All Forum Posts by: Robert Dabicci

So I'm working on saving for a down payment for my first investment property. My question is where should I keep these funds. I'm still new to real estate investing and with the current market it seems it could take me some time to find my first deal. I was thinking about keeping the first 12k this year in a couple of Roth IRAs between my wife and I, then I'm not sure about the rest. Is there a disadvantage to using Roth IRA as a temporary holding place and wouldn't it be a wasted opportunity to hold in my checking account where it will not grow?

I am aware that the IRA could fluctuate a significant amount and that I can only withdraw the contributions tax free and not the earnings.

Thanks for any and all help.

Hey @Noah Brant, congrats on the start in kzoo. I'm just starting to look for my first property in the area. What part of Kalamazoo did you decide to invest in?

It actually ended up falling through. Had a verbal agreement with seller and we were supposed to meet to sign papers when the snow storm hit. He then kind of led me on for a week before finally accepting an offer from another buyer. Never even got a chance to improve offer.

Hello I'm looking to buy my first investment property and I'm wondering how important it is to focus on 1 area. My job won't allow a lot of hands on property management so I intend on hiring a property management company. Should I really be focusing in 1 city so I can have the same company manage all of my properties. I'm afraid of investing in a smaller town 30-45 minutes outside of my home city of Kalamazoo, then finding my next property 45 minutes on the other side of the city and ending up with properties spread all over southwest Michigan.

Thanks guys I appreciate the help

Hello, I know every partnership is going to be different and I have to assess my individual case. That being said I'm interested to see what other more experienced investors think so I can make sure things are fair for my partner and I.

The details

This is the first real estate investment for both my partner and I. Its a 100k 4 unit that we expect to cash flow $750. It has 3 updated units and 1 that needs a new kitchen, floors, and some wall and ceiling work.

What I bring to the table: I am financing the deal. I am putting 25% down and securing the loan. I also found the property and I am responsible for dealing with closing and researching and implementing all the great information here on bigger pockets and elsewhere that makes for strong real estate investments.

What he brings to the table: He has decades of experience in home repairs and installations. He will be responsible for rehabbing the distressed unit (labor savings 5-10k) and more minor repairs in other units and future updates if needed. He also brings knowledge with his ability to diagnose maintenance problems and provide solutions that I would otherwise probably have to hire someone for. He walked property with me and provided assurance I needed to put in a quick offer without taking excessive time to evaluate area I'm not versed in or try and hire a contractor to walk property with me.

My partner proposed that I get an annual 7% return on my down payment off the top of the net cash flows and retain 100% of the initial equity from down payment and then we split the remaining cash flows and equity gain 50:50.

To me this almost emulates a 3 party deal with a money man (7% annual return interest only off top) , a real estate investor (50% equity gain and 50% remaining cash flow) , and a contractor/repair man (50% equity gain and 50% remaining cash flow) except that I take on the role of the money man and the real estate investor. 

I tend to think people will think cut out the partner and just pay for contractor work, but this is someone I know I can trust in their assessment and in their work. This is my first deal and I feel like I'd take comfort in knowing I have someone with a vested interest to rely on for these tasks. In addition, I would have had a much more difficult time assessing the property quickly and getting in an offer before another buyer.

Sorry for the long post. What do you think of this proposal. How would you change it? Thank you.

Kalamazoo

Hello I am looking at a 4 unit property (each 2 bed 1 bath) and I was wondering if anyone would mind pointing out some of the pitfalls a new investor like me may miss?

The property is listed just over 100k and when I use the rental property calculator I come up with $650 cash flow conservatively. (10% vacancy, 10% maintenance, 10% capex, and 12% property management (which I'm considering doing myself anyway). I'm looking at over 20% cash on cash return. The roof is 5 years old, the units have been fully updated within last 5-10 years and of course I would have inspection done prior to closing.

So it seems like the numbers work out well, and I'm not seeing a reason not to pull the trigger. However, I don't want to jump into a purchase and then get crushed by something an experienced investor could have easily pointed out. Thanks for the info and let me know if you need anymore information to assist. 

@Michelle St. Claire is there a reason I must get it for 70% arv? I understand that’s the strategy for brrrr and to be in the property for $0. But in my situation I’m talking about being ok leaving 30% in the property. 

Hello, I have seen a lot of people talk about doing a cash out refinance after a rehab and season period. What I'm wondering is if I buy a property for all cash (to move faster and make stronger offer) that does not need rehab can I turn around and get financing from the bank once I own the property outright and get 70% of the appraised value of the home back in cash? The main goal here would be to leverage my money instead of keeping it all in 1 property. 

Thanks