All Forum Posts by: Austin Johnson

1.a section mentioned risks about lien. I'm not familiar with the term, but I do understand it involves debt of some sort. What exactly does this term mean and where does debt come into play?

if you take a mortgage out on a property (the remaining 70-75% of the purchase price once you pay 25-30% down) the mortgage company has a lien on your property. if you hire a roofer to put a new roof on and you dont pay them. they can play a lien on your property. If you fail to pay your taxes for 5-6 years in the state of Missouri. the state COULD place a tax lien. what does it mean? it means upon selling the property, those liens get paid off first BEFORE you. 

2. What exactly is underwriting and what does this process entail? Where does this process take place in when making a deal happen (i.e. Before closing, after closing, when you first make an offer, etc.)?

Underwriting is the basic math to see if a deal works. So, I'm in multifamily real estate. our underwriting is a wee bit more than single family but I'll keep it to SFH. (if you're interested in MF, let me know!) *edit. underwriting should happen before making an offer in SFH. it's not a lengthy process so always see if a deal is even worth offering on before offering!*
you can use the bigger pockets calculators for SFH underwriting. it's the rental income, expenses, mortgage costs, renovations, etc and the total profit at the end. to quote my friend Brian Briscoe "rent comes in, bills get paid, the rest is profit". under writing is figuring out the rents and expenses to track the profits.

3. How do you estimate rehab costs when first looking through a home? Without a proper inspection it almost seems like you have to use the eye test and experience to guess what the costs for a rehab may be?

you're right. you can use general rules of thumb. but for most accurate (esspecially with the 9.1% inflation we're seeing) contact a local flooring company and get a quote. say $4.50/sqft installed? so now we know a 1k sqft house needing all new flooring will run us around $4500. i would suggest doing this for all major things. roof, flooring, drywall, painting,etc etc etc. maybe even find a foundation contractor. 

why wouldn't they?

mailers, website, cold call, lists. there are a ton of ways to catch the chicken. the most successful might be a website though.

man, THREE of you guys are going to start up airbnb arbitrage? that's hectic. You're right that $12k wont get you started. LLC is a must if you're working with several partners the way you are.
I love the ambition. I love the real estate focus and drive to do SOMETHING. I would have a meeting. figure out what your vision long term is, figure out what your partner's long term vision is and see where they overlap, where they butt heads, etc. see who wants to do this long term vs a quick profit. from there figure out what avenue you CAN do long term. this reminds me of me when i first tried to get started. I said I would be a wholesaler! then I'd get my real estate license and whole sale and sell! i can do all this and save money till I get enough to buy a apartment complex. repeat repeat repeat! my problem? shiny object syndrome. don't get shiny object syndrome. find what you want to do, figure out what needs to happen to get there and work on that. day by day by day. i wouldnt jump into airbnb arbitrage as a temporary towards something else.

 I mean... I'm an agent too. I don't want to bash your agent but I get 'trying to close a deal' vibes from this. 
personally I wouldnt try to force an FHA loan into a non-FHA approved house.

yes, massive crash incoming. sell all your properties to me.

I believe the rule of thumb is 100 units. once you hit 100 units, you hire a full time PM and a part time Maintenance guy. obviously if you're the PM, don't hire a PM,lol. but 100 units is when i would begin looking. that's enough in theory to keep them busy.

step 1: talk to him. step 2: listen step 3: come back and inform us what he says.
we can play hypotheticals all day. up till the point you ask how he feels about the offer, it's an endless cycle of if's. call him, say you were curious to hear his thoughts on owner financing, when he asks what you mean, share these details. if he is reluctant, spell out the pros of doing it and then the cons. (pros, no lump sum payment, secure tenant over the next 5 years, perhaps 10 years if financed correctly. cons; you can leave and build your own building and leave him with a freshly renovated storage unit that looks like a mechanics shop)

9/10 chance he gives you some sort of answer sooner than someone online can give you. 

why would I syndicate on a 350 unit and get a small split instead of investing myself on a smaller deal?
because real estate is a team sport. if it took me 5 months to close a 350 unit with a team, helping all my investors, helping all team members and developing an awesome community. I can rinse and repeat the process again and again and again while developing friendships and partnerships and contributing to the community at scale.

now, why would I do a small deal myself? and rely 100% on my own capital, my own credit score, my own experience to get the loan, my own liquidity to qualify? then be tied up with one deal till i can save up enough for a second deal. then a third. then a fourth. how long will that take? 
in order to tackle the beast that is large multifamily, the bank requires a lot of experience, liquid capital and overall networth. what if I don't have that?
I hope you're seeing the difference and im not just blabbing,lol. 

I wouldn't do that at all. you're wanting to put it under contract, upgrade the units and pray the seller doesn't back out with a free upgrade (and sell for full price). it seems very sketchy to me.