All Forum Posts by: Ron Flatt

Ok. I ran into the problem also. We bundled 10 homes together, and received a 70% ARV using their appraisal (yes were a little low). I think it was closer to a 60-65% but it did free up cash. We were able to get the loan on a 20 year amortization, 5 year fix, with up to 1 % up or down every 3 years. We also had a clause that if we sold any of the properties they would be released but the proceeds went to the balance. It helped us get more property, but now we are getting to sell one, and I will be losing the $700 month, and reduce what I owe, but the mortgage will be the same. So they are the disadvantages also.

Key is make several relationships with numerous small banks.    If it was easy everyone would be doing it,  Just stay persistent and keep fishing you will find the lenders, just like when you find the deals to buy.

Have you considered refinancing the properties you have to pull equity (no tax hit) and buying the Multifamily separately.  You may have to get creative on the financing but, you will have more property and the extra cash flow should make up the difference.  

I do not know all of the implications of your situation but it is probably what I would try to do.

Your question is very open ended. However, wanting to be able and earn while you sleep, seems to sound like you are leaning more toward being the money in a Joint Venture. You can definitely make some money, but you still need to make sure you know the type of real estate and more importantly you know who you are doing the JV with.

I try not to use always, but delayed gratification is usually the best way to build wealth.  Unfortunately, our society today wants what they want now, instead of saving and purchasing it.  Thus, we have huge credit card debt, large consumer loan debts.  

I remember my father telling me, if I had to finance a vehicle, I was driving to expensive a car.  I still have car debt, but I am more particular about that debt.  

Most of us on here cannot buy a property for cash, or rehab one for cash.  So we buy, using leverage.  We also need the cashflow monthly to maintain our lives or build our "Property Business".  

Let me give you an example:  

My wife and I have bought and sold purchased property over 25 years, we both work in the oilfield business which is very cyclical.  So we have had to use the properties, profits and sometimes the original investment to make ends meet.  So we only have 3 rentals and some raw land we want to develop.   However

In 2002, my brothers seen what I was doing in real estate and wanted to partner with me.. We formed a S-corporation with the understanding that no money can be pulled except for work preformed, unless we all agree.  With this understanding, buying, selling, renting we have moved from a small amount of seed money to we have almost a million in notes, over 25 rentals, and we have property to sell.  I am the one who has done most of the buying, selling and managing but currently one brother is doing it while I am out of state.  Notice, the difference in growth though because of the money being reinvested instead of pulling out money.   

Yes, it has been tough,  when your struggling to meet your own household needs and see a large pile of funds that you own 1/3 of but cannot touch.  I made it through the slim tight times and it will be a nice retirement someday.  Not sure when that will be, because both brothers have their own retirements do not need the income from our venture.  Delayed gratification will make it worth while in the end, but you do need to know that there is fruit in the end.  

I am unsure who my sister in law uses to screen the tenants, but I also look them up on social networks, such as facebook, linked in etc.  If they are spewing hate, bigotry, or complaining completely.  

I like to look for steady tenants.   As far as B or C Properties.  C properties are usually older than 30 years.  Older communities and tend to rent to upper low income or low middle income tenants.  You do not have A-1 credit people here, usually, but you can find honest hardworking individuals who can and will pay on time.  (unfortunately, I have had some tenants go to Loan Sharks, that charged them more than my late fee.)  

Look at your tenants, screen them, check their social sites (where they let themselves show), make sure you get your deposit.  When you treat these tenants firmly and with respect, they will stay with you and bring you more good tenants.

I agree with both post above, sell a non-producing asset.  Use the proceeds to purchase an asset that will give cash flow, (Cash is King).  

I am not familiar with your market, I do know that most individuals on BP like B properties.  I personally want and look for C properties.  The return on investment is much better, I screen my tenants and they know I am by the Book.  I have had tenants stay for over 10 years, and yes I still have those that seem to move more, (these are usually my one bedroom duplexes).  This is usually conflicts between neighbors than not paying rent.  It takes time to eventually get the tenant mix you are after in some areas.  

Find the right property, do not over improve (one of my earlier mistakes), and screen tenants.  

I hope to hear of a great success story soon.  

A deal is a deal, in my opinion.   I would prefer a duplex generally, but if a Townhome works best for you and the numbers work go for it.  

I have not had to deal with HOAs and I tend to avoid them.  

The Key is to keep making offers that work with your numbers.  Just because two deals fell through does not mean the next one will.  

Welcome to the BP.  When you have questions I am willing to try to help.  

@Jeremy Miller Great points.  If they are used as another tool in the tool box great, I see so many individuals let the balance creep up on one card then the next and next until they are under water bad.  I keep some cards, on use one and my wife uses one that we both pay off monthly or at least within 2 months.  I use builder store cards paid off at end of each project and to take care of maintenance on rentals.

I had his money for the down payment.  I secured the loan in my name from bank.   After the purchase and loan closed, I filed a 2nd mortgage to him, (realize a 2nd lien is in second position behind 1st lien, but it was some protection and it makes a paper trail for him to have claim to property.)

No the split was 50/50 on my deal, after all expenses.  We both made out very well.  

I personally would try to get it in both of your names.  You do need to know how things will be split up front.  Your time and effort should be worth 25% min.  with experience it will move up.  

The opportunity to get complete ownership can be agreed upon in the beginning.  It is important for this to be agreed upon.  DO NOT TAKE ADVANTAGE OF A PARTNER, trying to get the property.  It is better to let the property go for a higher price, and you get half, than to short change your partner.