All Forum Posts by: Alexander Zurn

@Dereck Mills books, videos, & podcasts are the building blocks for any newbie so right there you're already off to a great start. Some progressive next steps:

1. Start analyzing properties - get a feel for how to analyze good deals so that you know the price points your chosen neighborhoods that are good deals. It will take time and you may not have even chosen neighborhoods yet but analyzing deals in multiple areas will help you narrow down where good and bad deals are - thus, helping you pick the areas to analyze further and jump on should a good deal come available

2. Talk to a mortgage broker - I say this before you get pre-approved. There are a lot of questions you'll have once that process gets going and when the time comes for you to submit an offer you likely won't have time to ask all of them. The sooner you start the mortgage/financing discussion the more comfortable you'll feel. Chalk it up as learning more information about the whole process and helps you start building your team!

3. Save money and pay down debt - there are many different strategies but I found it useful to pay myself first (Read Richest Man in Babylon if you haven't). There higher % of your income that goes to you the better! 

4. Go to Local Real Estate Investor meet ups. Philadelphia has a huge REI Group so google that and start going to simply be around and get comfortable talking real estate.

Education is the basis but you also don't want to get stuck in analysis paralysis. Hopefully some of these steps can help you move the needle forward over the next months and get you prepared to buy your first property!

@Jeremiah Hatcher I would ask your loan officer about a first time homebuyer program in your state - something like Illinois Housing or Chicago DPA. Reason being, you can sometimes get a down payment assistance (DPA) loan that is foregiveable or has to be paid back with interest or without interest, different states have different programs. For example, I was able to utilize a DPA & closing cost assistance loan for my 1st home - this allowed me to use most of my savings to improve the property. Fortunately, I had a good deal where even a 2nd & 3rd mortgage still allow the property to cash flow so be sure to factor that in but it also allowed me to entirely leverage the property so I only have what I put into it. Not for everybody or every deal but it is something to consider to avoid the red tape of a 203k, putting savings towards a down payment instead of sweat equity, & possibly having a loan greater than the value of the property. Food for thought!

@Deven Singh more time in the market is better than trying to time the market - so the saying goes. Meaning, over time - if you intend to be a long term real estate investor - being in the market for a longer time (i.e. buying your 1st home as soon as possible) is better than holding onto your cash and trying to time the market for prices to drop/"correct". 

Sure, I wish I was able to buy my 1st in 2008 or 2013 but I got my 1st in 2017. Appreciation has been good and even if there is a correction and I see negative appreciation over the next 5 years - I will still have tenants paying the mortgage down and in 10,15, 20 or most likely 30 years IF I choose to sell, I will have seen plenty of appreciation by that point. Part of that is making sure it is a good deal and knowing your exit strategy when you buy.

That's my thought process - hope it helps!

@Mike McCarthy interesting. Once they are installed what do you do with the old gas boiler and cast iron radiators? Do you remove them or are they just shut off permanently and are not a concern? I have an oil burner and cast iron radiators so I'd be curious how they are managed post installation. Also, does the thermostat connect to these or is there something else that controls it?

Hi @Danielle Wolter - I am listening to @Brandon Turner's book again and thought it would be good to got down the 4 benefits of REI that he mentions:

1. Cash Flow

2. Debt Paydown

3. Appreciation

4. Tax Incentives

I believe he says having 2 OR 3 of the 4 is a good investment. So while you're losing the cash flow on this property, are you still achieving these other benefits? Appreciation may be slowing down in San Diego (?) - you'd know better than me but I still see tax incentives and debt paydown. 

Looks like your on the path towards keeping it but just wanted to offer some additional food for thought.

@Christina Colon I would consider the leverage you have available. The VA loan is of course 100% LTV meaning 0% down payment - full leverage. And you can only have 1 VA loan at a time, so in order to do that again you'd have to sell. Maybe others can shed light on if you can refinance out of the VA loan into a conventional investment property loan (20% down) and then have the ability to use the VA loan again to buy your next one with 0% down?? That gets a little into the weeds...

Short answer to your question, if you are cash flowing on a property you put 0% down on I think that is a very wise use of your capital. My gut tells me to let it cash flow with less in the property - consider your ROI in a couple years (depending on how much you put into the home after you bought it). This assumes you have the ability to put 10-15% down on the next owner occupied multi you're planning to buy.

Not a bad situation to be in!

@Sang Nguyen I would recommend speaking with a Mortgage Broker - they do business with my many banks and different lenders and have access to the best mortgage products and rates on the market. They will have the FHA programs being spoken of here and be able to explain all the details. Wells Fargo does not have the best reputation right now...

If you go to findamortgagebroker.com and punch in your zip code, you can get info of some in your area. Be open upfront and honest and expect the same in return. 

@Megan T. in today's environment, I would recommend shopping your rate. With such low supply, every mortgage lender wants your loan and it has never been easier to get lenders to face off against each other. While this may seem "rude", you're looking for the best rate and lowest closing costs especially on an investment property. My recommendation would be to shop around

Thanks @Sam L., I haven't heard of them. Just looking at their site - are they new? No reviews and I couldn't find pricing options for their products. I will dig a little further. Appreciate the insight.

Hello - I have an out of state 2 unit rental property that cash flows but could be way better if I can figure out the best way to pass all expenses to tenants. Right now they only pay electricity and I am paying water & heating oil. Problem is  house was built in 1890 and has single heating & water systems. In return, I do charge higher rents but it is not exactly offsetting the bills. I pay Oil (in cold months) and water every month. 

Question: What is the best way to split these bills appropriately so that next tenants that move will pay for this? I have heard of the Flow (I believe?) water systems that can split water bills in MF's on BP podcast - would this suffice? Same question for the heating system, is it best to just include in the lease that the bill will be equally split among tenants (i.e. 1st unit has 2 tenants, 2nd unit has 1 so bill will be split 3 ways).

Of course this would come with a drop in rent (if necessary) but want to be prepared come May 2020 when both leases are up to avoid vacancy and increase cash flow.

Thank you in advance!