All Forum Posts by: Clay Smith

Did you find one?

Hello Michael. Buy using the LLC but they will equity your personal guarantee for the loan. Another option is to own a property outright in the LLC and use it as a line of credit to secure more.

There are nonconforming loan lenders but the rates are very high.  They are generally used by self directed 401k investors. 

How many properties do you want to buy? 

Are you an owner occupant?

"Subject to" means subject to existing financing. If this is the case then the seller should be carrying the mortgage. You will get the deed. I think I am misreading your question. Can you clarify?

What kind of financing do you need? Are you putting cash down? 

I know Brent K. Invests there.  The Sojourn Church does also. Personally, I would not buy there. 

If you look at Zillow or city-data.com you will see he area as a whole does not match appreciation for the city average. Also, the rent to owner ratio is not favorable for owner occupants. The violent crime rate is terrible.

If your price point is for properties in the 30k- 80k range outside the west end, you could do better.

Well if you ain't first you're last - Ricky Bobby!

now that I look this, just buy the B class triplex I have for sale in the marketplace. We can or a deal on losing and incidentals ;)

Hey Jim, I thought Don Coakley was really good.  He spoke the day we met at the Indiana Subgroup.  Did you decide on a manager?

Come to the next KREIA meeting.  In fact, come to them all.  I think everyone should start with deciding on what they want to buy, why they want to buy it, and how they plan to buy it.  All good questions for setting up a plan of action.

Do you want to flip or buy & hold?  Is it streems of cash or piles of cash you want? 

If you are downtown for lunch one day, reach out to me.  I will share what I know freely.

First, lets try a method that makes logical since, instead of some ratio calculation.  Work through each of these scenarios.

1. CAPX

As for planning on saving for capx, there is an article on here with capital expenses listed out by age. You cant make money.  Use these figures, adjust for age, and plan your savings for capx.  I believe the cost figures on this article are inflated, so make sure you price the expenses accordingly for your property and area.

1. Known Expenses

• Get taxes from Zillow or county site. 
• Rent roll from owner. 
• Call utility companies for costs on water, trash, sewer, common electric, gas, lawn care, etc.
• mortgage (p&i)
• Insurance (I use NREIG)
• Management (7-10% depending on your area)

1. Vacancy

I lock tenants into 2 year leases.  I generally fill them before the next person moves out.  For now, plan for one month of vacancy at the end of each lease period.  This is one stat that proper management can offset.

1. Unknown Expenses

I think you have to plan for unknown expenses based on condition. In the last two months I have had issues with bats,  squirrels, spray paint, mail theft (leading to a turn over), etc.  All things I never planned for. You never know what is next.

I plan to cash flow $100-200 (before repairs) per door at minimum on any property I buy.  If it is a house that is in a Historic District, with wooden siding, and a converted property then I go for $200.  If it is a nice brick multifamily built to last and every capx item has an inspection sticker on the materials (water heater, electric panel, etc.) then I go for $100.  It all depends on what shape it is in.

1. GET AN INSPECTION

Do NOT skip the inspection.  It is a bartering chip and will help identify risks you can mitigate using seller concessions.  Use this to shore up your investment.

1. IN CONCLUSION

Once you figure out all of this, you will have a better understanding.  I stopped doing all this tedious work and I generally look for $200-$250 per unit based on condition of property.  This seems to work well for me.  In the end, it is a game of averages.  People with 10 properties generally have less risk of "going in the red" on any given month than the person with 1 property.  If all you really ever buy is a couple properties then all you did was create a miserable hobby.  Never stop buying, the processes make it easier.