All Forum Posts by: Ryan Williams

@Colby Easterling leaning toward doing an all-in-one loan and paying off mortgage quickly and then using the all-in-one to buy/finance BRRRR's, and fund my own flips (I already do a lot of flips with partners/OPM). Trying to have my cake and eat it too by paying off the mortgage and having that comfort or largest expense being gone, and still being able to scale rental properties with the liquidity of the all in one. That's the goal for the year! we will see!

Someone tell me if they think this is dumb, lol! 

@Bob Stevens I'm a big believer in buy and hold. Unfortunately this one would be negative $2k+ a month at 20% down, and that would be before any renovations to get top of market rents. We are in Denver, our market is a little different than a cashflow market like Cleveland. Also, the only capital I had in the deal was the commission, that being said keeping it as a rental would not be up to me. 

If I come across a flip where we could pull the majority of the money out, or keep only a reasonable amount in and the rents would cover the mortgage, I would consider it but I haven't really seen that here since the interest rates have been over 5%. 

My plan is to take profits from flips and reinvest in Denver into properties that I can force equity into, that are positioned to appreciate, and that would at least break even and pay for themselves. And I will look for cash flow in out of state investments.  😎

I wanted to share the story of my latest deal. 

I bought this property with a partner and we were planning on flipping it and putting it back on the market. Initially, it had gone under contract after 1 day on the market and we had not been able to check it out. A few weeks later we saw it came back on market, we checked it out and made a quick offer to land it $25k under list price. We closed at $1,275,000 and I put my commission back into the deal. All in after closing/holding costs we were all in at about $1,270,000. We were getting vendors lined up a couple days after closing and I got a call...

"Hi, we saw that you closed on this property, we were the ones that had it under contract before. We had intentions to buy the neighboring properties and build an apartment complex. One of the neighbors told us they had no intentions of selling soon so we backed out of the deal. After you had it under contract the neighbor came back to us and made us an offer, and we are under contract. Now you guys are the only missing piece, what would you sell it for?"

This was a complete surprise out of left field, so I threw out a big number - close to our best case scenario flip profit to see if they would bite. After some back and forth the price came down but they offered us $1,400,000 cash and a quick close. We held our breath to see if any shenanigans would happen during the contract period but everything went smooth and we closed yesterday! This would have been a great flip deal, but it would have been 4-6 months of work and have a degree of risk. My partner has been doing real estate for 15 years and he said this was the easiest deal he's ever done! haha $130k profit in two weeks with no work on our end. I could get used to that!

Has anyone had a similar experience? 

I wanted to highlight a recent deal I helped a client close last week to show there are still deals to be made in this market! This is the cheapest duplex to close in Littleton, Colorado in over 2 years. Needs some love for sure but has great bones with 3 beds 1 bath for one unit, 2 bed 1 bath another unit and an unfinished basement. We knew it was a great deal but with bad pictures and being in rough shape we made a quick offer slightly above list price, limited inspection and quick close and included a quick acceptance deadline so we others couldn't see the great deal we were seeing and they accepted! My buyer will live in rehab one unit at a time and there's an unfinished basement that can be turned into another unit. After rehab and adding additional unit my client will very likely be living for free and have this property positioned as a great investment! Appraised well over purchase price as well!

The client is an experienced investor and comfortable with sweat equity so this was the perfect deal for him. This may not apply to everyone, but it does show that great deals can still happen and there's still power in house hacking! 

Hello, I've been tossing this idea around and doing the math and would love the communities thoughts - 

Theoretically, let's say your annual income would allow you to save $100K a year. Would it be better to pay off your primary residence in the span of 3-5 years using that savings, or buy 1-2 rentals a year that break even/have a little cash flow?

I think the freedom of not paying your primary mortgage would be a huge stress relief and allow you to deploy cash quicker in the future and feel safer taking risks when you know your own living situation is covered.

On the rental side, I know the magic ingredient in real estate is time and the sooner you get properties, the sooner they appreciate and are paid off by tenants and 5+ rentals 20-30 years from now would definitely be worth more than the one primary.

Would love anyone's thoughts on how you would go about this situation! Thanks in advance!
 

Hello Denver! (and similar "expensive" markets) I'm an agent/investor, I run numbers A LOT for myself and clients for 2-4 unit properties in the Denver Metro area and I rarely find anything that breaks even from a cash flow basis. For you investors and agents helping investors who are buying in Denver and similar markets where positive cash flow is hard to find, what are the factors that make a good enough deal for you to go for it? Is it equity plays? break even or negative cash flow that will be better if you refinance at lower rate? 1031's? stashing cash for tax purposes? I'm trying to educate myself and my buyers how people are winning in this current market and would love some insight from others! Thanks in advance! 

@Heather Gates @Billy Daniel @Brittany Guimond thank you all! 

I'm still buying and looking to buy, but my criteria has changed a lot. During thet low rate period there were so many good deals, now they are a lot harder to find! I'm in Denver, so I look for cash flowing properties out of state, and I'm looking for our next house hack here in the Denver Metro that I can add some significant value to. 

With high rates I'm looking for more creative options like off market properties, seller finance deals, loan assumptions, or properties I can add value to, especially in an expensive market like Denver. I also look for and encourage my clients to pursue properties that would break even or cash flow now and hit an ideal 8-12% cash on cash return after a conservative refi of 4.5-5% interest rate down the road. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $188,500
Cash invested: $23,000

We just closed on this off-market turn-key duplex in my hometown of Searcy, Arkansas. My father in law partnered with me on it. $500-1000 a month cash flow and 10-20% cash on cash return depending on if we do a 15 or 30 year loan.  Just a few blocks away from the local college and town square. So excited to get this one closed and start managing it!

What made you interested in investing in this type of deal?

I have a couple homes in Denver but wanted to get a multifamily property in a cash flow market. My real estate philosophy is to have a diversified portfolio of cash flow and appreciation properties that I buy and hold over the long term.

How did you find this deal and how did you negotiate it?

It was originally on the market with a budget broker who supplied the sellers info to me directly. As soon as I got their info they took it off the market and we were able to negotiate off market.

How did you finance this deal?

We originally were going to do a 15 year conventional loan with 20% down with my father-in-law partnering with me. Because of some circumstances we switched over to a 30 year 20% down DSCR loan. The underwriting process was way easier after that since the property qualified based off income. We would have probably refinanced in a year or two anyway. We will still cash flow now , but hopefully we can refinance after a year to a much better rate.

How did you add value to the deal?

I was able to negotiate a $11,500 price reduction, $3500 seller concession, new sump pumps and french drains, and a new coat of paint for vacant side of duplex.

What was the outcome?

A deal that will cash flow now (which is hard to find where I'm at in Denver) and for the long term. Because it's at a lower price point we hope that we could even pay it off sooner and collect $2K+ a month in pure cash flow. We will cash flow about $400-500 a month once vacant side is rented and then cash flow $500-1000 depending on loan term we refinance to.

Lessons learned? Challenges?

This was my first off market deal, first out of state deal, first deal with a family member partner, first DSCR loan so there was A LOT to learn. I'm based out of Denver and I'm a real estate agent full time so there was a lot I knew how to do, but, because I didn't have my usual system and partners, this took so much more work. It's actually the most time I've spent on a single deal. Ultimately I took each problem one at a time and worked towards solutions and it worked out, but it was a lot!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

D'Lornn McMullen with Houz Mortgage saved the day with a quick turn around on a DSCR loan after our first conventional loan fell through. No agents were involved (I'm not licensed in Arkansas) and we used a local title company there in Arkansas.

Hey @Abe Louis it sounds like you have some options! I would be slow to get ride of a valuable property in Denver and really examine your options to reach your goals in other ways. Those of us that purchased in 2020 or before experienced unprecedented appreciation, which we may never see that same kind of growth again. If that property has equity and cashflows, it doesn't hurt to play the long game, make some extra cash, and have that thing be a nest egg down the road. 

That being said you can do whatever you want! lol cash out, HELOC, or even sell you have options which is a good place to be!