All Forum Posts by: Christopher Brainard

Hi Josh,

I'm sure you're going to get a lot of responses, most of which will be favorable to mortgaging as much as you possibly can, while others will tell you cash purchasing or low leverage is the way to go. 

The truth is, there is a single, right answer, and that answer is....Whatever allows you to sleep well at night.

Leverage will allow you to buy sooner and buy more, but also exposes you to the risk that if things go south, you're in big trouble. Everyone seems to forget the real estate market of 5 years ago, but I suppose my memory isn't quite gone yet. Buying conservatively allows you to slowly but surely build wealth.

This decision needs to be carefully thought out and discussed with your partner so you can decide what is right for you. If you would feel better with your cars paid off first, do it. If you think you're OK without it, I'm sure you can manage that as well, but don't give into the pressure of having to buy 'something'. Buy the right investment, at the right price, and at the right time.

-Christopher

Instead of waiting for them to ask you what you intend to do, I would recommend that you tell the realtor exactly what your plan is so he or she will know what they can contribute or if you are even the right client for them. I would also set expectations for how many properties you intend to purchase and in what time frame, but make sure that information is realistic. A realtor will quickly lose interest, if you promise the world and do not deliver.

-Christopher

P. S. If you are one of the 'no money down' crowd and you are simply looking to add someone to your team for comps and such, make sure you're open and honest about that. A lot of realtors will not do alternative investment strategies, but some may to build a relationship with you. Its important that you find the right realtor for the stage of investing you are currently in.

@Thomas Usher

Hi Thomas and welcome to BP.

I have to agree with the posters on this thread, when you're first starting out, you really need a couple deals under your belt to understand the ins and outs of the business. A deal of this size will require great knowledge of management of large scale commercial assets, which I don't think is a 'learn as you go' type of thing, especially when you're using investor's money.

With that being said, I'd recommend that you post your calculated value based on income, list all the expenses you're aware of, vacancy, condition of the property, etc. I'm sure there are many people on here who would be happy to chime in on the juiciness of the deal. It may be a gem, but it may also be a dud when you take everything into account.

Just remember, you need to crawl before you walk.

-Christopher

@Sutton Zolner

Bring a flipper myself that migrated from CA to NV, my opinion is that it is very hard to find a 'good flip' in Las Vegas right now. The competition is very high and many companies are over-bidding on properties, because they have crew on the payroll and need something for them to do. Since we've moved here, we have bid on half a dozen flips and they have sold for 90% - 100% of the current ARV. Clearly, not a good way to make $$$. Instead, we are now purchasing rental units, as there are still quality properties that will cash flow around 7% - 8%.

@Bryan Christopher

You'll be hard pressed to find SFR in Class A neighborhoods that will cash flow at current prices. Prices have come up ~30% or so in the last few years. The value seems to be in the Class B or Class C places, which are still selling at reasonable prices.

-Christopher

Hi @Andrew Lacy

I think you may run into issues with the loan only being in their name, as tenants in common, I believe most mortgage companies require all parties on the title to sign onto the loan, as the mortgage is against the entire house, not a specific portion of it owned by one member. Additionally, I'm not sure why you want to execute this strategy instead of just forming a company with whatever % ownership you prefer.

Also, I gather that you are not going to be involved with the renovation and just be the money behind the deal - I'm not so sure any of your friends would find the 80/20 split very appealing, especially if they need to be on the loan.

-Christopher 

Hi @Lucero Sanchez

Adding a pantry isn't going to increase your asking price for the property, a pantry isn't a luxury item. However, if you competition has pantries, and you house does not, it may slow down the sale process (or speed it up if the opposite is true). I'd spend a few minutes and review some sold listings in your area and see how the houses are equipped and make a decision based on what you find. 

In the last flip I did, I added a pantry and it ran us about $500, however, our kitchen was our selling feature for the house - cherry cabinets, marble counters, high quality stainless appliances - so we wanted to make sure everything you could want was in there. House sold in less than a week at our dream ask, so we can't complain and I think it was worth the extra investment.

-Christopher

Hi @Alain Yu,

No questions are silly on the forum :)

While the list of people on the link you provided may be used, you may also not need them on your 'team' depending on what type of investing you are pursuing. For example, if you aren't going to rent out a property, you don't need a property manager. This is also a function that you could fill yourself, if you choose to do so. 

To answer your specific question, you would contact them when the need arises or perhaps once in a great while in a social setting just to keep in touch. Real estate doesn't function like a traditional job, where you setup meetings weeks in advance and invite everyone from the team to attend (regardless of whether their presence is needed or not). Most of my interactions are one on one and strictly about a specific deal. I would highly discourage contacting them frequently if you don't have business to perform, as this could cause you to be ignored and labeled as a waste of time. Most entrepreneurs are very busy and have to allocate resources where they see the most potential for profit.

-Christopher

If you decide to fill in the pool, you will lose the value that pool provides - that could easily be $20k - $50k, depending on the condition of the pool and the neighborhood you bought in. With that being said, I personally would not want a pool at a rental property due to liability, but sounds like you plan to sell in a few years anyhow, so may be worth keeping.

-Christopher

If the smell is purely due to moisture, Home Depot sells DampRid in various scents. After a roof leak in my last project, I used this to pull the extra moisture out of the air and to remove that 'musty' smell. Worked quit well.

-Christopher

Hi Gary,

As a former resident of the bay area, I feel your pain. Make sure you add CapEx, Repairs, and Vacancy into your equation, these can be quite costly and will give you a more realistic grasp of what you may make. I usually budget 8% for vacancy and 15% for CapEx/Repairs.

Now, the rest is really up to you - if you buy that property you are going to be negative cash flow, even with your down payment. You should also consider what the current tax basis is on your current house, as you will be exchanging it for a much higher appraised value. Basically, you're speculating that prices are going to go up, which they may, but there is no guarantee and they are already unattainable or many people. Also, give consideration to if you really want to live in a duplex, which isn't as nice as living in a SFR.

And to clarify about Taxes, if you lived in Texas (Used to live in Dallas & Austin), you would pay more per appraised dollar, but there are many places in Texas where you can pickup a nice 3/2 for 100k - 200k. It isn't great for appreciation, but for your average person, the cost of living is quite low.

-Christopher