All Forum Posts by: Thomas Orgler

Firstly, congratulations! Sounds like a great deal! However, I think this a bit misleading for two reasons. You are not going to make 100k when you sell. Usually you will lose around 7% in sale with commissions, title fees, etc. (~15k) Additionally, sounds like you are living in it. If so, great! If this is your primary residence and you live in it for 2 years you avoid yet another charge: capital gains tax (probably 15% in your situation - another 15k). Anyhow, 70k profit is awesome! Congrats on that!!! That's roughly a 60% return on investment which is HUGE!

Regarding getting a HELOC on the property, a word of caution... you could very easily put yourself in a bind. If a flip goes wrong, now you are pretty close to underwater with primary residence. Just watch out. Leverage is king to making huge returns, but too much leverage causes risk. Try to forecast what would happen in a bad deal and see how it plays out.

A phrase I like to live by: "Keep your eyes in the sky, but keep your feet on the ground". Best of luck brother! 

A word of caution however... This is great that you own $1,000,000 in assets; however, this is not your net worth (or equity). Your equity actually is extremely small because you are almost 100% leveraged. If for whatever reason something happens in the market and you have a hard time renting or selling (real estate is highly illiquid) we are talking bankruptcy - and very quickly might I add. A healthy LTV ratio should be between 60-80% and by the sounds of it, with refinancing and lines of credit, you are limited to the max, probably at 90%.. or more... Remember, leverage is great to maximize returns; however, the more leverage you have the more risk you are putting yourself and your family through. As an example, calculate what would happen to your income if you hand tenant turnover that last 1 or 2 months for each of your units.

In addition, just a suggestion: look up how to build a pro-forma and identify what your investments' Internal Rate of Return looks like. Your financial spreadsheet is a budget which is also essential to maximize disposable income; however, you will have a lot to gain from doing that. If you have questions on this I would be happy to show you.

Just wanted to pick your brain on these two items; however, I admire your energy and planning! Keep it up and wish you a lot of success on sticking to your plan and on being on the 100k/yr club!

Hello,

I am a Passive Investor in Arizona and Miami and currently own 4 properties generating strong passive income. I'm originally an engineer and as any good engineer, we need to work crazy hours. I recently switched jobs into the Financial Services field and found myself with a lot more time in the day. As a result, I am looking to branch out my investment portfolio into something a little more active, particularly Flipping Properties.

I am hoping to get some advice on Flipping in Miami metro area and maybe some recent success/loss stories. I am looking for partners and general contractors in the area.

Kindest Regards,

Tom

Hello,

I currently own 3 properties in Arizona and have recently moved to Florida. I've been hunting for a good income property here and found a solid triplex (2x 2BD/1BA, 1x Studio) around the Hollywood area. The property is expected to drive around 14% leveraged ROI including property manager fees. Knowing the property was built in the early 1950's, I wanted to protect myself regarding lead-based paint. As a result, I think I made the mistake of having a lead-based paint inspection. Now I am in the process of negotiating concessions with the seller for the cost of an abatement (which I believe can get as a high as $30,000).

I am at a point where, after extensive research, I reached a consensus that lead-based paint is not really that bad of an issue as long as proper precautions are taken to remedy chipping paint immediately when reported by tenants and disclosures are followed through properly at leasing. In addition, the lead-based paint is likely under layers and layers of paint since the 1950's and all windows are sealed shut. Do you guys agree? Do you still think it's a big liability even if I disclose and am not negligent regarding repairs? 

Additionally, I feel bad for the seller. I almost certain he won't agree to the added ~$30,000 in concessions and he needs to put the property back in the market now legally bound to disclosing this hazard. I think it's a lose-lose in a way since even if the seller paid the full concession to cover my abatement costs, the abatement would still take time and cause me rental loss. This sucks... I don't think I'll ever do a lead-paint inspection again. In this case I am starting to think ignorance is indeed bliss... Was wondering if anyone had any similar experiences or advice on this matter.

Thank you in advance for your comments.

Kind Regards,

Tom