All Forum Posts by: Alex Craig

Go to Home Depot or Lowe's early in the morning as a source to find good sub's.  Really, if I were you, I would act as the contractor and find your sub's.

You can make just about any market work if the #'s work with the right team, but not the other way around.

If you can't get a conventional loan, look into HELOC's to pull your equity out or private lending.

My advice is to look on at online reviews and determine if there are any red flags. While it is tough to maintain a high rating mostly because of emotional tenants who have 1 complaint and decide to give 1 start, sometimes you can read between the lines and see if they there is a consistent theme. I would not worry so much on the fee structure as cheaper is rarely better in the PM space. I would focus on level of service, communications methods, which property mgmt software they are using, how they market your home while vacant are just a few items to ask about. I prefer the Portfolio Manager style of mgmt where you would have one single point of contact and that POC manages every process with your home, thus reducing your chances of the problems that can come up, mainly lack of awareness, with your property. 

@Nick Gold when I offer on multi-family I think of it as price per unit of where I want to be "all in." and work the offer backwards from there.  In your case, it sounds like some units may need more work then others, thus I would figure out with those repairs, what your per unit all in cost will average out to be.  While I understand the thought process of not wanting to insult the owner, but that thought process can lead you to overpaying. I would develop your offer and when making the offer, be able to support how you came to this offer price.  People skills comes into play here. I always take the approach of "I know you want more and maybe it is in your best interest to hear other offers, but this is how I came to my offer, why I need this price, etc......" My approach if I do not know the owner is empathic and try to frame it as a win win if you are able to close quickly.

@Amedeo M. I have seen private lending work best, but does come more expensive then banks. The private lenders I have worked with typically like 40% down and will charge a 2 to 3 points in origination (but no appraisal which can be up to $500) and 10% interest. They will lock in a term for 5 years and amortize over 15 to 20 years and some will do interest only.  If the plan is to buy and payoff, this works well.

If you are asking for 1% in $ to come back to you outside of escrow, if you have a lender, I doubt that is possible because it would have to be disclosed on the settlement statement. Your best route is to ask for 1% closing cost. Also, this may be impossible if you already signed your repair addendum. If you have not signed that document, then you would be good.

@Jarret Sa'o I focus the $ on the smallest balance. I have stopped doubling up payments, rather just payoff a property once my rental property account has enough in it to pay off the lowest balance.  As for how many properties to retire, I do not have that # in mind. I have built some good businesses that I enjoy and doubt I ever retire, not to mention having 3 daughters in private school and weddings to pay down the road. I am simply trying to create the most income in the fewest locations by buying good assets. I made the strategy of paying off properties sounds simplistic, but it is a tad more complicated as I am still adding properties with mortgages. But bottom line, in a simplistic way, my strategy is to buy good assets, under leverage them, even if that means putting more down then the min required by the bank and create the most income in the fewest locations. If I had to put a goal on it, I would say $150,000 a year net and to have that # by owning 15 to 20 properties with all mortgages free and clear. As I add property, I would say those mortgages get paid off within 5 years.

Buy as many properties as you can on fixed rate mortgages, then start working to pay them off. That is the plan that I started working in 2007; fast forward to today and now I have 5 properties paid for.  In 5 years, most of the properties I started buying in the infancy of my real estate career will be paid off. The cash flow for a paid for portfolio is amazing and the stress of not having mortgages is liberating. A lot will disagree with me because of equity left in the property, but the cash flow on 20 or so of my properties would take 2.5x that with mortgages, which means more work. I am all about simplifying life as I get older. The cash flow needed to meet my goals requires more work and more risk.  I say risk because of the # of mortgages I have to carry to meet my financials goals.  Even with the most ninja of property managers, owning a large portfolio will require more work then you may thing. My goals used to be 100 properties, but when I got to 20, I started to realize it is not about quantity, it is about quality and income of assets. 

@Chris Clothier

We have bought a couple in Knoxville, but only because a couple of deals fell in our lap due to the location of our restaurant on Sutherland Ave. While up there on restaurant business, I did go to their local REIA meeting and found it a solid group. I am certainly not an expert on the market, but I do think the area North of Sutherland has a ton of potential. We have already seen other restaurants open in the area and some construction too.