All Forum Posts by: Zachary Prusoff

Has anyone out there in BP land used a similar strategy on their own, without going through a 3rd party like F&G? 

I just found out about Fund and Grow today and as always I love being able to come to BP and get the honest details. So basically what I understand is that they charge a little over 3k for the service of applying for business credit cards and they will also call to negotiate increases in lines of credit. 

My wife and I both have upper 700/low 800 credit scores and our own LLCs - it seems like it would be pretty straight forward to apply for every business card out there offering a 0% intro rate and do this on our own.

I would love to know if I'm delusional and oversimplifying this or if there is more that I'm not seeing here. Thank you.

Hey Brian, The best way to find deals are via networking, hustling, and marketing. Networking: Talk to everyone you know. There's a Bigger Pockets meetup the end of August in Delray. I would also consider finding/connecting with wholesalers at local REI meetings. Google search for wholesalers in the area(s) you're looking for. Hustling: Some other great ways to find a deal- Call ppl renting via Craigslist and see if they're open to selling. "Drive for dollars" looking for run down properties and then figuring out who owns them. Look for landscape, garage door, roofing, or other obvious neglect issues. If you have the cash or can get a HELOC on your current house consider foreclosures/auctions. Marketing: Buy lists like "homeowners who live out of state (I e landlords or snowbirds stuck with a winter home they don't want to keep paying for) and send direct mail marketing. Search for properties in pre foreclosure or entangled in probate and see if you can support. It's highly unlikely that you'll find a 2% deal via Redfin in 2017 but there will always be deals that cash flow even when markets are at their peaks. Something always to consider is while you might find a deal that looks good on paper, do you really want to own a property in riviera beach? Location is so important. I probably should have said at the start that this is based largely on what I've learned via BP, especially the podcasts and not from my own nonexistent career in real estate.

My wife is out of town and I'll have all 3 kids so I'll get to sit this one out. I would love to meet up next time. Thanks for putting this together. I've been off BP for awhile but just came back so I'd love to network with some local REIs

Have you considered rent to owns with the Vero SFRs? I used to live right up the street in Sebastian and I think you'd create a nice win/win there. Either they do the option a few years down the road and you sell those homes or they don't and you get a few grand up front to leverage from each of them and you keep renting them out. Either way I'd consider a HELOC or HEL and keep hitting singles with those sfr's in Orlando/Vero, possibly as a BRRR, or like Don said, lump it all together and go for a home run with an apartment building/complex. The only difference I'm saying is go with equity vs liquidation. Another thing you might consider for more rapid growth in the Orlando area is student housing (500+/month per room) during the school year with converting to a short term vacation rental (air bnb) during the summer. There are still creative ways to acquire properties and meet the over 1% guideline. I'm considering doing that down here in south Florida and it seems simple enough but I don't know if the laws are different up by The Mouse. I'm also just sharing what I've learned from others and from an experiential basis have no idea what I'm talking about. Hope this helps you think a bit outside the box. There's nothing wrong with slower steady sustainable growth with what you know.

Congrats on jumping in! You have what my wife and I call a Catch-42. It's like the exact opposite of a Catch-22 where instead of being damned if you do, damned if you don't you are blessed regardless of which choice you ultimately make.

What are your long-term goals?

The two best paths I see are...

1. If your goal is financial freedom as quickly as possible then pay the $100/month and use the 15k from your cash reserves as a down payment on another property.

2. If your goal is security/control and the lowest debt/income ratio possible then rehab from your reserves, especially if you say you could still make it work through vacancies/unemployment post rehab. 

The most "efficient" use of capital is based on your perspective and is either to leverage your cash as much as possible (option 1) or to spend as little on interest as possible (option 2). 

Without knowing your situation or expectations I would suggest option 1 as, I believe, there's no penalty for early repayment if you change your mind and go the cash route and having a history of a HOL/HELOC with a lender in your area might open future REI doors for you as you get the hang of this.

Or if you want to play it extra safe, you can always get into another business or just keep saving and hope you have a big enough nest egg by the time you're ready to retire :) 

I think the most important question for you to get clear on now that we know you want to put 10% down on a max 400k multifamily is where are you willing to live? Sure, you can get a 4-plex in the ghetto of Riviera Beach, West Palm, or some super shady parts of Lake Worth or Boynton Beach but if I were in your shoes with your income I'd be more interested in a duplex in a neighborhood I'm comfortable in. Also what someone said about the FHA loan is spot on. If you're looking to get into multi-family, you really only get one shot at that massive leverage and I totally blew it when I bought my first home as a SFH. You have a great paying job in a stable field and can afford the payments on that type of loan even when the unexpected happen. As for the tax stuff you absolutely get to talk to an accountant. My understanding is that an LLC offers no tax breaks. An S -Corp does but it's really only worth it if you're making a decent amount of money. Having the rental income that's being taxed for a couple years will also serve you down the road should you ever want to quit your job and still qualify for bank loans. I'll keep my eyes out for a good property fitting your criteria once I know a little more about the 3 most important things: location location and of course, location :)

@Brandon Wu

I think Condos/HOA are definitely better for flipping vs buy and hold. Having a much better idea of the ARV makes working the individual numbers easier for me. Also like others have said, they typically don't need as much repairs. The cons of course are if you get stuck with condo commandos who slow down/protest everything you are doing. Time is money both in HOA fees and if you have a hard money loan you could really screw yourself out of all profits by holding costs. As long as the outside doesn't need any work and the inside is basic stuff (no permit needed) you can accomplish a lot when the numbers work out. If you were buying a condo to rent out there's no saying how much HOA and other fees could go up (along with taxes) over 5 to 20 years.

The pros of SFH and SMF (less than 4 units) is that you can drop a dumpster right in the driveway if need be. It's your home, you can do whatever you want with it. There is less headache if you need to use a backup exit strategy and rent. However repairs, especially with REO properties, can be much more costly. In my area (FL) these types of properties tend to be older than condos/townhomes as well.

I don't remember who above said this but ultimately the numbers are what matter the most not the property type

Let me also say that everything I only decided to get into REI less than a month ago and am still educating myself/searching for a good first deal. All of this is from what I've read/heard elsewhere so take it at that.

@Ryan Burg

My mind works similarly. I've used cheat sheets to study for (and pass) everything from middle school Spanish to organic chemistry. I'm also brand spanking new to REI. This is my first post on BP as I literally just joined. I'm reading through the Ultimate Beginner's Guide and educating myself as best I can. I feel like one of my biggest "challenges" so far has been figuring out all the vocabulary. I often find myself doing a Google Search on terms like ROI, ARV, etc. (I found an awesome BP interview video via Google about ARV and thought it quite funny that I actually didn't check here first).

My intention is to continue learning all I can from here, friends who do this, and anywhere else I can for a month and then jump into making my first educated move. I'm leaning towards fix n flips as these make the most sense to me conceptually so far.

Anyways I did a forum search for "Vocabulary" and that's how I found this thread. I don't know if there's any sort of glossary in the Ultimate Beginner's Guide because I have only gotten to Chapter 3 (started last night). Anyways I'm building up a vocab list and a more comprehensive useful insights list and will joyfully add it to this thread or possibly start a new thread and link you to it once it's more thorough.