All Forum Posts by: Aaron Vergason

@Joel Owens Thanks for the advice.  My portfolio is a few single families, duplexes, a triplex, and 5 unit.  it would be a weird package for someone to want.  I'll still do the analysis though. 

I have 12 properties in an LLC. They are all either commercial/ portfolio loans or held with private investor money. Commercial/ Portfolio loans are all 15 year with a 5 year ARM, and have fairly high interest rates. Am I able to get a loan that has a fixed 30 year term? This would treating increase my cashflow situation and make me less worried about rate increases in the future. My personal W2 income is low, so that won't help me get loans. I have had the 12 properties in the LLC for almost 5 years now though, so a bank should know that I can manage them properly.

Thanks!

Aaron

I haven't had luck yet getting a 30 year loan. The properties are in an LLC and banks won't do fannie or freddie loans with me. Only local banks will do are portfolio/ commercial loans.

Just ordered the book and used the DAD16 Promo Code to get 40% Off.  Thanks for the advice.

Thanks @Account Closed. You are absolutely right, I need to say no more often!  I want to keep my current helper because she does a good job and I also work a full time w2 job.  Many things I read say that you should be able to hire a manager or at least have the money built into the budget.  With mortgages on the properties there isn't much left over after vacancies, expenses, and cap. exp.  Maybe part of my problem is that I started out right away with portfolio loans, so i'm getting higher rates and 15 year terms.  At least they are getting paid down pretty fast.  That's the only think keeping me in.  They don't cost me any money to hold them and the tenants are paying them off.  

I just have read so much about investing for cashflow (And I thought i did that), but the cashflow in reality could buy me dinner each week if I'm lucky :)

I have been in a bit of a funk over recently. I currently buy and hold.  I have 23 doors all of which cash flow on paper, but don't in reality. I have a budget spreadsheet that I update each year based on previous year averages, and every year different issues pop up that cause me to spend my profits making the expenses instead.

The first year I was the landlord at 22 and people didn't take me seriously, so I got taken advantage of by listening to every non paying tenant issue (flat tires, grandmas sick, have to water the dog, etc. ) The second year I had a property manager who was both stealing from me and renting to drug dealers. That helped hurt my year end. The third year I hired another manager who had an actual PM company and he got zero out of 8 places rented in 6 months. The fourth year we got all our taxes current and paid off the operating credit card which helped us get through the tough times. Now this year we are steady, but still not hitting what I expect. 

Have any other BP buy and hold members felt this way, what did you do to get more profitable, how long did it take to get profitable? My rent roll is $180,000 at 100% occupied, but my average is 85% occ. for one reason or another.

Hey brad, very cool situation you are in. I also bought my first rental at 21. I was salary and I worked an average of 65 hours a week at my job. I started buying more rentals. Once I had 12 properties I knew I needed to either work less at job, get a new job or hire managers. Our small city has no property management companies so that isn't an option.

I first decided to try and work less hours at my job.  That lasted 6 months before boss wanted me back at 60+ hours again, so I found a manager to help me.  I also searched out a new job in a similar field that was much better hours. Best part is, I now have a baby daughter and my job is less stressful and less hours and I still have a great manager who deals with the not-so-fun landlord stuff.  

I wouldn't try to grow faster so you have more income to fully support yourself unless your wife makes enough to cover your basic needs. I tried doing that and I ended up forcing the numbers on deals to look like they work, and when they didn't the decisions got tough. Remember too how expensive other things are with out w2 income like health insurance.  Especially when growing your family. 

I'm also 26 now so I'm no expert, but I'm going through the same kind of stuff you are, except I don't have 50% of my gross a profit. If I did, that would be sweet!

where do you go to switch it up? are you paying much more do you think?

Hey! Congrats for getting into a second deal!  That's not easy.  If all of the needed repairs were caught during the due diligence period/ inspection, how about requesting the raise the sale price and get that extra money back at closing.  This way you can finance those capitalization costs.  Do you have more info on the deal (What is the asking price or what is the price you have it under contract?)  I don't know about your area, but where I am, I would never do a radon test for a rental house.  without that system it looks like you should raise the sale price by $6,000 and get that back at closing.  If the value of the house can cover that extra, then it's a good deal for you!  You can call it a repair reimbursement at closing.

Otherwise you will have to get the house a lot lower so you save $6,000 from your down payment and make the repairs out of pocket.  at 20$ down payment you would need to request a 30k reduction in the price...

I know there are some good podcasts from people why have bought in high priced Cali.  If there's anything within an hour of you that you can make the 2% rule work, that would be good.  3 Br 2 Bath is definitely the most easy property to get out of someday if you needed to/ wanted to.  it's also a good rental setup.  I would not worry too much about the interest rates being low.  They have been low for a long time and they won't jump up over night.  it would be a pretty slow climb.  Also try to buy the least expensive house you can find, I wouldn't spend more just because there's a 4x rule or something with your income.  The best way to get out of the rat race (IMHO) is to keep your expenses low (Including your mortgage) and get some rentals that have positive cashflow.