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Posted on 10/25/17 at 2:34 pm to Fat Bastard
I started a thread, but didn't get any responses.
What website do you guys use to store your content digitally?
I'm old school, and I keep my books in individual (by the property) binders. I have no issues with this, but my fear is that if something happens to those particular binders, it would be a major pain.
I'd like to scan and digitally upload these binders.
FWIW, each properties binders:
closing disclosure
insurance info
warranty info
deed
appliance info
tenant's application
tenant's lease
and a log of all money going into the property and going out (rent)
Should I just scan and upload it to a website like Dropbox?
What website do you guys use to store your content digitally?
I'm old school, and I keep my books in individual (by the property) binders. I have no issues with this, but my fear is that if something happens to those particular binders, it would be a major pain.
I'd like to scan and digitally upload these binders.
FWIW, each properties binders:
closing disclosure
insurance info
warranty info
deed
appliance info
tenant's application
tenant's lease
and a log of all money going into the property and going out (rent)
Should I just scan and upload it to a website like Dropbox?
Posted on 10/25/17 at 6:41 pm to NYCAuburn
quote:
With the capital I have to start, do you think it is ideal to start with all cash purchases on a few homes,
NO! use the mortgages as leverage, it gives you a better COC return....sure you will have a higher PCF with a property free and clear but you can have great PCF with financed properties also.
But no, max out all your fannie mae backed conventional mortgages (you are allowed 10, there are other tricks of the trade but i won't delve into those right now) before even entertaining the idea of cash buys. once you do that with conventional mortgages you can jump to private lender mortgages but they require as much as 50% down but could be paid off in 10 year terms. just depends. I personally would not even think of cash buys until you had enough dough rolling in ANNUALLY to buy a home with cash. USe the leverage.
This post was edited on 10/25/17 at 6:48 pm
Posted on 10/25/17 at 6:44 pm to Fat Bastard
quote:
NO! use the mortgages as leverage, it gives you a better COC return....sure you will have a higher PCF with a property free and clear but you can have great PCF with financed properties also.
Ya, I'd rather buy 5 $100,000 homes than 1 $100,000 home with cash.
Posted on 10/26/17 at 7:28 am to NYCAuburn
quote:
With the capital I have to start, do you think it is ideal to start with all cash purchases on a few homes, then get loans using purchased homes as collateral?
My advice will be different then the others, but I'd do one cash and one loan to start. How much real estate experience do you have?
The one and only thing that matters for COC return is your buying point. For rentals you basically have to get them at a steal of a buy. You gotta find ways to find properties dirt cheap. That can be auctions, making contacts with realtors that get bank foreclosures, whole salers, etc.
Sure leverage is great, but it's hard to get a good feeling of leverage until you own a home outright. You have enough cash on hand there's no reason imo to leverage every property becaue of the risk. Own some outright and do a portfolio loan. That would be like having $10 mil net worth and buying all your stocks on margin. It makes sense to have some completely safe investments also.
Posted on 10/26/17 at 8:12 am to Fat Bastard
quote:
NO! use the mortgages as leverage, it gives you a better COC ret
I would look into putting that $500K into a secured fund of some type. Bonds, etc. and then take out a secured line of credit of around $350K with your funds as collateral. That is plenty of money to get started. I'd be willing to bet that you can find a bank that will work with you on developing a plan similar to this.
Use the line of credit to purchase the property in full and after 30-60 days, roll them into a more fixed product from the bank. This way, you have very little of your own money out of pocket. You have to have someone that can help you find good properties.
I have said it several times in this REI thread and others, but you have to develop your "team" in order to really get rolling in this business.
Posted on 10/26/17 at 8:44 am to baldona
I have bought my first three rental properties over the past few months. I bought the first in May and all three are flooded and gutted homes.
I first got a HELOC on my primary residence and paid cash for property number 1. I then renovated and did a cash out refinance with a local lender...5/20 arm. Property number 2, was purchased with the cash from my refinance. I'm in the middle of renovating it. Property number 3 kinda fell in my lap but the local lender allowed me to purchase with a construction loan. The bank financed 90% of the purchase price and then provided additional funds for the renovations.
I started the process with the BRRRR technique in mind.
I first got a HELOC on my primary residence and paid cash for property number 1. I then renovated and did a cash out refinance with a local lender...5/20 arm. Property number 2, was purchased with the cash from my refinance. I'm in the middle of renovating it. Property number 3 kinda fell in my lap but the local lender allowed me to purchase with a construction loan. The bank financed 90% of the purchase price and then provided additional funds for the renovations.
I started the process with the BRRRR technique in mind.
Posted on 10/26/17 at 8:44 am to stevengtiger
quote:
I have said it several times in this REI thread and others, but you have to develop your "team" in order to really get rolling in this business.
Well said. You have to know that team doesn't always offer the lowest rates or best deals, but you gotta find people that will help you close deals and make things happen. There's plenty of people out there that take their time too much, there's times you gotta be able to have someone know what it takes to close.
Posted on 10/26/17 at 9:32 am to poochie
You have to separate that mortgage payment into interest and principal to make that calculation honestly.
Let's however assume your interest in year one is $3000.
I suggest you use your actual profit number plus interest and use ROIC as your benchmark. ROIC needs to be more than your interest rate on your mortgage for sure---much more for my taste. In your scenario then your profits--forget cash flow for a minute--are $12000 rent income minus $3000 interest minus the expenses you mentioned ($4800) for a total of $4200. Deduct some depreciation say $3000 and some income tax say $400 and your net profits are $800. Your ROIC would be ($800+plus the interest add back of $3000)/$100000 or 38%.
Let's however assume your interest in year one is $3000.
I suggest you use your actual profit number plus interest and use ROIC as your benchmark. ROIC needs to be more than your interest rate on your mortgage for sure---much more for my taste. In your scenario then your profits--forget cash flow for a minute--are $12000 rent income minus $3000 interest minus the expenses you mentioned ($4800) for a total of $4200. Deduct some depreciation say $3000 and some income tax say $400 and your net profits are $800. Your ROIC would be ($800+plus the interest add back of $3000)/$100000 or 38%.
Posted on 10/26/17 at 9:25 pm to stevengtiger
Another reason to not cash buy a NON cheap property is lots of “ dead equity”. There are investor groups in HOUSTON that teach NEVER EVER pay off your properties. I’ll do a cash buy if it’s dirt cheap or if ive used up all my conventional mortgages allowed by Fannie Mae and I feel I have enough private mortages and only if money is rolling in so good where I have enough PCF ANNUALLY to do a cash buy. Then I’m ok with it. I’m not worried at all about over leverage. 20-25% down on all conventional NOO loans is not over leveraged. Now if I had a bunch of properties with only 5% down via owner financing then yes you can get over leveraged that way. That low amount also severely lowers your PCF.
but you won’t be allowed to put that little down with NOO conventional OR private lenders for long terms. only owner financed.
The LOC works best with flips as you know. With rentals you will either pay OOP or payback what you used on the LOC for down payments.
but you won’t be allowed to put that little down with NOO conventional OR private lenders for long terms. only owner financed.
The LOC works best with flips as you know. With rentals you will either pay OOP or payback what you used on the LOC for down payments.
This post was edited on 10/26/17 at 9:34 pm
Posted on 10/27/17 at 9:57 am to Fat Bastard
quote:
The LOC works best with flips as you know. With rentals you will either pay OOP or payback what you used on the LOC for down payments.
This is where having a good realtor helps us tremendously. Example below.
Purchase price: $65,000 (deal under market value)
Rehab: $7,000
Total OOP from the LOC: $72,000
Now I can buy the house and rehab from my line and have the house appraised to roll into fixed rate product. I would want a home around this cost to appraise for around $90,000 and my bank will loan us 80% of appraised value. This would give me a mortgage for $72,000. Outside of some closing cost, etc., I am only out maybe a grand or two to use my LOC to purchase, rehab and roll into fixed product.
Granted this example is in a perfect world. We have had two properties that did not appraise for what we hoped for and ended up about $6,000 out of pocket. Both homes were closer to $100K properties, so only paid $6,000 to buy and finance a property is fine with me.
Posted on 11/28/17 at 3:54 pm to Fat Bastard
Anyone looked at Roofstock?
Posted on 12/1/17 at 10:06 pm to Teddy Ruxpin
quote:
Anyone looked at Roofstock?
nope. fill me in about it.
Posted on 12/2/17 at 9:26 am to Fat Bastard
quote:
nope. fill me in about it.
Looks more like a brokerage of rental properties with many having current tenants as opposed to turnkey operations.
Looked interesting so I was curious if anyone had dabbled with it.
Posted on 12/3/17 at 7:31 am to Fat Bastard
Hey guys, glad to join this thread (and read through the 300+ posts)
I am moving to Chicago post b-school and planned on buying a house. I started looking at how to file my VA home loan and I saw that you can buy up to a fourplex, the stipulation being that I have to live in one of them.
I am moving to Chicago post b-school and planned on buying a house. I started looking at how to file my VA home loan and I saw that you can buy up to a fourplex, the stipulation being that I have to live in one of them.
Posted on 1/12/18 at 2:21 pm to Azazello
Thoughts on purchasing a trailer to rent. One is for sale near me for $40k. I'm thinking i could rent it for $500. The street seems fine, no red flags.
Posted on 6/16/18 at 6:09 pm to Coon
Depreciating asset. I wouldn't mess with it.
Posted on 6/16/18 at 10:27 pm to Coon
Single or double? 40k seems high for a single. It would need to be very nice.
Posted on 6/17/18 at 8:37 am to Decisions
Anyone looking to lease office space off of Sherwood on Justice Ave? It's 14'x12' and electricity, alarm, internet, and water included for $550/mo.
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