All Forum Posts by: Candyce Chen

Hello @Suzanne Villanueva,

Glad to hear you are successful on your own investment. That’s so awesome. I’m in CA & investing out of state and I’m still learning too. 

1. Podcast: I feel BP Real Estate Rookie podcast is very helpful, you can check out episodes #30,#31, #64, and #73,  

2. Books: 

Start your own corporation by Garrett Sutton and his other books. The writing style is pretty simple to understand. 

I also borrowed many books from Kindle Unlimited, one of them is very useful for partnership & JV:"Investing in Real Estate Private Equity: An Insider’s Guide to Real Estate Partnerships, Funds, Joint Ventures & Crowdfunding by Sean Cook. 

3. Legal: my lawyer suggests to set up a LLC in the states I have properties. Personally, I will suggest to have a separate bank account, umbrella insurance, and use a CPA from your investing state too. Partnership is for funding & LLC is for taxes & asset protection if it's set up correctly. It probably also depends on your personal situation, HR structure, tenants, property location & types…etc. I'm not a legal nor a CPA, so you might need to check with a professional in TX on this.

4. Website & YouTube: many websites & YouTube channels talk about Real Estate LLC or RE LLC for Californians. Beside focusing on why choose LLC vs. other biz structures and how to form one, you can also check out what's Pro & Con of forming a LLC. The link below is helpful for me. Investopedia & Millionacres have many good articles too.

https://www.investopedia.com/

https://www.millionacres.com/a...

Above are resources I used during my very beginning of researching. Hope it helps. Best luck on the next cheaper of your RE partnership. Happy Investing! 

Candy C.

Hi @Tommy Mckeown

It's so awesome that you are thinking about your future investing decisions and realized about the inflation in such a young age. Time is on your side.

IMO, you should definitely put your money into mutual funds. You will lose money value by putting your money into a saving account as bank's interest is only 0.01% nowadays. If you must put money into a saving account, maybe look into a high-yield saving account or a money market account to temporary park your money before purchasing a property.

1. Financial Education: You can take some personal financing planning, personal investing, real estate investing classes in college. Those are very helpful.

2. 401K match/Roth IRA: some companies such as Starbucks offers a good 401K match programs with an educational or tuition reimbursement. I will suggest save as much as you can and max out your annual 401K or Roth IRA.

3. Stocks: You can use Nerdwallet.com to calculate how much money you would have in five years from your investment.bogleheads.org and humbledollar.com offers good advices too. FinancingLife Academy has free classes such as “Where should I put money?” and “Common Sense Investing”

4. Risk tolerance: This will help you decide % on stocks/bonds/cash reserve. You might have a higher risk tolerance due to you are far away from a retirement age. You can invest in low-cost total market index funds.

5. Self-direct IRA: you can also roll over your 401(k) into a self-direct IRA by choosing the real estate as your investing option. You will need to find a reputable self-directed IRA custodian and a trusted lawyer.

6. Other Items: Improve your credit score to over 760 if it is possible, avoid paying PMI with at least 20% down payment, make sure your DTI is low by paying off student & car loans, budget extra money for closing cost, and have a stable income. Those will help you use OPM and secure a mortgage with a good interest rate.

7.Mentorship: Partnering with seasoned investors and offering your sweat equity. Learn by doing is the best way IMO to understand the market you plan to invest in.

Those are items I wish I would have known at your age if I were saving up to buy my first real estate investment. Hope it helps. Please do consult with professionals before any investment. Best luck on your RE journey & Happy Investing!

Hello @Christopher Lamp,

Congratulation on getting your startup fund from a family member. That's the best way to start. I admire your courage to pick up a flipping project on your first deal as it is harder than buying a turnkey or a minor rehab property. 

1. LLC - unless you need to share the equity or profit with this family member, otherwise I don't think it is necessary to have the LLC for the first deal because you do not have a property or tenants yet IMO.

2. Internet: LLC will be under commercial and not residential loan. Interest rate percentage is different. The lender will look at your rental income under LLC. Since you do not have a property under LLC yet, it might be harder to get a loan under LLC. LLC or commercial loan might be ARM and balloon payment vs. personal will be a fixed rate mortgage

2. Fix & Flip - you might need an experienced partner or a project manager that knows about the construction unless you are going to oversee the project yourself.

3. Gift or Estate taxes - This is minor, but I will suggest to look into gift taxes in your state, so you do not end up paying extra taxes on the gift for 2021. Parents can give up to $15K per year for children. Federal estate tax is $11.58 millions in the 2020 tax year. You might need to check on your state law for more details. Some states are very specific about it. 

4. Title: not sure if this family member needs to be on the title. You might want to check the probate law in your state to ensure there is no issue on this in the future during the sell.

5. Credit: if you have a good credit score and have less than 10 properties. Your credit might work better to get a lower interest rate than a business loan. 

6. Finance: Hard money loan, private lending, or some local credit unions might be better. Big banks will not fund a distressed / fixer upper property.  If you have a good relationship with a local small bank, they might be willing to work with you for a construction loan. 

7. Contractors: It's very hard to find a general contractor or sub-contractors due to surge of demand. I will recommend you check to make sure a general contractor is available based on your timeline before starting the project. 

8. Realtor: You would also need a good realtor that understand investors/flipper and have lots of local connections. It's harder to find a realtor that wants to deal with foreclosure /short sales/for sales by owners/distressed properties. 

Hope those tips help. It is my personal experience, please do check with your legal/CPAs/lenders for advices in your particular state. Best luck on your project! 

Candy

Interview more PM companies and definitely get a new PM. 

Offer rent reduction or cash incentive for your current tenants if they can help you find new tenants. Let them choose their own neighbors.

Contact non-profit housing organizations. A lot of cities have some organizations to help local people find place to live.

Reach out to local churches/hospital/performing center/university if there are any there. Sometimes they will lease housing for 3-6 months for visiting doctors/nurses/professors and are willing to pay a higher rent.

Airbnb/short term rental if local regulations are allowed and doable. Talked to short term rental PM in that area. 

Hire a local and well-connected realtor to help you find tenants and run background check.

Check social media to see if there are any rental groups for your area. Post your ad and boost it on Facebook/Instagram. 

Hope those ideas help. Good luck on renting out this vacant unit.

Hello @Rob Duhon 

Small Multifamily (2-4 units) would work in some markets/cities, but it might not cash flow in another. Vice versa. Here are some advantages IMO. Those might not apply to your area.

1. Less expenses: one repairing cost/one roof/one exterior/one insurance/one contractor/one loan application…etc. 

2. Easy to negotiate down the Property Managment Fee % b/c it’s 2-4 units vs. one unit.

3. Multi is cheaper per unit than SFH to purchase in some cities: Small towns' multifamily price could be comparable to some Midwest cities' SFH.

4. Higher cash flow: 2-4 rent income vs. one. For a Triplex, I can still get 2 rents, rehab the vacant one, and stay cash flow. Basement closets/storages and parking spots can be rent out.

5. Risk diversification: multiple rents vs one check. Vacancy cost is lower in some nice neighborhoods due to high rental demand. 

6. Loan Application: Easier on a commercial loan application & better to get a partnership for someone with a multifamily experience. 

7. You can still turn SFH into Multifamily:

Having 4-6 SFH cluster together in a renter area, then tear those SFH down to reuse the land and to rebuild a condo at the existing land/area. You can get a higher cash flow per unit in the end, assuming the revenue can cover the builder's cost within the loan terms.

Hope it helps! 

Candy 

@Jerome S.you are very welcome. I used Mutual of Omaha & NASB from Costco Mortgage service. Both are overwhelmed with slow reply, but rate is good. I went through 3 slow loan officers before I found the fast one I want to work with. Best of luck~

Hi Jerome,

You will get way too many phone calls from the LT. Here was my process to refi a NY property. It helped me narrow down my base line pretty quickly and lock down the rate right away.

1. Checked with the current lender that hold the loan to get a quote on a cash out refi for interest rate on 80 % out vs. 75% out. 

2. Checked interest rate with local credit unions and small banks in that particular city to get a better rate. This should give you a good general idea. 

3. Asked realtors, lawyers, Property Managers for good loan brokers referrals, then talked to 2-3 brokers by using info from step 1 & 2.

4. Checked interest rate via Costco Mortgage service. Loan origination fee is capped at $250 for executive members. 

Then compare those options. Hope this helps. Good luck on your cash-out refi, it’s a lot of work, but it’s totally worth it.

Hi Michael,

I went through similar situations before. Here are couple different points I will consider before making the decision.

1. Narrow down the property type/method you want to invest in: 

multifamily vs. SFH,

BRRRR vs. Buy & Hold,

Fix& Flip vs. TurnKey, 

Long-term vs. Short-term rental 

Each type requires different cash amount up front and needs to deal with various lending options & regulations afterward. 

2. Choose the Market: search that specific type of property in your chosen market. That should help you decide how much to spend on down payment + reno cost + expense + design cost + Property Management fee…etc

3. Decide on how much you can or want to leverage - How many financed properties you currently have under personal loan vs.Profolio Loans. 

4. Can you get four more residential loans with a lower interest?($125k*4 = $500k) 

Or do all four loans need to be under commercial loans with a higher interest. How much is Closing Cost, insurance expense…etc. 

Interest amount you are paying out each month while refi to pull out the money & finding deals are also an extra expense.

5. Then based on the above,you can then calculate COC, CAP, NOI, Cash flow…etc.

6. Lastly, how much time do you have? Do you plan to self-manage your own properties vs. hire a professional property manager? If you get four loans/properties, you will have to go through the same process of finding four deals, 4 closing, 4 rehab, 4 PM…etc. 1-2 properties might be easier than to manage four of you don’t have time. 

And if all of your properties are located in different markets, it will be a lot of work to research and learn about each market and get new realtors, PM, contractors…etc. unless you already have a team established in those market.

Hope this helps. Best luck on your next deals!!!

Candy