All Forum Posts by: Brent Paul

It can be good or bad depending on the investment and how educated they are on what you are doing.  I can honestly say out of my family and friends I can maybe get 2 people that would consider this option.  Proof is in the pudding.  If you can show results and they can make a little something from that investment it could open more doors for you.  But on the flip side if things go really bad that could close any doors that were open forever.  In my family if you make one big mistake you hear about it for life.

Personally I don't mix friends and family with business.  It has gone very badly for me in the past with other things non real estate related.

A 30 year will always give you more cash flow which you can reinvest into the next property.

If I was 15 years from retirement and it cash flowed at least 250 after factoring in the 15 year mortgage then I would consider it.  So far I haven't found anything that worked for me.  I would advise against anything that barely cash flows.

You also have the option to pay extra on the principal if you do 30 year.  

The 15 year will cut into your cash flow.  You can always do the 30 year and pay it down over time.  Run the numbers and see where you are at with cash flow after all expenses. 

A couple things to check before you purchase. Make sure they allow rentals. Many new ones in my area are not allowing them. Check the bylaws. Another thing to keep in mind is how old the units are because the HOA fees do go up over time. Especially if things like roof, siding, sidewalks, parking lots, etc need replacing. A friend of mine bought a condo and a year later they replaced the roofs and it went up $50 per month. Within 4 years he was up over $125. He sold it shortly thereafter. If you are intent on purchasing one make sure there is enough meat on the bones if it is an older place.

I stay clear of anything with an HOA. Just haven't had good experiences in the past.

Don't forget you will also have capital gains taxes.

Also before you buy this flip make sure you have solid ARV and what the repair costs are going to be. Many people make this mistake and when something is off they lose their shirt. Sometimes appraisals come in lower than expected.

Make sure you have some kind of backup plan just in case.

I have to agree with Scott. You want to be absolutely sure those numbers for the ARV and rehab are accurate. I highly recommend setting aside an additional 10 percent in repairs just for things that come up. And believe me they will. Sounds like you are doing a pretty extensive reno.

As with any purchase there is always a risk that repairs cost more or that you get no offers or lower offers than the ARV you were given. If those numbers are solid and you are confident then you should be able to absorb any minor adjustments in price or repairs.

Always have a backup plan in case things don't turn out the ideal way.  You can do everything right and the appraiser comes in to say it appraises for 20k less than you thought.  Or you get no offers and have to do several drops in prices.  Know where you stand with your numbers.  If the inevitable happens would you be able to rent it out for a year or two?  Many flips fail, but having some type of backup plan is very important.

This doesn't seem right to me.  A good HM lender wants things approved and closed so you can start work.  Then they get paid back.  I have never heard of a HM taking this long to close.

He doesn't get his final payment until everything is fixed correctly.  Do let him know you are not satisfied with the work and show him what is wrong.  This is not acceptable.  

HOA's are a huge pain in the rear. Most don't even allow rentals. Better check into the bylaws of the HOA. A few miles from me there is a rather large development of townhomes. The HOA has a clause which basically says 2 strikes and your out. In other words 2 complaints and you can't rent it ever. Once I heard that from the realtor that made me think twice about buying it. Screening tenants is a big part of it. But sometimes you can do everything right and things still go bad.

Not a ton of money to be made by selling it. After you pay all the realtor fees, closing costs, etc you maybe have 10k left. If you are allowed to rent by the HOA I would consider renting it out for a few years and see how it goes.

That depends.  Personally I don't keep any properties that don't cash flow at least 250 per month. Would you at least break even if you were to sell it?  I might be inclined to rent it out for a few years and see how it goes.  If it becomes a pain with it being in another state then I would sell it.