All Forum Posts by: Curtis Steineke

@JBeard, with only putting 25-30% down, are you ever challenged with having enough rent to cover the cost of the mortgage and expenses?  I am not opposed to adding something like that to my plan, just tying to weigh everything out.   As far as the like property, our current attorney and the individual who is doing the 1031 exchange for us have confirmed that rental properties meet the like property requirement for our exchange.  Thanks

I am in the process of taking what to me is a large sum of money and invest it in real estate as part of a 1031 exchange. I have always been taught that debt is bad and don't want to use all of it to finance properties even though I understand leverage, I am trying to strike a balance in my investment plan between having some paid off and some bought with a loan. I am looking to get both cash flowing properties like a duplex or quad plex and a couple single family homes. I want to buy at least one out right cash and the other two or three with a loan putting about 35-40% down on each of the two or three that I loan. I am also buying a SFH that I will be using for a all cash purchase, rent and then live in to cash out the money later on down the road to avoid paying capital gains tax on it. My plan is as I retire from the military I have a house to live in that's paid for and a steady income - retirement check and property income. I am still on active duty in the Army for a few more years so that helps with the conversion from rental to private residence timelines. Is this reasonable to strike that balance. Ideally I would like to have the loans paid off by the time I hit retirement age in about 20 years so going into my later years I have zero debt at retirement time. I would like to hear your experiences in dealing with a large sum of money and making smart decisions in striking the right balance of investments etc. or if there is such a thing. Thanks in advance.

I know most of these are diaries of peoples completed deals but my first time out was a miss but figured I would share it with the group. I had found a 3 bed 1 bath property 1,000 sq ft, FMV at about 120K to 150K in the neighborhood depending on the size, this was a smaller home so I went with the low end figure for my math. I went and researched the property, ran title check etc found out it was a one owner since 1989 when bought new, owner took out a mortgage from the bank for 40k back in 04 was now in foreclosure at 15K, owed 5k in back taxes had one line for 2K against the property, other debt for about 15K not attached to the property.

Made some calls and lined up a friend to go bid, had the plan to wire the money etc. Verified Monday afternoon that the property was still going to auction, got up this morning and called the Sheriffs office one last time and found out it had been canceled. I know there had been a lot of traffic on that property and given the amount of equity in the home, I was interested to see how the auction would go. 

I wish it would have went different, but I did follow through the process and got a feel for what I was doing so it was worth it to me. I spent some time - I didn't keep a good time log, figure about 2-21/2 hours on various phone calls and internet time researching the property, neighborhoods, talking to friends, bank, utility companies, etc. and about $130 bucks between the title search and a couple of records searches but I count that as part of the education process.  Since I haven't golfed the last two months, I will call that hobby money invested in my education, I kept all my spreadsheets, documents and notes in a file so I can reference in the future and keep on looking for the next deal.

Hopefully someone got a win today!!

Thanks to everyone for the responses.   I can tell you what I know about some of the pros and cons of buying in Hawaii, but that's only from being here for less than a year and is based on observation.  Right now the market is really strong, home prices and condos are high.  Some of that is from foreign investment, ie the condo that we live in has 40 some odd floors, we are one of two families living on our floor the rest are empty or owners who rarely use them, there are  about 8 units a floor.   The unit we lived in was owned by an Asian family who came here and used it once a year, till they sold it to our current landlord.  The same unit 2 floors below us (37th floor, 2 bed 2 bath, 1,100 sq ft) is listed at 1.2 mil the last time I looked. You still have to pay condo fees on top of that etc. Also some of the condos in Waikiki (and maybe other areas?) don't allow or short term rentals, (anything under 6 months) so you have to make sure you do your due diligence when researching a particular property. There are less expensive units out there and even more expensive than the particular unit we rent. We chose ours for the location  - right across the beach from Ala Moana Beach/Park and it was within our BAH range.  

Many of the military members who live off post live in Mililani, Eva Beach or Ko Olina.  Homes out there are more subdivision type look to the layout and run anywhere from 400K on the low end to about 800K on the higher end.  There is a good rental market with all the military locations here, and from an investment standpoint you can look up BAH rates online and see what the military members are getting for BAH.  Single Family Homes and Townhomes do well with the military.

North Shore area has some vacation rental homes, but you will pay a premium for beachfront/ close to beachfront property. The area is nice though, congested in the winter time - good surf times-. I don't know to much about the area other than I cant afford to live there, even the foreclosures were expensive (its all relative- its probably not much more expensive than some areas in the mainland) but I am used to military towns and buying a SFH, 3 bed 2 bath for about 150k-250k.

I hope I gave enough info, I could have probably added some homes that are for sale or rent but if you go to any of the online sites, you can get a feel for what you get for your money.  I probably left some things out, maybe some of the other members from Oahu can weigh in.

Hello everyone,

My name is Curt Steineke, and am new to the real estate investing world.  I am currently stationed on Oahu for the next 3 years.  I am planning on retiring from the military in the next 5 or so years and returning back to South Dakota, I would like to have some rental properties set up before then to help with the transition.  I have a 1031 exchange to do on some property currently owned (in the process of selling) to help cover the cost of getting my first few properties purchased and running.  Looking forward to reading the forums and learning about real estate investment, some buy, sell and hold, some flip, anything to make me smarter on real estate investing. 

Another option would be to offer lower/ waived security deposits but that is pretty risky. We've rented a couple of places that offered lower security deposits in Colorado and Tennessee.

One thing to keep in mind for your tenants, depending on what their job is and what other business you run there could be an ethics/ conflict of interest issue. I.e. The military member works for the contracting office and you also run a lawn care business that happens to be bidding on an upcoming contact for the military instillation. Now those would probably infrequent occurrences but you get the idea.

Lots of discussion on here about smart and going to school, just because you can perform a technical skill, does not mean that you are limited in your intelligence.  Put a welding torch in the college educated kids hand and lets see him repair a bridge or pipe fitting, now who looks smart.  

For an interesting perspective on education, take a look at what Ken Robinson has to say.

https://www.ted.com/talks/ken_robinson_changing_education_paradigms

 One thing I have noticed when it comes to real estate, the people on TV make it look easy, maybe it is depending on your skill set.  Yet I see on here and in other forums, books etc, stories of people who got in over their head.  Regardless to what business you are in, making uninformed decisions can be painful.   The challenge is understanding how to make all this real estate investing work.   Whether its worth paying someone guru or not, I cant say, never took one of their courses.  I think taking 30-40k and invest that money in real estate and try working with a good quality mentor would pay more dividends but that's my opinion.

@Nick L.

Thanks for the advice, I will call a title company and see what they can find out on the property.  I hadn't thought about getting with the owner to buy the redemption rights.  I can try and reach out, given they haven't paid their taxes and the other judgments, I could certainly do that.  Is that something a regular real estate agent can draft up, or would it be better to get a lawyer to draft that up?   I never really planned to buy an auction property but this one has good potential, lots of risk, but good potential so I figured I would look into it.   99% of the last years foreclosure auctions were on homes with no equity but this one has good equity so I figured it might be worth.it.

I am looking at a home in South Dakota that is coming up for auction.  The mortgage amount is less than 20K, homes in that neighborhood are around 120k on the low end, 160 on the high end. Its a one owner built in 1989.  Owner took a mortgage (2nd??) in 2004 for 40k and  still owes about half. Had some financial issues around 2013 by the looks of it.   The question I have is there is about 17K against the owners in the civil and small claims courts, 15 K to a bank (Discover), 2k to a local business and 300 to a local business.  There is 5k in back property taxes, I am ok with covering that If am responsible if the house goes for a low enough amount.  If I buy the property at the auction will I be responsible for those other  judgments?   Also SD is a judicial state and the owner has 180 days to file back to claim it. If I end up winning the auction and paying the property tax will they have to cover the cost of the back taxes as well or just the price that the house was sold at for the auction? 

Any help would be appreciated.