All Forum Posts by: Alexander Felice

I have a bunch of doors in Fayetteville, I don't expect this to be a noticeable impact. 

I saved up 70k to start, my first project was 68k total. Really cut it close.

Took me about ~5 years of saving to build that up from nothing. Saving tax returns, selling my car and driving a beater, and living like a peasant. Sacrifice is a good approach to investing imo. 

@Daniel Kent

If the money is coming from his personal funds then you should have no problem to do this.

If it's coming from a bank refi, it's going to be a bit more conplicated becuase it'll be a 1st position and the LLC will have to sign for it.

love the idealism, but the ground logistics are incredibly difficult. If there was a profitable way to do this, it would happen all the time. 

First, you have to get a neighborhood to sell you all their properties

and you have to buy a big enough block to make a dent in the local culture

you have to have all the residents actually pick up and leave the area (and really, where are they going to go?) so you can get teams in there to rehab/rebuild 

then you have to overcome the public stigma of said area to get actual tenants or buyers to pay for these houses

and when all that is done, you have to show a profit....

From a capitalist perspective, this is a money loser

from a philanthropic perspective, there are more efficient ways to help 

and when the government gets involved and it's called gentrification

Sell it, don't drag a partner into a long term project that he doesn't want to do. 

Find the right partner for the project. 

helocs are great, they do have downsides. One being that HELOC's suffer the first hit when liquidity in the market dries up.

Sitting on that heloc as a means to purchase in a downturn might sound like a good strategy, but in most downturns liquidity is going to dry up and banks will close many un-borrowed heloc balances (and might call some that are open).

Someone bumped a 2 year old thread.

To update my original comments here, 

I think 2 years ago you could still buy assets cheap enough to warrant more debt, these days I would recommend to be more conservative. Valuations are higher and there is less certain appreciation in the future. 

It also depends on how much equity is the deal and how that equity was made (created v purchased). 

Debt is still a good strategy but more with more moderation.

it sort of depends on the loan type, but not many types will allow all of what you asked. 

standard Fannie loan will be 75% LTV, and would let you pull out the extra, but has 6 months seasoning

delayed finance will allow to skip seasoning, but it's 100% of HUD-1 maximum, among other restrictions.

local commercial lender is your best bet, but you might find it hit or miss. It's kind of an unnecessary risk on the banks part, but certainly possible. 

Writing a business plan is a VERY useful exercise and undervalued on this site (in my experience) so I'm glad to see someone mentioning it. Maybe I'm bias because in lending we have to do one for every loan.

Your plan will vary based on the audience obviously, but here's a jist to start with:

What you're trying to accomplish (summary)

Who you are (sell your management skills)

detail of the business model in question (location, financials)

SWOT (strengths, weaknesses, opportunities, threats)

risk mitigation (every "what-if" you can think of and the plan to correct, exit strategies, etc)

Where your partners fit in 

organization structure (who owns what, outlay where everyone's risk is spread)

This is obviously not complete, but should get you started. Writing out your plan and selling it to people is a tremendous skill set and something you'll improve with over time. 

I have plenty of examples I would be willing to share, or help go over your drafts if needed. 

what is the mortgage on the first property? If there is no loan, you can pull the equity out, but both parties would probably have to sign for it though. 

it seems that the property is owned 100% by the LLC, and you own 25% of the LLC. this distinction is important to remember. You want a small loan on the property (which currently holds no debt), and you want it in just your name. This might be possible with just you signing/guaranteeing (and the LLC cosigning) but it'll become the first position loan on the property for all parties.

You might be able to lend inside the LLC but its' a bit outside my scope. I know the bank side lending but not the legal/tax side as much