All Forum Posts by: Travis Sperr

Your Castle Real Estate and Pine Financial are hosting the 13th annual Denver Real Estate Investor Success Summit.

It’s a full day of education from top local experts. Plus, there is a happy hour networking event following the summit. The first drink is included in the registration price.

Registration is only $19!

There are NO SALES PITCHES! This event is about learning and networking.

Details and registration are on the website at www.denveriss.com/

We are loading up this event to be sure you go home knowing this is the best thing you could have done on a Fall Saturday. Plus we are throwing in our special networking happy hour following the event for FREE. We will buy you a drink to say thank you for coming to the event.

Here's a partial list of the topics:

1. How to Create a Cash Flow Empire and Protect Against the Housing Crisis 2.0 
2. How to Flip 20+ Properties a Year: Building a Repeatable Flipping Business
3. Front Range Real Estate Market Trends

Details and registration are on the website at www.denveriss.com/

@Connor Anderson it is no to say it can't be done - but a very low likelihood, unless you can get true private money - an uncle, parent, colleague. Any sophisticated lender is either not interested or will want significant money down, sometimes upward of 40%. The reason for this is the lending laws to owner occupied borrowers are significantly different than lending to investors - examples foreclosure process, rates and fees that can be charged and no balloon payments.

If you do fins someone to lend the money needed, I would highly recommend that you have a competent mortgage lender take a very close look at the deal so they can get you refinanced out of the private money once you have the rent revenue in place. The process might be different on a single family collecting rent rather than an investment property. 

Although I wouldn't use the term soften in our market, especially in the areas you want to buy, there is truth to the fact that some people who list in Sept - Jan are selling because they need to and not because they want to. But there are still more buyers than sellers...

Good Luck!

@Victor Mercado If the deal is as strong as you think, why not contract it and wholesale for a handsome profit and be better suited to take down the next deal? Not sure where you get an investor loan with $2k toward the purchase. Also if listed on the MLS and not selling there is an indication the increased value may not be there.

@Joseph McKinney Rather than focusing on why others say it makes sense, instead try coming up with 2 or 3 potential deals and show her exactly how the deal would work. Take x dollars out of property a, invest in property b - here is profit, cash flow, risk, reward, plan to grow to multiple properties increase cash flow etc. I would imagine this investment is dear to her heart and the idea of just pulling cash out without a clear plan is uncomfortable.

@Monte Blunk You can run the math 100 times, It will always say to take the cash out and buy more deals, more gross cash flow, higher valued portfolio, higher cash on cash than the equity is currently providing. But your risk tolerance can’t be measure with math. It all has to do with your time horizon, the deal you can find to deploy the cash into and your long term goals. if you anticipate using the cash flow to live on at some point or bearing retirement the lower loan amount and less doors probably serves you best. If you have some time and are confident in the deals you can locate to make it all pan out it will likely serve you better in the long run. Good luck!

@Seth Rouch $150 a ft is probably still safe for single family depending on area, square footage and price point (basements less per ft). The cost of construction is rising quickly and making it difficult to pencil deals in some areas. Keep in mind you will want your land cost to be around 20% of your end value in most cases. Time to permits for single family is a couple months with competent architects, 5+ units is taking 11 months in Denver. 

One of the challenges in nailing down a price per foot right now is two fold - everyone has a different idea of the "cost" to build - some will just include the hard number, others provide the all inclusive (demo to doorbell) soft and hard costs - everything excluding land, closing and financing costs. The other piece is the square footage - I am building town homes right now, 1250 sq ft - the cost jumps up because there is no marginal cost savings - just more kitchens and baths per square foot. 

Good Luck!

Try Kim Lopez at www.envirocaredenver.com/ 

Originally posted by :

This is great feedback! 

Interesting point from  about how the degree stays with you for life and presumably impacts earnings power for life. I understand that rationale, but I wonder if that's as true today as it was a generation ago. How often do you look at someone's degree when assessing them for a job? Maybe in the first 4-5 years out of college? When we recruit here at BiggerPockets, I usually make no more than a minor mental note of folks - where they went to school and what they studied is far less important to me than whether they have relevant job experience and convince me of their ability to rapidly develop the related new skills they'll need to work here. So, I wonder if colleges degrees truly have an impact in most fields beyond that first 1-3 (maybe five) years after graduation. 

In that case, economics would suggest a moderate loan of perhaps tens of thousands of dollars in a field in which a college graduate can expect to earn a median income following graduation, and maybe a small six-figure balance in a highly lucrative field. 

Fair point that degrees are not important at all after x number years in the industries you and I operate in but, that same degree that may be over looked when experience is strong, was required to get the job that provided the experience that you are seeking. In some cases the degree is the cost of entry being a requirement for law school, nursing school, medical school, masters programs and now to become an appraiser! Of course discussing specific scenarios is getting into the weeds on the subject, but a doctor fresh out of residency who borrowed their way through is as bankrupt-able as they come $300k+ in student loan debt, before they buy the Beemer and get the doc loan on a $750k home all before making a dime as a doctor. With the debt wiped clean, they can continue on to make $300k+ a year for 30 years. Maybe an extreme example, but you get it. 

As insane as the entire education system has become, we both know there are still very real possibilities to get a great education with little student loan debt and the prospects of a lucrative career.  

Fun discussion and view points. 

@Scott Trench I really like the idea of disincentivizing creditors for making such insane loans to people that literally may never be able to repay, but that is not what the market is demanding or we wouldn't be here. Similar but different, Dodd Frank considerably changing the lending space, which ultimately made it more expensive for the borrower. Similar theme being, if the people can't figure out simple economics, the government will need to protect us from endangering ourselves. 

I can never get behind allowing student loans to be bankrupt-able - for one reason. Other than purchases made with a credit card/LOC, when you file BK you lose the house, car, boat and other assets (if any). If you BK on your education loans, you still have the education and ability to make an income with the education received.

It all starts at home with parents teaching their children how the real world works before allowing them to go out of state at a great football school to study philosophy while racking up $100k in debt. There is also no onus on the universities that continue to increase costs year over year, again showing the market doesn't seem to care...until they are $100k in debt explaining why they can no longer provide straws for cold drinks in the drive thru. 

Agree 100% the system is not right and that degrees from colleges will continue to mean less and less. I also don't know what the answer is other than what I can control - saving for my kids education and teaching them economics.

Fantastic subject to discuss. 

@Stef Martin if your intent is to scrape and rebuild, then you need to use comps that are new construction in the area to back into a value on the land by subtracting all of the costs to do the deal including your profit. The value of the property today is determined by what you can build on it. It is typical to buy the land at about 20% of the end value of the property you will build and sell.