All Forum Posts by: Scott MacDonald

@Ben Ashburn I plan on being down this month if you are free for a beer?

@Ben Ashburn we have been down a fair bit recently. We have a 28,000 sq.ft commercial building under contract we are converting to apartments and some smaller MFH. We are new to the area so looking to link up with local experts!

Hey Guys, I currently have a few properties under contract in Corpus and looking to connect with others in the area. A bit of a long shot but in town tonight to meet some builders tomorrow. Is anyone available for a beer tonight?

@Harry P

I’m in a very similar position, moved from Boston in 2015 and started investing in rental properties in 2016. Currently manage around 25 properties mainly in Austin. I particularly like the 78744 and 45 zip code. While Austin can be tough to break into I really like it, short vacancies, great quality tenants and rapid appreciation!

 Hi Beth, I don’t remember saying the Austin market was too hot. It’s harder to find deals where the numbers are right. It’s much easier to get into a hot market when you plan on living there as you can afford to pay a little more. I invest in Austin for investments only so I’ve a strict criteria on what I’m looking for such as cash flow and little to zero in the deal but even that is possible in Austin if you look hard enough. 

@Joe Scaparra

I agree with Joe, I’d even say to go as far as a quad Plex. House hacking a multi family is a great way to get started and if I was in your position that’s exactly what I would take on as my first project.

Hi,

I'm looking at purchasing a property that is in flood Zone AE and the FEMA quote I got is $4,500 which is prohibitively expensive and killing my deal. The property has never flooded according to the owner and my CLUE report so I don't expect it to but my lender requires it and I feel it's good to have in this situation.

My agent has pointed me to some private flood insurance companies who are coming in substantially lower at around $500-1,200. The issue I have is I’ve never heard of any of them and I’m concerned why they are so much cheaper. I don’t want to find myself in a situation of learning the negatives of private flood insurance after the worst has happened. The companies I’ve got quotes from are:

Floodsimple.com

Insurox

Floodsmart.com

NCIP

Is there anything I should know or be concerned with? My lender just requires that the private insurer “follows the National Flood Insurance Program guidelines and it CAN’T be more than 5% of the replacement cost value of the property.”

Any lessons from the field here? Is private insurance going to leave me high and dry in an emergency? What can I do to prevent picking a fly by night company?

Thanks

Scott

Have you looked at the services like Plastiq? They allow you to cut checks and bill your CC. They charge a fee but it’s cheaper than a lot of options. That way they can print a check for your contractor and bill your CC.

Hi Narinder,

Congratulations on getting resourceful in REI. It separates a lot of the wannabe investors and the investors on their path to their goals. I have borrowed from my 401k, cashed out IRA's, borrowed from non-term life insurance policies to name a few in my conquest to obtain more real estate and reach my goals. I think its a good option purely because I trust myself to make more cash and equity in REI than I trust Fidelity to grow my 401K.

I typically follow a BRRRR strategy where I buy the property, rehab it, rent it, refinance it and repeat the process. The refinance typically cashes me out all my funds invested and I repeat the process. So when I have borrowed from a 401k previously I typically look to repay it within a year. MY understanding, During that time when you have the loan out you are paying interest to yourself to keep your 401k on track. So lets say you borrowed $100k out of your 401k, bought a property, held it a year doing some renovations and then refinanced your cash out you would be making loan payments to the 401k. Lets say you have an 8% interest agreement it means that if you held it a year you would pay $8k interest over that year, so your $100k 401k will be worth $108k with the interest you paid. Plus you will hopefully have built equity in the property and made cashflow.

I am sure others will chime in with their opinions but I find myself leveraging as much resources as possible to accelerate me to my goals.

Congratulations Rick! Knowing when to walk away is one of the most important skills to learn. It hurts losing that option and inspection money buy you dont want to dig yourself a hole especially when starting out. I got complacinet in my purchases and stopped scoping properties I deemed to be low risk (PVC piping, no large trees and little slab movement) and got stung when I bought a duplex that had a rotten cast iron pipe under the property which had then been replaced with PVC outside the property. So to my initial glance it was PVC when I seen the PVC inspection pipe. Ended up costing me $20k to tunnel the pipe out and replace it all. Lesson learnt is I simply wont buy a property without running a camera regardless of how low risk I deem it to be. So you dodged a bullet with the cast iron on the last property.