All Forum Posts by: Tim McKelvey

@Kim Stuart often times, looking at exit strategies refers to what to do with the property, not just the loan.  So if the property is a concern, exit strategies could include you seller financing it to someone, keeping it as a buy-and-hold (if a flip goes south), VRBO/Air BNB, etc.

However, wrt your specific question on the loan, aside from putting your home on the line, you could cash-out refinance another property (if you have multiple) and use that to pay off the hard money lender.

Another option would be to get private money (family/friends) to pay off the hard money loan and either pay interest or provide equity.

Hope this helps.

@Constantia Petrou it is very important to follow the lease.  In the long run, you will be better off by NOT allowing this in the future, or by changing the lease to whatever you will allow.  Now, that said, what to do in the immediate moment, let them know they will need to get the shots up-to-date and provide the proof.

@Alisa Boderick Congrats on finding BP.  I found it about a year ago.  I would recommend listening to all of their podcasts.  OK, you don't need to listen to them all.  If you hit 70-80 of them you get most of the concepts.  What you get by listening to them all is what changed from the "goldmine" days of investing in 2011-12 and today.  I lived in FL for 17 years (3 in Tampa) so I am a bit familiar.

While listening to podcasts, please write down the names of all the books they recommend. I've read about 30-40 of them so far.  They are great for either motivation or tactical details.  Definitely get Rich Dad Poor Dad if you have not already read it, and also cash flow quadrant.  Then, I would get one of the more recent books related to taxes wrt real estate--lots of great info that few people know about.  Then, I would listen for info about cash reserves so you can figure how much you need based on your tolerances.

And of course, ask questions and review the forums for issues and answers from others.

I bought my first property last July on the other side of the country.  One thing I can say is you need to have a good team (realtor, property manager, and handyman) in the area if you are investing remotely.

@Rahul Handa Your question is a bit vague in that you have not provided much information on your market or your circumstances. So, we will need to make some assumptions.  Then you can follow the logic.  If the assumptions are not accurate, then change them for your needs and re-run the logic.  1) Based upon deals you have analyzed for your market, how much do you anticipate make per door?  If you assume 250/door, you need 10 properties.  If you make 100/door, you need 25 properties. 2) Again based upon your market and your analyses of properties, how much does a property cost?  For this example, we will assume a $60,000 property will cashflow $250/month.  We will also assume you will get conventional loans with 20% down, closing costs are $5000, and flooring/paint cleanup is another $5000.  So you will need $22,000 per property (12,000 down +5000 +5000).  So for10 properties, you would need $220,000.

However, your mortgage would only be for $48,000.  Many lenders will charge $2000-3000 extra for loans less than $50,000.  Further, you need to have cash reserves for property management, capex, etc.  You have to figure this based upon your risk tolerance.

Also note, you may not be able to get 10 conventional loans, so you may need to get business loans where 25-30% down is required.

Anyway, this should get you started with figuring out how to put a strategy together.  Good luck to you.

@Ken Maddis

Any idea how many mortgage workers they have?  600 seems initially like a very small number for such a large bank.  Also, any chance their "slow-down" has anything to do with "perceived questionable" banking practices?

@Nicole Heasley

You are spot on with the stock buyback due to huge windfalls from the recent tax reform.

@Melanie Hartmann I think it is great that you are willing to jump at opportunity. You sem to be at an opportune point in life/career and are not blindly jumping in. So long as you are willing to accept the risk/consequences of it not working out, go for it.

@Bob Mueller Jr.

This is an interesting hypothetical.  Rather that give the typical "it depends, what are your goals," I will try to provide some insight. I do not think a percentage is the appropriate measure.  Your key phrase is "Responsible RE investor."  Based upon this I would look at an actual dollar amount, not percentage that: 1) enables you to live in a safe neighborhood and decent schools district, is modest in size and fixtures, and has payments sufficiently small that you are still able to invest at least 10-20% (or whatever your target is) of your income.  Warren Buffet still lives in a very modest house.  He does not invest a set percentage of his net worth into his personal residence.

@Fran Rivera

For taxes rates, your city and county websites should have the info.  If you own a home in the same city and county, just look at your tax .

For capex, think of the major items that will need to be replaced, and how often.  Roof 25-30 years, a/c 15 years, kitchen appliances 5-10 years, flooring ??? Years...

Get quotes for all these items and divide by number of months (30 years =360 months)  This is how much you need to set aside each month for capex.

@Fran Rivera

@ Dan Barli has some good comments.  

In addition, I see two thing looking at your analysis. First, you have CAPEX at $24. I suspect you meant $240 (10%). That will hit your cash flow over $200/mo.

Next, I do not see a line for insurance.  I see PI, and property taxes, but not property insurance.

Cheers,