Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
I am getting closer to my goals! I closed on number 9 today. It is a 4/2 ranch with a 2 car attached garage. I bought it for $133,000 which is more than I have bought any of my other rentals for, but the market and rents keep improving. This home needs very little work; only a but of paint. Has new windows, newer kitchen, newer hardwood and baths.
I put 20% down with a 5/1 ARM at 4.625% and my payment with taxes and insurance is $642. The home should rent for around $1,300, maybe $1,400. There were multiple offers on the first day of course. I think being a Realtor and knowing the listing agent helped me out on this one. Asking price was $134,900.
It was purchased off of MLS just like almost all of my deals. For those saying you can't buy off MLS, I have 6 fix and flips going, 5 of which were from MLS and one from the trustee sale.
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
12y
Congratulations @Mark Ferguson . I think what I like about your portfolio is that they are all very nice houses. I only have one house purchased for over $100,000 and I struggle to get $800 a month for it. Using the 50% rule you would not have cash flow, but the reality is that it costs just as much to put a roof on my $50,000 rental that I get $500 per month for as it does to put a roof on your $130,000 rental you get $1,200 a month rent for. I doubt your taxes, insurance, vacancy, repairs run more than $300 or $350 per month. Yours have the added bonus of having a high demand 2nd exit strategy of selling to home buyers. Very nicely done.
Americus, GA · Member since 2014 · 22 posts · 18 votes
12y
I sort of ignore the 50% rule as well when figuring cash flow. I do look at the age of the roof, the hvac, the appliances, etc, and then figure my expenses based on all of this. I also maintain a fund for all of my rentals for extraordinary expenses that I would not expect.
I also get 80% financing from 4.75 to 5% using an 5 year ARM where they also let me add any repairs/remodeling to the cost of the home. I get that from a local banker with a portfolio loan. I also make sure what I tell him comes true -- like potential rents, costs, etc.
The reason I pay off properties instead of buy new ones with cash is I have Arms for all my loans. I am buying multiple properties a year and by paying one off early at a time I reduce my risk of my payments adjusting. If I knew I could continue to get as many mortgages as I wanted forever and they were fixed rates, I wouldn't pay them off early
Conyers, GA · Member since 2013 · 7 posts · 1 vote
12y
first I have to say congrats to you and keep it up. You certainly put some encouragement into those on BP, myself included, who have not made a move due to trying to stick to the 50% rule as a first time starter. Has been difficult to get that fire to take the first step outside the rule even with loads of calls and emails with little response from the MLS listings.
@ sounds great being able to get a 5 year ARM. Mark is that the same for your loans?
Excuse me if that information is elsewhere as I familiarize my newbie self with the site
The reason I pay off properties instead of buy new ones with cash is I have Arms for all my loans. I am buying multiple properties a year and by paying one off early at a time I reduce my risk of my payments adjusting. If I knew I could continue to get as many mortgages as I wanted forever and they were fixed rates, I wouldn't pay them off early
Specialist · San Antonio, TX · Member since 2012 · 462 posts · 294 votes
12y
Good job Mark in meeting you goals... However , I am interested in how you are protecting yourself with all your acquired properties, more specifically the properties you own or will own free and clear?
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
12y
@Dee Georgian I do use 5 year arms, but I am not able to finance repairs with them.
@James Park I do plan to continue to finance with 5 year arms. The biggest reason is my portfolio lender only offers arms or 15 year fixed. I get so much more cash flow with an arm.
@Henry M. Each property is in its own llc and I have an umbrella policy on all of them.
Lacey, WA · Member since 2013 · 52 posts · 4 votes
12y
@Mark Ferguson Mark, that's awesome! My goals for the next couple of years are similar but I'll be looking in southern colorado. How did you finance your purchases? Would you mind sharing any more info on your pathway to this success? I'm just getting started and could use any help!
Knoxville, TN · Member since 2014 · 116 posts · 57 votes
12y
You have 9 LLCs for 9 properties? Wow! I guess that gives you the ultimate protection. But is it worth the expense of starting llc, keeping separate bank account, filing annual report, and a separate tax return for each house? I currently have 6 rentals and they are all owned free and clear but I only have 2 LLCs. It seemed way too cumbersome to have one llc for each. Do you really carry around 9 debit cards? What will happen when you get to 100? Also congrats on your next stop towards your big goal. My goal is very similar to yours but I want 100 free and clear properties in 10 years. Ive enjoyed reading some of your blogs as well.
Real Estate Investor · Baltimore, MD · Member since 2014 · 21 posts · 3 votes
12y
Hi. I'm new to investing in the Baltimore area. I purchased my first rental in 2011 and my second in December 2013. I retired from law enforcement and looking to purchase additional properties in the near future. Since I'm from NY, and a female, the hardest part I've encountered is finding reliable people to help me with rehabbing and not rip me off. If you don't mind sharing some of your contacts, I'd really appreciate it. Thanks in advance.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
12y
@Scott Kelley I sent you a pm. Always happy to help if you have questions.
@Pat Martin I do have 9 llcs now. But it's really not very hard. I have my assistant create each llc and it takes her about 20 minutes. The annual report is really easy to file and costs $10 a year. I have separate checking accounts, but I don't use debit cards. Almost everything is done with electronic billing or checks. Since I am using single member llcs my accountant said I don't file a separate return for each one. They are still filed on my individual tax return. And thank you for the compliment!
@Raquel Thomas I am in Colorado and I don't have any contacts in your area. I would try to get referrals from realtors or PM's in the area if you can. It's crazy, my wife and sister have had problems with a contractor we used to use. He was awesome to me, but treated them like crap.
Hi. I'm new to investing in the Baltimore area. I purchased my first rental in 2011 and my second in December 2013. I retired from law enforcement and looking to purchase additional properties in the near future. Since I'm from NY, and a female, the hardest part I've encountered is finding reliable people to help me with rehabbing and not rip me off. If you don't mind sharing some of your contacts, I'd really appreciate it. Thanks in advance.
you have to start telling them that you are the PM and will take it back the client. you will see their attitude change at an instant.
Real Estate Broker · Charlotte, NC · Member since 2014 · 129 posts · 12 votes
12y
hello mark,
You are a real inspiration. I too agree with finding deals on MLS, especially if your a Realtor. You get paid from closing the deal when you buy and sell. I found a private money lender who is asking 10% down, interest only at 12.9% for 5yrs, stated loan. That can put a damper on the cashflow initially, but my plan is to refinance to a lower rate after a few months. Do you think this may work for a newbie realtor like myself?
Mark, I sent you some advantages of a trust via PM.
This comment is for all... An LLC. will not give you the protection needed in many scenarios in regards to real estate. For those who have multiple properties, a trust should be the vehicle used for the best asset and privacy protection hands down.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
12y
@Account Closed Are you talking about taxes? All the LLCs are included on my personal tax return. I don't file a return for each one. My taxes are much less than that and they are very complicated.
@Nalo Coban Like it was mentioned it will be hard to refi after a few months due to most banks requiring a 12 month seasoning period. That seasoning period means you have to use the last appraisal or purchase price of the home in the last 12 months, whichever is lower. Then they will only refi at 75% loan to value. Why are you going with private money?
@Randy Duncan It does not make sense for most of us, but some have bad credit, or don't want to be tied down.
Knoxville, TN · Member since 2014 · 116 posts · 57 votes
12y
Henry would you send me the info on trust please? Are you a lawyer or what is your knowledge and expertise from? What scenarios would an llc fail to protect your personal assets from a lawsuit? Thanks.
It was purchased off of MLS just like almost all of my deals. For those saying you can't buy off MLS, I have 6 fix and flips going, 5 of which were from MLS and one from the trustee sale.
All my properties except one were bought through the MLS. One was with hubzu. Also half are a Estate Homes. Oh and over half were bought only being on the market less than four days when purchase. Estate homes that are priced well go fast. I am a buy and hold guy selling only one of my nine properties bought since 1/1/13.
Henry would you send me the info on trust please? Are you a lawyer or what is your knowledge and expertise from? What scenarios would an llc fail to protect your personal assets from a lawsuit? Thanks.
Let me preface this response with an apology to Mark Ferguson, for hijacking your post. I just want you Mark, Pat and others to protect all of what you have earned.
==================================
Pat,
I sent you info as per your request. I am not an attorney and nor do I claim to be one. I can name many but let's keep it simple and name privacy. What you can do is add your LLC as beneficial interest inside of a trust for added protection, but like anything else a corporation can expose its members fairly simply.
Can you use a corporation to protect you to some extent? Absolutely. If you have an Equity and Shelf corporation as back up or are business savvy such as Robert Kiyosaki then yes. But he still is exposed...
An example being the following in corporate shuffling/protection:
With that said, a trust is best hands down. One of my partners is a premier trust builder. He is the only (to my knowledge) to ever close a few Reverse Mortgages via through a trust. He use to work for Truth and Lending and to be frank would go out in the field and in essence recover assets of corporations without malice or conscience.
The only party he was unable to penetrate was a trust. Here's the bottom line, if anyone knows who you are then anyone can find out what you have. And if anyone who knows what you have then anyone can go after your assets. Case closed. Identity Theft alone should be enough to place your properties inside a trust.
I have been doing this since the 90's and my partner has been doing this the last 25 years. A trust is a spectacular way to protect yourself. Anyone trying to pry into your trust will be unable to without a court order. And for that they need to show probable cause.
It's that difficult.
My partner was the best at recovery. With grown men crying in suits, he had no mercy. Then he hit the wall. The wall of an Inter Vivos Trust or Land trust. That's how he became interested and pursued his specialized education in being a Private Real Estate Trust Builder & Trustee.
I think I may have made this long winded.
But sharing is caring.
Just my two pesos.
Big Henry
NOTICE: I AM NOT AN ATTORNEY LICENSED TO PRACTICE LAW IN TEXAS AND MAY NOT GIVE LEGAL ADVICE OR ACCEPT FEES FOR LEGAL ADVICE.