All Forum Posts by: Rob Hakes

@Eddie Knoell  - I am new with spartan.  I got my first under contract last summer and am under contract on the second, so I have not had the vacancy or maintenance problems yet.

For my first one I was pleased:  The appraisal came in at $1500 above purchase price.  They had it rented out a few weeks before closing (nov 2017) and they got $25 more for rent than the original projection.  

$97500 purchase price for a 3/2

$950 for rent

Have you looked into Spartan Invest? I just got a few houses from them.  So far a positive experience.

@Chuck Van Court

I have done some deals with Spartan.  With them and most reputable companies, your purchase price should be close to the appraisal (my first was 1500 under appraisal).  I do believe that the pricing in these markets is heavily driven by these turnkey companies based on what they can rent them for.  That is one limitation as an investor is that it does limit your exit options for some years as you are buying a property at a top market price.  If you understand that and focus on the cashflow it could be a descent investment.

There is another turnkey provider who I was working with that has to start raising their prices in order to start purchasing more properties.  They will start to raise rents in hopes of keeping cap rates the same.  They also told me that because they have to raise prices and start pushing the market, appraisals will be coming in below purchase price for at least a year as they establish new comps.  The investor will be left to make up the difference if financing. This is in the memphis market.

Spartan has not reached this point YET in Birmingham.

Yes you can get insurance that covers replacement value.

@David Mazza

I was in a similar situation earlier this year (but probably smaller numbers).  I was refinancing my house to try and lower my payment amount in efforts to create a cashflowing rental out of my personal home.  My appraisal came back about $75k more than i thought it was so i changed my strategy.  

I did a cash-out refinance and used the $75k to re-invest.  This raised my mortgage payment by $200/month but left me with an opportunity to cashflow about $1200/month with my new properties and investments.  This was alot better than selling the home because i got to stay in it, and rather than having to worry about paying taxes on any gains, now i have created additional interest to write off.

It was basically an arbitrage move, where i am borrowing the  75k @ 4% and investing it at around 10% (one of my investments turned out to be a huge return thus getting me to $1200/ mo extra.

I found some good providers in the south that have worked out really well.

I am brand new to this, so time will tell.  So far so good.

@Gary Fare

I am trying to do the same thing with a SFH I bought out of state. One strategy that I have been mulling is to deed the property into a land trust first with myself as the beneficiary. According to Federal Law, the bank cannot call the note due if the property is being moved into a trust as long as the beneficiary does not change. This change gets recorded. Then once that is done you can change the beneficiary of the trust from you to an LLC, this change does not get recorded, but is still valid, leaving the LLC holding the liability if it hits the fan.

I am not an attorney.  Just a joe.  Clint Coons, an attorney who writes for BP has some really good articles and literature on the subject.  This is also the strategy that my local attorney is suggesting.

@John M.

Just wanted to put in my two cents as I am starting to venture into the turnkey world and have been wading through this the last 6 months.  It ALL depends on who you are working with and the particular details of the turnkey company.  I have found a few turnkey providers that seem to have good system's down.  First and foremost they keep the PM in house, and put a high priority on a high quality rehab to keep tenants happy and longer term.  Some of the small things will also make a big difference like: is your tenant responsible for their own appliances (to cut down on maintenance calls) and  what actually is the markup on the service calls?

I have not had a turnkey property long enough to know what the actual returns are, but i am closing on a property this week with Spartan Invest and the brief details look like this:

-$97,500 purchase price

-$99,000 appraisal

-$950 rent

-Closing Costs (your estimate looks close)

-Spartan purchase price (don't know for sure but based on tax records it is around 20k)

-I cant say enough about the rehab!  This one was probably a little more extensive than usual as they had to basically tear it down to the studs and build it up from there.  An entirely new interior including some new plumbing and electrical. New roof, all new hvac systems. new windows.

With turnkey, you are definitely paying top market value for the homes, and if you had your own boots on the ground doing the rehab and management you would be making ALOT bigger cashflow.  But for something as truly turnkey and simple as this was I am super happy.  

I am projecting about 9-10% cash on cash return, plus the additional 4% that mortgage paydown will give me.  And if appreciation only sat at 1% that would be an additional 4% because of leverage.

I am thinking of posting a more detailed case study once this one is underway.

Keeping my fingers crossed.

@Basit Siddiqi- 

Wow! thanks for taking the time to put all of this down.  I will definitely dig into the info.

I really appreciate it.

I am looking for any suggestions on a good tax accountant in the Salt Lake, Utah area that is savvy with real estate investing.   I have acquired some rental properties this year and will need some help with long term tax planning and yearly filing.  If you have had any good experiences or would like to recommend one, that would be great.

It would also be helpful to get some suggestions on what questions to ask and some 'red flags' to look for while selecting one.

Thanks in advance.

As I understand it: As a 1st lien holder you are actually 3rd in line behind the County (taxes) and Utilities.  So I guess it depends on how much equity is still in the property once the unpaid's get satisfied.

@Daniel J. - I was wondering the same thing about Cardone as I listened to his podcast. One thing that stuck out is how he spoke about what he 'should' have done when he was younger. Hind sight is always 20/20 and he is forgetting about his own development and things he learned along the way to make it all possible. Im sure if he took such a big leap without having all of his experience, it may not have panned out as well as he thinks it would have. I hope that his advice does not push somebody that is too inexperienced into a nightmare 4%CAP that they lose their butt on.

I always think of a quote from the late, great Jim Rohn "Make sure what you do is a product of your own conclusion". Simple but imperative.