All Forum Posts by: Scott Schultz

I know of several Investors that have been buying and getting to them when they can, for example Home Path Financial LLC owns one across the street from me, they just started the rehab, they have owned it for 2+ years, they just havent had time to get to it. I have done the same, when I have several going, I will put one on hold till I get to it. if the deal is good enough it can sit, money is cheap or almost free when you have cash to play with.

here is my method. I buy well below market, and rehab with cash (usually a Line of credit on paid off rentals) when rehab is complete generally I can pull a note for 60% LTV and get all my initial capital back, I pay off my LOC and do it again. If you cannot get this type of increased value after repair, you are not buying right enough. The $80K you have should only be thrown out and returned, never parked long term in the deal. The reason for my 60% philosophy is Market Swings, I generally get Commercial notes, so 3 or 5 year terms with 15 year amortizations, the 60% LTV insures if my not is due for renewal in a down market, I will still have adequate equity to refi, considering here in WI we typically dont see 20% value drops in a downturn, but if we did I would still have a minimum of 20% or more equity in a bad time to refi. I also keep a few properties free and clear that dont have Lines against them, this is added insulation from market swings. I dont ever want to borrow more than 40% LTV across my portfolio, I think I am at 35% at the moment. I have 24 Locations, totaling 27 doors. Just my plan. Doesnt work for everyone, but your $80K is a nice spring board for growth.

depends what you want the money for and how long, you can do FNMA cash out refi at 75% LTV with fixed rate for 15-30 years, or a in house commercial cash out with 3,5,or 7 year term usually amm'ed at 15-20 years, or as stated above Lines of credit, on the commercial side LOCs they can take both properties together and set up a LOC based on usually 80% of combined value. Keep in mind what you use the money for, if you use it for business the interest and loan costs are deductible, if you use it for personal you cannot deduct it, but it is not considered income. so if you say use $40K to fix up your personal home and $40K to buy another investment property you need to split the amounts interest for tax purpose. Many people still deduct the interest regardless, BUT if you are audited, you will have to pay it all back with interest an d penalty at 18%

Buy and hold is quite forgiving in that time can heal bad deal wounds, flipping if you make a bad deal, you lose money. I am a firm believer in saving your pennies till you have a reasonable down payment AND a some back up cash for the errors that will happen along the way.  finding a deal is the easy part really, being prepared for what lies ahead is the hard part for most people.  

@Marcus Auerbach Water bills were a huge deciding factor when I hired a manager, as it sits I think 50-70% of the managements fees are covered by water bills I would probably get otherwise nailed with. 

@Richard Hernandez I didnt notice that @Marcus Auerbach threw some numbers out, his numbers are on the high side for Worst case scenarios. Where is the property located? and what are the soil types? Wells rage from about $5000 to $10K  for a full replacement, but unless the water is bad (contaminated) or dry you can usually fix them its litterally a hole in the ground with a pump at the bottom of the pipe, everything else is in the house and as simple as can be, a $20 pressure switch and a $100-200 pressure tank is pretty much all that usually fails.  I have tons of experience in this area if you have questions.

If I had a choice of being on Municipal or well and septic, I will take well and septic any day, the Well is little maintenance and no bill and with exceptions, generally you may replace a pump and piping every 50 years or so unless lightning whacks the pump, still a pretty cheap fix,  septics, in WI require pumping and inspection every 3 years ($150-$300) and if maintained will last 20-50+ years and depending where you are and soil type replacement would be $2,500 to $20,000 I can get a 1000 gal (3 bedroom) system replaced up north in sand country for $2500, in clay its more as often you need a mound. But I would stay off the grid if possible.  Just my opinion.  

Sounds like you have a start, What I have found is buying value add has been huge for me, the fact that you have worked in HVAC you have some understanding of construction, so why not buy what others cant and do the repairs up front to your liking? I buy stuff that needs full rehabs at deep discounts, and do full rehabs, New furnace, water heater, electrical panel if needed, flooring, kitchens, roof, windows, ect as needed and force the value up, so I tend to buy between $20-50K so $10-30K rehab and get an ARV between $80-120K with rents at unusually .8-1% of ARV or 2%+of my all in cost, this spring boards you forward, doing BRRR without needing more cash, because you can get all your money back out, I try to keep my equity high and debt low with the prospect of economic changes over the terms of a loan, lots can happen in 15+ years. let me know if i can help, I have 24 locations, 27 doors Im in West Bend and have stuff all over WI. Also do you have your 608? I have been looking for a guy to vac and charge if I install an AC when I do a furnace, ( I am licensed just havent taken my 608 yet no vac pump or charge scale either.)

All investors need to learn the GIS and other mapping applications intimately, the overlays show things like Zoning, Flood maps, Soil types, Topo, and much much more, all at your finger tips 24/7 I never take anyone's word for anything, especially from a government office, even before the GIS  was wide spread I would go to the county offices and read the maps myself,  Do your own homework and dont rely on others,  same reason I learned abstracting, understanding more than most will get you farther than most, best of luck.