All Forum Posts by: Ryan Allison

@Steve Puglisi do you have a 401k?  My company uses Fidelity and I'm able to borrow up to 50% of the 401K amount (up to $50,000) with a 5 year note with 4.75% interest.  Again, you have to pay this back with bi-weekly equal principal & interest payments otherwise you'll have to declare income tax and pay a penalty.  The best part is that all of the interest goes towards your 401k, basically paying yourself interest.  

Some people disagree with me on this, but in my opinion, if your deal has enough cash flow where it covers your payment back to your 401k that you borrowed for your downpayment, in my opinion it's not a bad option.  You may have some opportunity costs with lost investment money, but if you have good cash flow it's something to consider.  

This deal in Wethersfield?  I also live in town here.

@Rory M. , I think it depends on what you’re looking for.  If your going to live in one of the units, I would definitely house hack and invest in a multi locally.  

If not, then theres other pockets of the country that have good returns, you highlighted a lot of those areas that seem to be popular & also a lot cheaper up front with downpayments.  For these reasons, I’ve spent a lot of time the past couple of months looking into the FL marketplace.

I don’t know much about NH either but I agree that Western Mass and parts of Rhode Island and CT have deals that cash flow.

@Account Closed there's a flurry of reasons why Hartford & East Hartford have cheaper properties.  In my opinion, a lot of it has to do with the real estate taxes there.  They are astronomical, particularly in Hartford.  It's definitely possible to invest in Hartford but with the property taxes and the amount of vacancies it makes it makes it an uphill climb for people like myself to venture there.  

If you're looking to rent near East Hartford, Hartford does have a couple of new developments that from what I've heard appear to be close to full occupancy.  Glastonbury also has a flurry of new developments that are very popular but they're more expensive.      

If you're going to be working in East Hartford, I would recommend Manchester or Vernon as a potential house hack.  You also might be able to get a 203K rehab on a single family in Glastonbury that might be a good option as well.  I do not own anything in any of those towns but I have heard from other investors who have done well with that strategy.  

Good luck.   

@Matthew Bellino , smart man for starting this early.  

If I was able to do it over again, I would do 100% do what you are doing.  Not sure what year at CCSU you are, but NB is a great place for rentals.  If I was you, I would house hack a single family home and rent out to some of your friends or classmates or buy a 2/3/4 plex.  

You won't have the income requirements but if your parents co-sign you can get a good loan about 3-5% down.  Unfortunately, the reality of you finding a deal under $100,000 that is habitable is going to be tough in New Britain.  I don't own anything there but have made a couple offers and all of them have been above $100K (& still have required quite a bit of work).  Feel free to reach out if you want to discuss further.

Thanks for the insight everybody.

I agree with all of you, if you bake in the numbers for hard money & you still have profit, it's just the cost of doing business.  I have no problem with that.   

I had a hunch that most of the BRRRR deals were offmarket but what I didn't know was that pretty much ALL of them are. I'd imagine this holds true across the country.

@Andrew Postell your approach definitely is the way to go.  The problem I have is getting LEADS.  I'll have to gameplan on how to get more leads on distressed properties.  @Michael Doherty did you find your properties off the MLS? Probably helps that your an agent!

@Salvatore Lentini  and @Melvin List i am curious to know more about some of these loans that are "in the middle."  @Melvin List especially in Florida as Orlando is one of the areas I'm looking at the most.  

@Josh Norell agree, i'm actually very close to finalizing my first HELOC.

@Lee Ripma @Whitney Hutten thanks for your insight.  

@Anil Bajnath just did this on my rental property, although were in slightly different worlds as I do not own it outright... 

I would most likely recommend a HELOC. As mentioned above, you only pay interest when you need it & are not locked in. Also, you avoid closing costs with a cash out refi and the costs of maintaining a HELOC are very low (about $100-200 per year minimum requirements). You may want to reach out to a couple of credit unions but the ones who do them for investment properties mostly go up to 75% of LTV.

Looking for some insight from BRRRR investors... who have you been using for the initial loan (the initial purchase & rehab portion of the project) prior to refinancing? Unfortunately I can not do a 203K, it has to be non-occupied. I realize a lot of this is location depedent, but anybody have any good recommendations?

Hard money obviously is an option but I would like to avoid the high interest, albeit the positive being only having to make interest only payments.  I'm leaning towards conventional purchase & doing the construction out of pocket prior to refinancing down the road, but I'm trying to find the cheapest way to get this intial loan done.  Do people typically use the same bank for both loans?  

Thanks,   

Eric, I agree with Mike those CT towns have good cash flow and good upside potential.  Unfortunately the CT marketplace has shown little to no appreciation which stinks but the cash flow in the towns Mike mentioned is typically good.... with that said you will not find something under $75K there that isn't a complete gut.

If youre exploring other markets, the midwest has a low barrier to entry since their properties (& taxes) are significantly lower than in the Northeast.  

Agree with the others... unless Santa is selling the property himself this seems WAY too good to be true.  

Bud, I agree with the others especially @Michael Ealy, I would definitely do this deal with owner financing, 10-15% downpayment, interest only payments and a balloon payment at the end of 15-20 years.

Sometimes investors in other parts of the county are shocked when they find out the cash on cash returns that we get here in the Northeast.  The deal you proposed would NOT make sense if you want cash flow.

If you're looking for appreciation in the Taunton market, obviously that's a gamble.  I personally still think there's more appreciation potential in Taunton from those seeking elsewhere from Boston, but that's obviously somewhat out of your control.  

I got lucky on a property in Mass as it looks awful compared to other parts of the country from a cash flow standpoint but I got lucky as it appreciated like crazy, probably the best investment I've ever made in my life.  Obviously this could happen with this deal too but I wouldn't bank on it.

If you do the downpayment with interest only, you can refinance right before the balloon payment is due and hopefully get all the appreication you want towards a traditional loan.