More Success or More of What-Not-To-Do
Hey Everyone,
More Success or More of What-Not-To-Do
Below is my first post in the Success Stories forums
https://www.biggerpockets.com/forums/223/topics/17...
I’m finally writing my 2nd “Success Story” post. I’ve been waiting to see if my new property would consistently produce cash flow as well as needing to finally finish my NRC exam to obtain a Reactor Operator’s license for the Watts Bar Nuclear Generating Station here in East Tennessee. I’m happy to announce that after a LONG 2.5 year process, as of July 25th, I passed my 2nd NRC Exam in my long career in nuclear power.
So here’s my story in purchasing my first duplex…
Around June or July 2015 I was trying to figure out how to buy a property outside of my SDIRA to increase my personal income. My goal was to have a steady flow of income that could be reinvest into future RE endeavors. I listened to BP podcast #89 several months earlier and after jumping into RE by buying turnkey properties, I kept Ohio Cashflow in the back of my mind as a potential Turnkey Operator. If you recall from my previous post, at this time I'm still in the middle of a Reactor Operator's training program, so I didn't have much time to pursue REI except through the turnkey route.
I made the decision to borrow from 2 of my properties in Dallas, TX. Unfortunately the only rentals that I own are in a SDIRA. I would then pull the borrowed money out of my SDIRA and purchase a property free and clear. Since Ohio Cashflow (OCF) was working in a less expensive market, I decided to do more research on them (them meaning Engelo Rumora) to see if there were any negative reviews / comments.
Now Engelo REALLY puts himself out there and is all over the internet; I figured if there were ANY negatives somebody would have said something. I did a BP search for Engelo and OCF. In general everyone seemed to have nothing but positive things to say, but nobody during my research on BP had actually purchased a property from OCF. I did listen to several interviews with Engelo such as:
The one with Lisa Phillips (https://www.youtube.com/watch?v=pv7wohQTKls )
The Mark Podolsky interview (http://www.thelandgeek.com/?s=engelo+rumora)
The Brock Collins interview (http://www.freedomrealestateinvesting.com/engelo-rumora-turnkey-ohio-cashflow-investor-rei-012/)
and a interview at growtheverywhere.com, which is more entrepreneurial and less REI (https://growtheverywhere.com/growth-everywhere-interview/engelo-rumora-real-estate/?cet=33)
As well as investor testimonials on youtube
I also did a BBB search and Ohio Cashflow has an ‘A’ rating and there was a Toledo, OH business news article / interview I read (unfortunately I did not keep the link)
After my initial search, in July 2016 I made a decision to call OCF / Engelo to see about investing. Engelo and I ended up talking on the phone and he has as much enthusiasm in the day to day as he does in his interviews (a lot of energy that dude has). Engelo asked me to fill out a questionnaire about my personal REI experience and informed me that he only deals with investors that can buy free and clear. I told him that would not be a problem and that I had the money but it would take a little time for me to get it.
I also asked Engelo for a couple references which he gladly provided me. I contacted these references and both had positive experiences w/ Engelo and OCF. After all this I was set to buy a rental property from Ohio Cashflow, I just needed to get a hold of some money.
After speaking with Engelo and feeling more comfortable, I contacted First Western to start the process for non-recourse loans against my properties within my SDIRA. The process is very similar to a normal loan and I decided on $50,000 on 2 properties ($100,000 total). The prices for rentals in the Toledo, OH area (as seen on the ohiocashflow.com website) were ranging from $50,000 to $80,000 and I needed to plan for the taxes and penalties I was going to incur pulling money out of the SDIRA.
About late August to early September 2015, while waiting for my loans to close, Engelo posted on ohiocashflow.com a duplex in Middletown, OH. The numbers were:
$74,900 and $1350 rent, after expenses it was going to be about 15% ROI
I contacted Engelo and told him that I wanted the duplex in Middletown; I told him I did not have the money, but was in the process of obtaining loans on properties that I already owned. Engelo essentially said, “no problem, though we want to close early October”. Engelo was very flexible on the terms to purchase the property.
Mid-September my non-recourse loans closed and was able to close on my new / rehabbed dublex the first week of October. I was hoping that the close was early enough in the season that the PM would be able to find renters before late fall or winter. I had plenty of reserves and Engelo’s partner, Bryan, briefly mentioned in one email that OCF had motivation to ensure the duplex was rented because it would cost them money. Engelo has also mentioned in his interviews that the rentals would be tenanted to the buyer’s satisfaction. Well, I looked over the purchase agreement I signed and I couldn’t find any promise for back rent. So instead of relying on any money for back rent I patiently waited HALF THE WINTER for a tenant. FINALLY, in February I got news of 2 new tenants moving in AND TO MY SURPRISE – I GOT BACK RENT from October 2015 to February 2016 ($1350 for each month of vacancy).
Anyway I am very happy with OCF and their customer service is top notch. Engelo help me find a GREAT lender to refi the duplex (about $49,500 @ $450 monthly, PITI), and Engelo's other partner Dominique helped me find an insurance company
Here’s my first duplex on youtube: (Engelo is a little hyper – I think to prevent hyperthermia, video was shot in January)