All Forum Posts by: William Walker

Originally posted by @Ralph R.:

@William Walker  . You keep referring to risk. Can you explain what risk to the landlord is there when   the bank has financed 100% of it??  I'm not seeing that either.

The risk is that she has a major property repair, has a decline in the property value, or has any of the tenants that people post about on this site every day.  It's the same risk that is taken on with any investment property.  I don't understand how you don't think there is any risk with this or any property.  One of the things to make the reward worth the risk is to have the property cash flow.  By not being able to see any money out of the deal for a very long time while possibly having to sink money into the property is not what most first time investors would see as ideal. 

I can get a 100% financed property as well through the VA, but I'm not going to go grab just any property because someone else is financing it. If I had plenty of investment properties with positive cash flow, no limit on VA loan amounts, and didn't want any money out of the deal for 5-10 years it would be much more enticing. Most investors use funds from their first property to fund future deals. This investor wouldn't be able to do that and I think it would stunt their long term investment possibilities.

Again, I appreciate your post and the civil discussion.

Thanks for reading the previous posts. 

She doesn't have to put 20% down. It's a VA loan which is 0 down (but I believe there are some fees and I'm not sure she calculated that in), so she could put any % down that she wanted to. I agree that you get infinite return if you put no money into it and have a tenant pay the mortgage.

I personally would not want a property and all the risk that comes with it while not having any real positive monthly cash flow.  She will only be able to get money out of it either when she refinances it after getting over 20% equity, when she sells it (hopefully), or when the mortgage is paid off in full after presumably 30 years.  That's a long time of risk with no reward especially for a first investment property. 

I get what you're saying, it makes sense and I appreciate your post.  I just don't think it's a good deal for a first investment property.

Originally posted by @Ralph R.:

Tiara Stewart-Cannon Ok I didn't read every post on here but of the ones I read everybody seemed to overlook 1 thing. NO DOWN PMNT. Basically the first posters are telling you that you should pass up a free 50 dollars a month per unit or 100 dollars a month when both sides are rented. What's that going to be 5 years down the road as rents go up? And for free?? remember it's 0 down payment. What they are saying is correct if you laid 20% down payment out of your own pocket that would greatly reduce your payment and increase your CF. one investor gave you an ROI. I dunno where he got that number. Your investment is 0. The number is infinite. You want to remember it is extremely difficult to find a 100% leveraged property that will cash flow. I think you did very well to find 2 that would do it. I am assuming your numbers are all close to real numbers. RR

$50 / door is not worth it. Especially for a 120k property! At some point there are going to be some expenses such as.....well....anything. And one, literally one, decent repair will knock out years of earnings. Lets say the PM fee ends up being 10%. Then what's her return? The $50 a door isn't "free" and I think it's very foolish to approach it with that attitude. Any property comes with risk even if it is acquired with 0 down. To eat up 1/4 of her VA loan potential for $50 is not a good investment.

It's also frustrating to have someone jump into a 1-2 page post and say "I didn't read every post"...but here's my opinion.  Imagine walking up to a conversation and saying "I didn't listen to what any of you said but here's my opinion".  I don't mean that as a personal attack, just frustrating to read.

As a first time investor with other busy life obligations - the simple answer is yes. Do I look at my pay receipts every month when the tenant didn't sound a peep and think dang I could have had that % to myself for nothing? Yep! Am I beyond ecstatic that I didn't have to deal with finding a tenant, screening them, collecting payments, answer complaints, and so forth? YEP!

My advice (take it for whatever that's worth), is to spend the next few months building some savings and really monitoring prices in your area. You sound like your are skating on thin ice financially speaking for the time being. If your rental required a major repair or a legal issue came up how would you handle it? That's great that you have the pre approval letter. Once you find the right property it should speed things up a little. I think you're right on track with the duplex idea. But that requires you breaking your current lease which might be more than you can afford out of pocket at the moment. So save hard for the next few months, monitor property prices, and when you see one that you know is a great deal you'll have everything in line to jump on it. Best of luck!

Commenting to follow

Don't accept the partial payment. If you don't have the full payment by the due date charge the late fee and get ready to start the eviction process. I'm usually not on the heartless side but it sounds like this tenant is going to be giving you some major headaches. Best of luck.

For the PM rate your best bet would be to call one or two of the PM companies you're thinking about using and ask them their rates and any other fees.  Mine charges a %, but there is a fee for placing a new tenant, renewing a tenant, and for twice yearly inspections with photos and a report. 8% seems low to me but it might just be the area. I don't think 8% is unheard of or anything, I was just curious. 

That's good about minimal Capex. I'm not sure I understand going with one of these deals with no money down and then putting money down on a different investment property. Maybe just choose one to focus on for now.

And I'm not really a fan of the $100 a door theme. If the house cost 30k or if the house costs 200k, that's a big deference on your return. I would look at the rest of the numbers before saying $100 a door is good.   I can't tell you an exact # as each investor had their own goals, but I think the vast majority would say the returns aren't enough for these deals with the way they are structured. 

@James Maradits

Thanks for the support!

I agree that it's a VERY modest approach compared to a lot of people on here who flip, wholesale, and creatively finance deals.  Once I start having a steady income from work and I'm able to stay in one location, I'll resume investing in real estate with slightly more aggressive approach.

I don't have much desire to flip houses, I'm more interested in long term buy and hold wealth accumulation.

@Nathan Gesner

Awesome pictures and descriptions.  I'm always interested in seeing hoarder house renovations.  Any updates?