All Forum Posts by: Scott Johnson

Quote from @Jason Hirko:

@Kristin Caras not all deals are worth investing in. If the numbers are already that tight for you, one bad stretch of vacancy or major repairs and you're going to be hurting

This is where I'm at with this. It sounds like you're trying to make a deal work. The problem isn't that you need to make this deal work, it's that you don't have enough deals to choose from. The question then becomes, "how are you looking for deals?" It's important to remember that on the MLS, in a lot of areas, people are bidding things up like crazy. So how can you find more deals that will work best for your portfolio? That's the question.

Quote from @J Scott:

I've written on this a bunch in the past... It would be very difficult to sell a flipping business, for several reasons: they normally don't maintain inventory or much personal property, so there's little asset value; there's rarely any intellectual property; there's rarely any brand value; and there's not a lot of proprietary knowledge in the industry, so building a new brand from scratch has low barrier to entry.

Now, this isn't completely true. Companies like "We buy ugly houses" have been able to leverage their brand and trademarks to build value that can be franchised and sold.  But they are by far the exception, and their value is purely based on Brandon trademark, not any competitive advantage or intellectual property related to operations.

So, if you want to build a business that can eventually be franchised or sold, that's going to be the key... Building a brand that somebody's going to be willing to pay for. Not just building business.

My question was whether you're been building a brand or not. Think Coca-Cola. Their brand is worth billions. 

It's true that there are few assets in a flipping business unless you keep a warehouse of supplies or have a company car you're willing to let go. We're building a brand right now, but unfortunately, a lot of the media and advertising is based on my face and personality. I don't like it and will eventually find someone who likes the camera more than me, but our logo/name is on point and neutral. 

A recommendation is that you read "The Millionaire Real Estate Investor" cover to cover multiple times. Keller talks about key points that will allow you to sell your business. Lists of customers, brands, and systems are the key. I'm building my business to sell, just in case I decide to do so. 

Come on by and rub shoulders with local real estate investors, lenders, and vendors while enjoying some of Greenville NC's finest beer! Seating in the front (if it's warm enough) and inside! This is the first meetup of many! Get Excited! Can't wait to see you there!

Meetup is sponsored by Christian Jacobson of Homevestors! Can't wait to see you there!

Quote from @Cory Lucas:

@Scott Johnson I’m certainly not in disagreement, just that fear of the unknown I guess. First time around for me, so unsure of the best way to handle it and trying to figure out “a best way”

Thanks for the feedback

 I'm by no means a Guru, but if you'd like to discuss or roll play the conversation, send me a message. I do have property management experience and had to set tenants straight/evict.

Option 1

The Federal Reserve is already discussing rate hikes. Playing with variable rates is like playing with fire at this point. While I do believe they will revert to their dovish behavior after the first one or two hikes (when the markets crash like crazy) the increased risk could leave banks keeping their rates higher. 

You can do what you wish, but I wouldn't touch variables with a 50-mile pole. 

Sorry, not sorry for the bold and italics. This is a "tough-love" situation.

@Cory Lucas, get him out. Pull the plug. No choices, just get out.

If this is all true, then your tenant is making it impossible for you, as a landlord, to fulfill your obligation of keeping the home in liveable condition. Why would you worry about his dignity at this point? It's business and he knows what he's doing. 

If he has not been paying rent and you have not evicted him as defined in the lease agreement then you can get in a ton of trouble!!!!!!! The judge will look at you and say, "Why have you not been enforcing your lease?" and possibly give more leeway to the exiting tenant!

Hand him the 30 days notice at the door and walk the property for an inspection (Bring an officer or a friend if you feel like you need it). Take a lot of pictures just in case things go south and you'll have them for court.

This is a two-way contract. Enforce your side of it.

Quote from @Reid Chauvin:

Hi @Logan Pourbaix - it sounds like the hang-up is around your Debt to Income ratio. Without having a clearer picture of your income and debt obligation situation, there's not much I can do to advise. If you have any mortgages tied to non-income producing properties, or extensive credit card balances, student loans, credit card balances, etc...those are all things that are reducing your ability to take on this new mortgage. Although, showing an executed lease on this subject property should definitely reduce the effect of this new mortgage on your DTI.

Feel free to reach out if you want a second opinion. I don't mind spending some time with you to analyze your situation. 

Correct me if I'm wrong, Reid, but wouldn't it be best for him to finish the rehab and get it rented before seeking financing? Sure, you may need to wait six months to get your capital back out, but then you get paid. 

All-in: $105,000.00 & a $112,500.00 (75% LTV) refinance means you've gotten paid $7,500.00 to buy the property. That's not including the cash flow and depreciation you'll get from it. Then the income will be used in the refinance.

Quote from @Hoa Nguyen:

Hey everyone! Quick questions that I am hoping someone with experience in owner financing can answer. I am seeking owner financing on a single-family deal near me. The seller is up for it, but the mortgage does have a due on sale clause that would stop me from being able to go through with this financing method. What are some ways around due on sale? 

I think what you're actually looking to do is: 1) Buy the property Subject-To the existing mortgage
and 2) Have the seller carry back the remaining balance and you make monthly payments.
Educate yourself on buying a property subject to the existing mortgage and then learn about how to place a subordinate lien on the property to protect the seller's interest regarding the money they're lending you. That's a more subtle way of buying the property. 

@Kaylinn Restrepo DO NOT SACRIFICE YOUR INCOME

Remember that from Robert's book as well. Especially since you're assisting them financially. My brother and I are starting our investment journey a bit differently. We're wholesalers in Greenville, NC, but all of our buy-and-holds are going into our parents' names. We're building their retirement for them since they're getting close to that age. 

If you wanted to you could use assisting your parents as a "why" for starting out with investments. The cash flow from your rental could go to them, and you get the loan paydown and depreciation. BRRRR is a fantastic technique and we did our first one this year.

Educate yourself first. Get in contact with someone local who does what you want to do and work for free. I asked every flipper I talked to if I could just help them with some of the renovations and found one. They're one of our core buyers now. Give what you want, and it'll come back in buckets. If you want leads, give leads. If you want money, give money. 

Hope this helps!