All Forum Posts by: Carl Davis

Quote from @Ryan Moyer:

Quote from @Cole Schlack:

Quote from @Matthew Erickson:

Hello!  Does anyone have a recommendation for a great real estate agent with expertise in cabin / mountain property short-term rental transactions?  I am most interested in the Wasatch-back area, but am also open to Bear Lake, Flaming Gorge, or National Parks in central and southern Utah.  Thanks in advance!

Happy to give you input, having owned a number of them over the years in Utah and Idaho.  The key is you need to make a great buy, paying inflated rates based on Covid rental numbers on the last 2 years is a big mistake. Im not an agent, my wife is in the Eden area(Powder Mtn, Snowbasin) 

 Is there such a thing as cash flowing properties in the Eden area at current rates?  I've got some great properties down in Southern Utah but I live in Ogden and would love something over on the Ogden Valley side, but seems like inflated prices and meh rental revenue there would make it pretty impossible to cash flow.

If you're talking about STR's it's tough. I live in Ogden currently as well and have 3 units in the area. Our only STR is in Tucson Arizona. We wanted to make one of ours a STR to your observation the numbers just didn't work looking at market rates. Seems to be the best option in the area for STR would be a house hack. I just default to LTR's in the area because of this.

Quote from @Michael Lynn:

@Erik Browning If we use one of our VA certs on a property, and the property matures beyond a year, does that mean we have the other spouse's VA cert available for use?

Since the VA loan is a VA benefit for each service member it does not get removed when members get married to each other.

This means if you use your VA benefit and your spouse still has theirs you may use theirs again.

This is how I understand it to the best of my knowledge but I am not a loan officer so it would be best to check in with one before going off of what I say.

I'd love to connect as well! DM me!

Quote from @Robert Washington:

Quote from @Carl Davis:

I've also done something similar with our VA loans. There are also other zero down loans for primary residence through navy federal at a higher interest rate so you can keep house hacking.

 I never heard of this. The last tie I checked NFCU is offering 5% down on primary homes.

Lookup the military choice loan and the homebuyers choice loan through them. You can call and ask about them as well.

My name is Carl Davis and I will be hosting an investor meetup this Monday, November 14th from 5-8pm at the Jason Mitchell Group Office! It will be a place for investors to network with each other, share details of upcoming projects, past experiences and more!

We look forward to seeing a lot of new faces and hope the event is an awesome opportunity for everyone.

Jimmy Johns will be provided.

If it were me, I would not use a HEloan for a flip, however I have limited flip experience so take the explanation with a grain of salt. 

HEloan will draw all of the equity out immediately for the full amount and you will have to pay it back monthly regardless if you are flipping a property or not. This also means if you find a cheaper flip and do not use all of that money you will still be paying this off and could eat away all of your profit.

Maybe if you already had the property lined up and the numbers were all there but this is a much riskier option than a HELOC. Like Matt, with a HELOC you will only pay on what is taken out, plus you may only be paying interest during the initial draw period.

With limited capital you could pair the HELOC with some private money from previous partners or family members wanting to get in, this may create even less risk for you.

As far as the DTI goes I am not too sure on that but I would be careful doing a BRRR right now with the fed expecting to raise rates another two times this year. Even a good value add project could be ruined if the rates keep raising at the rate we have seen.

Just my two cents, hope this helps.

Quote from @Benjamin Gonzales:

@Carl Davis

Yes how is your legal entity structured? And how is that allowing you to operate in your current space? 

I’m also curious as to how you manage your properties as well?

I’m not trying to reinvent the wheel here with STRs and I’m really interested in getting started. I’ve looked at Airdna for properties in my area and it sounds good. But planning for no tenants is a great and I will have to create a network down in Oklahoma. 

Currently the home is in my name because I bought it in my name. We are in the process of doing a quit claim in order to get it into our LLC that we have our properties in. Biggerpockets has a video on asset protection I am not a professional in this realm and speaking to a lawyer or someone who does that professionally is your best bet. I have a separate LLC for my sales business. We keep everything separate in separate business accounts.

Each property has its own account, each business has its own account all separate from personal finances. Once again I can't give you advice on this but co-mingling is a terrible idea in my opinion.

Management wise it is a lot easier in our experience than some make it seem. We have automated messages that go out whenever people book, then we have two cleaners to choose from whenever we are setting up our turnover. My mother in law will go behind the cleaners and refill simple things like toilet paper and what not (we pay her a fair price). As far as maintenance goes our home was built brand new in 2020 and the builders warranty covered everything we may have had trouble with in the beginning but we will need to source maintenance personnel in the future, most times if we need my wife's family helps us out. 

That being said having someone on the ground to handle simple things is paramount. On thanksgiving last year our tenants wanted to grill on the one we had and asked if we could get them propane...If it were me I would just fill it up but since they asked we went ahead and asked her brother to fill up the tank and bring it to them.

We want to hand off the property management in the near future with someone that has a good team in place as we do not want to put unnecessary stress on our family but most of the people we interviewed managed from out of state which is the same thing we do. We don't want to pay 20 percent to someone that will do the same thing as us.

Just some things to keep in mind. By no means are we exceptionally great at managing STR's this is just our experience from owning this one. Talk to other hosts in the area, join facebook groups and ask them what obstacles they faced as well.

In regards to your first question, I am not sure I fully understand what you are asking specifically. Do you mean how do I structure my business as a realtor or how do we manage it?

Some investors like to save a percentage of their cashflow for vacancies/repairs but we actually save every penny we get extra for the first two years then start to save a smaller percentage. In about two years we haven't had a month that we made less than our expenses. If the seasonality is hitting really hard and you have vacant months saving every dime in the beginning should more than help. than after your first year you can better budget based on the previous years performance.

Quote from @Jemir Martinez:

Can you explain that a little further? Are you saying that the loan can only last for 12 months and not go any further? If so, how would one pay it off in 12 months? Don’t see how I could pay off $350k in 12 months. 

 Like Bob said above. Hard Money loans are only given on usually up to a 18 month payback period max, then the loan has a balloon payment of the full loan amount at the end. If you are using the hard money to only acquire and there is no rehab or anything to INCREASE the value of the property then it almost defeats the whole purpose of this loan product and I would not recommend it whatsoever.

Quote from @Benjamin Gonzales:

@Drew Sygit 

Hey Drew!

So what I meant by zero cash flow is…

mortgage is- 1040

Rent - 1250 ( I have not raised rent in 2.5 years)

Property management- $125

Cash flow- $85

Goals- I want to 1031 my Oklahoma property for an investment property in El Paso, TX ( new duty station). I want manage it myself. Which is why I want the investment property close to me.

2) Sell home in Lacey, WA, 98516

Going to list for $620,000

Financed at 550,000

Current amount owed- 528,000

I hoping that based off of the size of my home 5 bed, 3 bath, 2900 Sq ft. That I have potential buyers get into a bidding war for my home. (This is advice from my realtor). I go live on 18 October, 2022.

After I secure these two transactions I want to create more passive income by getting into STR lease arbitrage. I have not researched this at the moment as I'm trying to focus all my attention to making my first two goals happen. I'm planning for both transactions to be complete in 6 months.

I sold my motorcycle because I'm currently deciding what type of company I'm going start. I sold my motorcycle for $4800. And I'm going to start my LLC but I'm currently back and forth with myself because…I don't know if I should make it a realty company or an investment group because I want to make several investments after I gain this capitol.

 This is what I would do in your scenario but keep in mind everyone is a little bit different on how they prefer to do things.

1. Property in Oklahoma - You are not cash flowing much but have you looked at comparable rents in the area? Can you raise the rents? Can you actually turn this property into a STR thus increasing the ROI on this with little out of pocket cost? Are the STR restrictions that make medium term renting more viable? Is there a way to add value to increase rents? I think if you could figure out a way to cashflow this property it may be easier than doing a 1031. The property you buy at your new duty station could be a house hack if you don't already have a primary residence. This will decrease your monthly expenses, and increase your revenue plus you'll be able to keep a higher producing property now. If you're worried about having capital to purchase your next primary and you're using all of your VA entitlements look into USDA loans, and Navy Federal also has a zero down loan option with no PMI for military members as well.(homebuyers choice and military choice loans)

2. Property in Washington - If you are set on selling this property it seems like you'll net around 50k after paying fees and commissions (just using average numbers). If you want to get into STR arbitrage from there it is definitely doable but I honestly don't think this will be more passive than what you are currently doing. I currently own a STR and it is about the same time demand as my other long term rentals. Obviously there are more variables involved but especially if you are managing them yourself it will not be a more passive in my opinion.

If you really want the income to be passive, I suggest REIT's. If you do not mind self-managing or paying a property manager than I would continue purchasing.

I hope this helps a bit.