All Forum Posts by: Ron Flatt

I think it is great you met her.  One of the first items is how well do you know her.  Do not go into business with someone you first meet.  If it was someone I first met, I would probably offer to purchase as many as she was willing to sell on an owner finance that would give her a monthly income, possibly I could help her get the ones she wanted to keep in rentable condition if she wanted to be landlord.  If it was someone I knew better, I might agree to a partnership, with an exit date and how we would exit the partnership and get them up and running.  If she has never been a landlord, this might be easiest for her.  The key is you need everything in writing, you are providing a service that will provide her an income and you will profit also.  NOTE:  I like to limit partnerships to 5 years with a defined exit strategy.  The best one I was in, was one of us quoted the price the other had the opportunity to buy or sell at that price.  This is a fair way to separate, think about it, if I quote a price then I am willing to buy or sell, it is the other partners choice, If they quote the price, I have the option of paying the price or selling to them.  

Justin, it is good to be honest.  Sometimes we all get a little scared and do not know what to do first.  Find some folks on here, go meet with them.  I had a gentleman from Houston drove up and looked at what I have done, asked a few questions.  He met with my maintenance man, asked him questions.  Met a few tenants.  I was planning on feeding him at the local cafe, but he picked up the tab.  He came up later and watched me at a Tax Foreclosure and watched as I lost a few properties to others and then was able to purchase 2 other properties.  

Meeting new folks is great, just picking their brain.  I still call my older brothers, both a lot more conservative when it comes to buying than myself.  We have different techniques but they work for us.  We were partners for 17 years, when I bought out the rental portion of the business and they took over the notes and unsold properties.  

You never know you might find someone to do a joint venture with on the first one, to get your feet wet.  NOTE: Word of caution- you need to get  to know them first and always have an exit strategy in writing.  
Good luck, if you are in the Hillsboro, TX area give me a call, we can have coffee if I am in town.  
Be Blest

Unsure of what your market is like there, but 500K investment with only 2700 return, does not seem like a great deal.  I would be more apt to sell the property, buy a property with a better return on capital.  You cannot bank on appreciation, you may be able to afford it today, it things went south and you couldn't, it would be better if the property can pull its own weight through the tough times.  I would think you should be able to find at least a couple of 10 CAPs in your area if you look, I think your portfolio will build faster and you and the bank will sleep better.  

Well, welcome to the group.  I am that poor cousin down south of you in Hillsboro.  If you get a group together and let me know when they meet, I would consider traveling to visit the group.  I am always interested in sharing ideas and gathering contacts.  You never know when you need a set of ears to bounce something off of, or maybe a partner or JV.  Good luck, If you are in heading south on 35, stop in Hillsboro, I usually good for a cup of coffee.  

I do not live in a high price market, but I do believe: 

Look for the right deal, yes it may need some TLC.

Purchase it and you should be able to own as cheaply as you are renting with the advantage that you get the tax savings, payment will not increase unless taxes and insurance goes up.  Refinance on the rentals is fine, but use that money for more rentals, use very little to purchase your residence.  The main caution:  DO NOT over leverage, where if one or more goes vacant you are in a bind.  I have never had a major vacancy rate or major maintenance problem, unless I just used my cash for another property and let funds get low.  (Murphy''s Law strikes when you are least prepared for it).  

I have an lengthy application, and I look over several applicants.   If there is a reason I do not want to lease to an individual, I continue to look until I get someone better qualified.  If you are in a market that tenants are scarce, this might not be available to you. 

was late last night,  60000 @ 12% would be 7200 a year in interest.  Some investors will want some of investment back as they get their interest.  so you may have more than 7200 in payments to them.  

House hacking is not for everyone, I agree @Allen Bishop Jr., my wife and I have never house hacked, and my daughter did not. Many people can house hack and are successful. I recommended house hacking so he could use his VA loan. Otherwise he can purchase something on his own with traditional financing or just do as my daughter did and find a property for himself, then either turn it into rental when he moves to next duty station or flip it.

Many folks under estimate the cost of the rehab and think that it is worth more than it is after the work is complete.  Be Careful on a fix and flips, you can get in trouble, even if you have some construction experience.  

IN general as noted above, the taxing authority notifies the person who is owner of record, any lien holders of record, etc..  So a Lien holder can pay the taxes to protect their investment.  

Ok, i do not know all the ins and outs of your deal.  But you said it has 800+ cash flow.  

Go to the BP tools and pull up your property with all the information.  

Set up an LLC and try to convince a few investors to front 30% of the property, for the downpayment.

Then get a loan for the remaining 70% + closing from Bank.  

Example:   $200 K prop,  borrow from private individuals $60K at 12% for a min. of 5 years, with a balloon at end, if they want to be paid off.  Borrow $140K from Bank on as long a term as they will give you.  

So you will have 60000 that you will be paying $5000 a year in principal

You will have 140000 bank note at probably around 6 or 7% for 15 -30 years.  

You will have to pay taxes, insurance, maintence and capex, property management(even if you do it yourself).  

At the about year 3 of ownership, you would ask your private money people if they are going to want to get cashed out or renew, for another 5 years.  

Somewhere starting at beginning of year 4 you will start the refinancing, and payoff anyone who wants to be paid off.  Use the extra after paying off investors who want to be paid off, to purchase your next deal.  

The hardest part is finding the first investors,  they are having to buy you and the deal, because that is all that is there.  If you pay them as you promise, you will find some of the people who pull out, may be out for 2-3 months and then come back say well you know last time I only put in $5k but I think I could invest 15 or 20 maybe 100K if you have something.  Once you have them coming back, then you can work on getting the private money rate down, because they know you will deliver not only their interest but their principal.  

Good luck