All Forum Posts by: Bill Devola

LOL, we're ALL headed to destination 'grow our net worth'.  Question is, which bus do we take to get there. 

My responses on this board are pretty repetitive.  I won't spoil it for everyone and say which category they (almost) always fall into, but in your situation its almost impossible to offer advice without knowing more.  

In finance, whenever you evaluate the return of investment you ALWAYS need to assign a time value to the underlying capital, which is done as an interest rate.  Which interest rate you use depends on what you're calculating, but if its how you invest your own money, its call the 'risk free rate'.   Another way to think of this is the opportunity cost of your money. 

What I'm trying to say is, where would you take your money if you pulled out the capital and moved it to another venture?  I know Michigan has some really great flip and rental opportunities to get into.  But I'm not on the ground, so I can't say if they are better or worse than what youre in now.  I also can't say if you have access to credit to pull off a good flip if it comes along if you held this home.   Some things you didn't indicate that I think you should be considering:

*How much more $ do you have to invest in repairs to get that extra $20K in value (the $75K figure) and extra $250/mo in rent?  If its $3K-$5K its a no brainer.  You do it.  If its $15K - $20K to rehab it, its also a no brainer.  You DONT do it.  In between these two are where it gets tricky. 

*Sounds like your gross rents are about $9K for what would cost you $43K.  I don't know what taxes are, or other expenses, but this isn't a bad return.  But maybe you could take the cash you'd free up from the sale and generate a better return from a new rental.  Or do another flip that you know is available.   This goes back to my previous point...whats the opportunity cost of tying up that money for the rental?

From what I know of MI, its not a bad rental, but doesn't sound like a home run.  Before I made hard decisions, I'd start shopping the market and know exactly where I'd invest the money (flip or rental) and see how it'd stack up .

Yup.  Hurts right now.  Take solace though, in NYC metro markets (and I'm sure all throughout Cali) many people take on rentals that are at or near break even just for the appreciation and tax write off.  

No one can tell you whats right or wrong, but some different perspectives for the same question:

*How much of a hassle is the place?  Do you have to travel far to manage it?  Are the tenants always turning over?  Is it hard to rent for some reason?

*Is the area its located in stable?  On the way up?  Or could it be on its way down during the next downturn in the market?

*Finally, what would you do with your freed up credit and $300/mo?  Could you buy another property that actually has positive cash flow?  Or would you just like to go to the movies more often or go on a shopping spree once per month and not have the burden of a re-fi out of a variable rate mortgage hanging over your head?

The pain will PROBABLY pay off.  But usually the most profitable/stable real estate investments are the ones that pay off over the long term.  

These documents are not trivial.  You're going to have a hard time getting someone to answer comprehensively because you're looking for crash course in deed/title land work.  

You're right...you're not going to figure out what the documents are by reading them.  But if you got on this forum you have access to google and should use it.  Its senseless for someone to summarize the purpose of (some of which are complex) them here.  

If you think I'm being hard on you, it gets worse...If you aren't familiar with at least SOME of the documents you listed out above, you need to take some time to learn your way around real estate.  Any place is a great place to dive in, but some of those documents are basic and I'd be concerned that, even if you get bites from your marketing list, you'll have difficulty handling them and moving things to the next stage. 

I know that's a harsh assessment, but don't soil your reputation locally.  When you start gaining momentum in real estate, your name and track record mean alot to people.  Know before you say 'go'. 

Youre coming to the wrong place.  You have too many quirks specific requirements and that you need to make a loan work.  The only people that are going to be familiar enough with the products are either the brokers or loan companies. 

I suggest looking for "portfolio lender".  I have no idea how the high vacancy units in FL will be looked at, but if everything is cash flowing (and has been for a respectable amount of time) you should have some options.  Buy you're gonna need some give and take, and maybe fewer demands.  

To tell what amps the service is the easiest way I know if is to look on the panel.  The main panel. 

The main shut off switch to the main panel is usually labeled with a number on the actual breaker switch.  Bring a flashlight 

@Bob Bowling

Cool post bro!

@Bob Bowling

Oh no.  Not again.  I'm not going to get sucked into this hole where you argue and you use some convoluted logic to explain why cap rate is a stupid metric.   We can agree to disagree.  Strongly.  

Lets leave it at that. 

I'm curious myself, but was hoping that the community could help itself a bit here by chiming in.  What are your experiences in any state regarding wholesaling and the issue of "practicing real estate without a license".  I know this is an issue for some in GA.  

Help us by weighing in with your experiences, even if its, "Never had in issue in 15+ years!".  What did you find out the correct work around was (if any)?  What was the legal advice given to you?  Etc.  

Another tip for you:  

If youre looking at multi-fam, you should suggest your target cap rate.  In NYC you'll find plenty of multi-fams at a 4 cap.  Plenty at a 7 cap.  And plenty in between.  

What I'm saying is, when you start a search with a broker, give them more to go on.  In a metro area the size of NYC, there are too many to effectively narrow down with a criteria of just multi-fam. 

Id consider it a sign from above. 

The numbers definitely seem to be off, but taking a step back, it doesn't sound like a great deal. Without crucnhing ANY numbers, you sound like you are at break even with a 100% LTV mortgage with no repairs/maint or vacancies figured in. Thats issue #1.

Issue #2 is the C+ area. 

Issue #3 is you're from out of town and making your first trip down.  I'm only saying this b/c I've been burned:  know your market.  When you start getting into C+, C-, D+ areas,  and you have a SF renting for $800/mo, you don't need the headache of trouble filling a vacancy that you have to manage from 200 miles away.  

This is all really off the cuff advice, so take it with a grain of salt for this investment.