All Forum Posts by: Travis Sperr

@Brent Olsen the fees seem in line with any purchase transaction - the one that sticks out to me is the title company charging a settlement fee and a notary fee - assuming you closed in your home state and not at the title company. You should be able to get a notary for free at a bank and I would ask title to reduce the settlement fee since you didn't take their closers time, conference room or get free cookies at the closing.

Easier to beat up title fees than lender fees, which would be your next stop.

Hopefully, you are not further surprised by the taxes in Memphis - city and county property taxes billed separately.

@Wayne Holliman It sounds like your lender is not a fannie mae direct lender - if so there would not be a seasoning requirement for a title change so long as the continuity of obligation can be proven - you signed for entity, own entity and signed for debt - then it is not an issue. Your lender has an overlay that requires title seasoning.

cliff notes - You need a fannie mae direct lender with no overlays, shouldn't be difficult to find.

Commerical loans can be easier to get but the rates and terms are not nearly as friendly as conventional financing on 1-4 unit properties.

@Bryan Zayac when using this strategy the increased repairs should increase the value accordingly or the deal doesn't work. When I was heavy into the BRRRR strategy, before it had a cool name, I was rehabbing close to flip condition using less expensive materials where I could to achieve a comparable property to the flip houses in order to get the best value on the refi. As also mentioned I am fixing anything that will create an issue down the road. But items like knob and tube or old plumbing might be less marketable, it won't affect the value of the house in comparison to the cost to remediate.

Deposit the money into the account the month before the lenders seasoning requirement - for example, they want 2 months banks statements - you need to deposit the money 90 days out. So the workaround is to season the funds.

@Monte Blunk This is a common question investors find themselves asking as the equity position grows in their investments. The math will tell you to take the money on HELOC's or even cash our refinances because you can invest it at a higher rate of return via rental real estate. The numbers do not measure the risk because everyone has a different risk tolerance you are the only one that can decide if this a good fit for you.

I have taken HELOC's against a rental property to fund other projects, typically new construction deals, but have never pulled money against my primary. Fully understanding loans are loans, there is a difference in my mind between my primary and investment properties. A few things to consider -

If you take a HELOC against your primary home to buy rentals and later decide you want to move, your equity will be tied up potentially eating up your ability to put a down payment on another home - especially if values go the other way.

When you using a HELOC to fund purchases or the down payment on a new rental you are 100% financed, makes for a killer COC on return - but if values are flat or lower when the term expires on your HELOC it could leave you in a tough place.

Buyin more properties will increase the gross cashflow that will better support the goal of retiring from W2 but will increase the debt making it more difficult to pay off the portfolio when you really begin to enjoy the income. Based on your ages my approach would be more toward making a plan to purchase great properties now and have them paid off at or near retirement age.

Good Luck!

@Chris Krinslow - Not too difficult to understand with the right information. You need to see the title commitment or legal addresses to understand if there is a recorded easement for access. If there is not - then probably best to pass on the deal in a hot market people will overlook the nuances of the situation, in a slow market, it will kill your value. Unless this type of set up and arrangement is very common in the area. I am curious if you accounted for the front back house style on your valuation of the property?

@Christopher Lugo Find mentors and communicate with them frequently. I started at a young age as well - mid twenties. and found it difficult to connect with active investors when I didn't have much value to add. As I am little older and experienced, I am more than willing to help guide newer and younger investors alike but few ask. Also, remember that it is not a race, you don't have to do 8 deals by 22 to be successful, take your time and start doing deals when it makes sense for you - until then learn as much as you possibly can.

@Will Foster typically you would be right on time for that meeting, but the location closed after 30 years. Check Meetup.com there may be another real estate meetup that falls during your trip. 

Pine Financial Group and Your Castle Real Estate are back at it, hosting another one of a kind real estate investor’s success summit, Saturday October 28th! 

This is a FULL day of education and networking where we are joined by some of the best speakers, vendors, and real estate investors in the state. There’s absolutely NO SALES PITCHES, YOU choose what speakers YOU would like to learn from throughout the day. Wrap up the day with the panel of experts, Q&A, networking, and a FREE drink! 

Where: PPA Event Center

2105 Decatur St

Denver, CO 80211

When: October 28, 2017 @ 8:30am-5:00pm

For more information and to register, please go to www.denveriss.com.

@James Watts Fair enough - wasn't my intention to beat down your idea and you are correct in the lack of constructive feedback. 

In the example of your partner putting up all of the money and taking all of the risk, to be paid back with what a property manager would charge ( assuming you are managing the property) would take a long time for their investment to be paid back. Not knowing the price point or rents, using an example of 10% of gross rents to pay back their initial investment - how long would that take?

They bring the money but you bring the deal and experience - a lot of value in both sides of the equation. Maybe better to determine the rate of return they are seeking for the amount of money they can put in. If it is 10% COC, you can structure the deal so they get net rents that would equal that amount and you keep the rest. Not knowing your long term play, would it make more sense to give up more on the rents to take more of the equity when you sell in the future? Who goes on title? Is the deal a partnership in an LLC?

After the partner's initial investment is paid back- do the profit splits change? If you have a turnover, who covers the costs associated?

The challenge when you are taking money from someone else partnership or loan, they are always more involved than they said they would be and you will feel a pressure to answer to them. When you have a partner and the property gets trashed by a tenant, you have to evict and rehab that requires a hard conversation. When you have a loan, you continue to make your payments and the bank doesn't ask why you selected that tenant or why you let them go 2 months before evicting.  

Partnerships can be a great tool, but they come with headaches - people change, circumstances change, markets change, etc. So important to spell everything out ahead of time and have a strong agreement that protects both of you.

Is it fair to ask they put up all the money - if they agree to do so - then it is fair. You are the expert in this transaction so you have a responsibility to provide a fair deal as you understand all of the risks in the transaction, where they are expecting that deal will just go as planned forever (even if they say they understand things could change, when they actually do change they forget).