All Forum Posts by: Account Closed

I just listed a great opportunity to house hack in Jacksonville, 4 miles from the Shoppes of historic  Avondale. Two buildings on one lot...if you rent out the larger building, you could live for free!! PM me for details.

I just used JAX Urban Construction, and am pleased with the work.  They took 2 weeks longer than expected (common), but ended up a few thousand cheaper than their estimate (uncommon).  They are a branch of my Property Management company (but work independently), so they specialize in rental property remodels. 

@Aaron Thivierge - Have you thought about BRRRR-ing it?

Purchase $60,000

Rehab $45,000

All in for $105,000

Refinance ARV ($180,000) at 80% ($144,000) from your friend at 4% for 20yrs ($873/mo Principle&Interest):

$1,100 (rent) - $873 (PI) - $92 (taxes) - $50 (Realistic Insurance) = 

$85/mo cash flow before any repairs/CapEx, etc. (with essentially $0 invested in the house, so it is an infinite % return if you get any cashflow)

+

$39,000 cash (new mortgage of $144,000 - all expenses of $105,000)

You could use that $39,000 to go and buy two more properties that are $85,000 each ($17,000 down [20%] each, plus a little cushion for closing costs)....or a multifamily for $170K.

Then you would have 3 properties, with $0 invested!!!  I think that's magical. 

You wouldn't have to pay $42,000 in taxes (35% of the $120,000 profit from flipping). You also get the tax benefit of depreciation, and if you really wanted to capture the additional $36K of equity ($180K ARV - $144K mortgage), you could sell it in one year and 1031 the profits into another property (one with better cash-flow), and defer the taxes (similar to what @Jeff Riber suggested).

Could you PM me your lender's information?  I'd be interested in talking with him about some lending options in Jacksonville.

I second @Kevin Smith's recommendation for @Corey Clarkston and the team at Lenger Financial / St John's Property Management. They helped me close on a 6 SFR portfolio last month (with seller financing), and are starting a renovation for me next week. It's a true, one-stop-shop for all real estate investing needs in Jacksonville.

I also wanted to thank @David Greene for writing the book on long distance real estate investing.  I read it right after buying my first out of state property, listened to the special live podcast for buying the book in the first week, and even reached out to get a few recommendations for realtors in Phoenix and Dallas (even though I haven't had any luck in those markets).  Without his book and learning to develop my team of rock stars in Jacksonville, I wouldn't have been able to accomplish what I have in such a short time.  Thanks again David!!

@Jaron Walling - I was hoping that my company would allow me to do an in-service rollover to an IRA, so I could do a self-directed IRA home purchase...but they don't, so I had to do the 401K loan. It's nice that the 401K loan does not count towards your Debt-to-income ratio and the "interest" that is charged is put into your account (so you pay yourself the interest of the "loan"). Maybe also check to see if your company allows an in-service rollover to an IRA (self-directed). Otherwise, a 401K loan is a good way to access some cash to reallocate into RE.

Thanks again everybody for the support and encouragement.

@Alshan San, 4 of the 10 were from the MLS, and 6 were part of an off-market portfolio sale that my property manager found for me. 9 of the 10 already had renters. To me, it doesn't really matter of the price of the house, as long as the cash-on-cash return is at least 12% after all costs are planned for. Some people would rather buy one MF for $1M that gets 12% return, others would rather buy 10 SFRs for $100K each for 12% return, and others would rather buy 20 $50K houses for 12% return. At the end of the day...it's the same cash flow.

@Joshua Diaz, yes, I am planning on financial independence (enough to cover my annual expenses) within 2-3 yrs, plus a little cushion, then I'm done with the rat race.  I'll have to start looking into creative financing for some future deals, but I'm happy with how this real estate thing has started out so far.

Thanks everyone for the kind words of encouragement.

@Lane Kawaoka and @Sherwin Gonzales, it is more a matter of chance that the first 10 ended up being all single families.  We had made an offer on a 12 unit, but we were too late.  It may be unfounded, but we believe that SFRs appreciate better, have better tenants paying higher rents, and provide for an easier exit strategy, as there are many more buyers for SFRs than MFs.  The financing is also really easy and cheap for SFRs with 30 years fixed mortgages.  We may very well transition to a LP role in a syndication, and settle for a lower return, if the headaches and management turn out to be too great, but for now, our Property Manager is doing great.  I estimate that we'll only need 20-25 total for me to be able to walk away from my job, so we don't plan to scale that much more, and we don't have to "manage the manager" much at all now, but we'll see what the future holds.  We are also very interested in doing some BRRRRs.

@Joe Rizzo, we started looking for properties in San Diego, but the numbers didn't make sense (as I'm sure they don't near Boston).  We had realtors looking in Cleveland, Phoenix and Dallas without any luck before finding our first deal in Las Vegas.  Then we did a deal in Jacksonville, and decided to focus there.

@Ahmed Elias, 8 of the 10 already had renters in them, and we've only had to do minor repairs (re-plumbed one of the houses).  Most of them are in B neighborhoods with two of them in a C neighborhood.

@Kraig Kujawa, since the 6 units we just closed on have seller-financing, those don't count against my "10 Fannie Mae" properties.  Also, all 6 of the mortgages (if I include the one in escrow and my primary residence) are in my name, so we can do an additional 10 in my wife's name only.  We plan on using the cash flow to purchase more properties, and then once we get to 20-25, then we might pay off a few of the smaller loans to free up some more mortgages, or just increase our monthly cash flow.  Leverage is one of the best things about real estate investing...we're in no rush to pay the mortgages off.

@Ned J., Our primary residence in San Diego appreciated 50% between 2013 and 2016, so in early 2017 we performed a VA 100% cash-out refinance to take out the equity. We used this, along with selling a lot of our stock, peer-to-peer, and other financial accounts to focus on real estate. I even did a 401K loan, which doesn't count against my DTI ratio, to free up some more cash for REI. I just transferred my mutual fund IRA to a self-directed IRA, so I can get more properties. Essentially pooling all the money we could to buy properties. The cheapest house we have was $57K, with the most expensive at $119K, and the bulk right around the $100K price point.

Last Thursday, my wife and I closed on an off-market, owner-financed, six property portfolio to bring our total number of investment properties to 10 single family residences.  Our very first investment property closed the last week of November 2017, so it has been a busy first half of 2018!!! Since we live in San Diego, all of the investment properties are out of state (#1 in Las Vegas, #2-10 in Jacksonville, FL).  We also have one more house in escrow that is schedule to close later this month.  Our target for all of 2018 was 10 houses...so it seems like we have to adjust our goal.

Our Jacksonville Property Manager (@Corey Clarkston from St John's Property Management) is actually the one who brought us the 6 SFR portfolio, and we are so happy to be working with their team to find new deals and manage our current properties. I am so grateful for BiggerPockets and the community of experts here willing to share their knowledge and provide the motivation to get started in this wonderful world of real estate investing.

Scott Goldstein at Atlantic Trust Mortgage.