these 16 years, I actually only used conventional financing for four (4) of the properties, finding the process burdensome, although once in place, conventional financing was great.  I have always used local community banks who appreciate the business and are responsive and competitive on rate & term; and occasionally I would refinance (after investing in improvements) and place with the same small group of community banks.  Never did want to try portfolio or commercial lenders.