All Forum Posts by: Shawn Ginder

Investment Info:

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

Purchase price: $37,000
Cash invested: $10
Sale price: $47,500

Sold 2 unit

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

The cashflow

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

Craigslist for sale by owner, when talking to the owner mentioned he had another property wanting to sell that wasn't advertised

How did you finance this deal?

private loan from uncle

How did you add value to the deal?

rehabbed entire second floor unit, raised rent an place new tenant.

What was the outcome?

got out of the deal not losing money.

Lessons learned? Challenges?

Location is key to success, this property wasn't in a great neighbourhood, grateful to get out without losses.

Adding to what Kurt says above, don't be afraid to use leverage, once you get say 4-6 properties or more cash flowing you can put all the extra income toward one mortgage and in a very short time payoff mortgage after mortgage and in say 5 years or less own several properties free and clear reaching your goal. It's having the mentality using leverage to increase the income, which will than accelerate the debt payoff of income producing assets all the more faster. You can learn more at vipfinancialed videos on youtube for further research on using debt to achieve financial freedom in a short time.

We are using a high level of leverage with bank loans and private short term loans that will be paid off in the short term, we also have seller financed notes in the mix.

I have seen much of Grant's materials in the recent months. 

Thank you for the feedback!

We also bought from far away, from Europe buying in central PA. Like others mentioned the team on the ground will be key to your success. Have to have a solid team in place to run things for you and good communication with them. 

As noted by others, the deal has tight margins, so if this offer doesn't come together continue to shop for bigger margins. 

The other thing to watch for is location, get someone you trust with eyes on the ground that knows the market, ie. a property manager who understands the street you are buying in. 

Our advantage we had walked the property two years earlier, so we had an idea of what we were getting, having a home inspection will also give you the information you need to evaluate further, and if you can have a property manager walk the property can give feedback will also help. 

All the best.

Currently have 6 properties, 11 units in 2 years of investing.

Want to grow to 75 units in the next few years and over 5000 in 10years, seek advice on what I should be doing today to see the dream become reality?

Any tips or focus points for the next 2-5 years would be helpful!

Thank you! 

Shawn

We have done this from the borrower side of things, perhaps smaller amounts dealing with, but the path we used in PA was lender deposits funds to our bank account in advance to ensure funds cleared on the account, typically 7-10 business days on the bank side for deposit to clear in excess of 5k. Title company writes up the mortgage and or note for the lender, we give title company the funds at closing through bank wire or cashier check, documentation gets files by the title company at the court house. We place the lender on the mortgage as 1st or 2nd lien and is also included on the insurance documentation.

I'd check with your title company if they can prepare the note documentation for you and or use the template you now have and take a step out of the process with the attorney. 

With the title company preparing the documentation they can move much faster to shorter your time period on closing the deal.

Disclaimer here, I do not provide legal advice, only encouraging to check with those that do, but this option is something to ask about to your title company. If they can't ask other title companies.

Another option sell the house, look into buy a small multi family home where you could live in one side and rent the other unit(s) out and have the tenant(s) pay the remaining mortgage payment for you thus living virtually free of housing costs. Than continue to save up for your next rental home. Explore this option.

Or, use the open line of credit, and or equity in the current home for a downpayment on a rental home. Got to know the numbers and have a great cash flowing deal for this to make sense. Be careful, but this could be a great way to get into real estate investing.

@Summer Timms - check out www.padeals.com I have been to there introductory seminar, and believe they can be a trusted company to work with as a turn key provider if interested. The management team they recommend using is what we are using and are very professional, Harrisburg property management group. Non the less will give you another market to look at in the Harrisburg PA region. We have three properties in Harrisburg, mostly outside the city, one edge of the city and doing well with them.

@Saj Johnson - Johnstown PA, study this market first, you will see it is a declining market, not growing consider this in your evaluation. What jobs are there, or were there that are no longer there? I too saw ads of this nature from this part of the state I grew up in, and talked to a seller who wanted to sell to me as he wanted out of the market to move away, have to ask the questions why would an investor want to move away if the returns are so good. Retirement, possible, but it could be a number of other reasons, the seller disclosed certain realities to me as a newbie from his 20+years in that market. Find that person to talk to. 

Section 8 - where we are investing in PA the section 8 program isn't working the way it should, investors are out thousands owed by the section 8 program. Is it working in Johnstown, I don't know but I would investigate first.

Lastly, the low income housing, cheep homes, have to weigh in the repair factors vs. income to cover those costs. Consider crime where these are located. Consider vacancy rates, and non paying tenants or continually having late payments always wondering will you be paid this month or not, or should you evict are situations you can run into frequently with this type of investment. All of these things don't show up on a 25%-30% projections.

Trust me, we have had some of these issues, in similar neighbourhoods, if you can manage this and find a way to be successful at it, it could be a great niche to get into, some do, others loss out and give up investing all together as result of the headache. Use caution, and gain enough knowledge and you will know soon enough if it is for you or not.

@Summer Timms - You'll need to get this information from someone in the market itself. In PA we have what is called residential licensing fee for having a rental unit, and a city business license fee for having rental property, and if the city does inspections they may charge you the inspection fee. These fees are minimal, when averaged out over a year can be from 10-30 monthly on the property. We are also now getting quarterly sewer maintenance fees from the city. You won't know until you ask these specific questions from either investors in a particular market or a property manager who would know. Many of these fees are borough or city limit specific.