All Forum Posts by: Chris Coleman

@Shawn Dulan you don’t have to be a non-profit to give back. There are a lot of very successful for-profit businesses that give back plenty...both as a formal part of their mission and informally behind the scenes.

If you want a great example of one who has formally made it a part of their business model, you should check out Lifebridge Capital with Whitney Sewel.

I will tell you that setting up and running a non-profit actually has more compliance requirements, more paperwork, and more associated expenses than just operating a LLC.

@Mat O'Grady first of all, you seem like a good person for considering this and even asking the question. Many people would not even consider helping this family that they don’t even know if it’s not in their best interest. But you are considering it, so good for you.

If you have the means to help someone in their time of need, then yes, you should always try to do the right thing for the right reasons, and you will find blessings by doing so.

But we know these issues are not always black and white, and sometimes you have to discern the details to know what’s really best to do.

In this case, I would ask a few question, like:

1. Do you actually have the $35K to purchase the property?

2. What does the family actually need the money for right now? Will they use it wisely for a true need?

3. How much is $35K relative to the value of the property today? For example, would $35K be overpaying more than what a 20% downpayment would be?

Finally, if you’re married, then I recommend that you and your spouse be in agreement about this as well.

Again, I believe the fact that you even posted this question shows that you’re not a greedy person. But maybe try to get to know the family a little bit, answer the above questions, and trust your gut on this one.

@Payal H. do you mean the Midwest as in Kansas City, St Louis, Indianapolis, etc? If so, these can be great places for single-family rentals.

But here is an article that may help you evaluate potential markets.

https://www.turbotenant.com/blog/the-best-places-to-buy-rental-investment-property-in-2020/

@Lee Gardner you are correct about the pros of a HELOC in that you're only incurring interest on the amount you take out rather than an entire loan amount.

One thing to consider with HELOCs is that they can have a variable interest rate. So make sure you know the maximum amount the interest rate could increase, both annually and in total, and calculate what your monthly payment would be in this scenario to ensure that you would still be cash flow positive.

Of course, since we’ll likely be in a low interest rate environment for several more years, you’re probably pretty safe.

@Eddie Starr I have used a particular broker who is with Rate.com for investment loans, and I've been very pleased.  I don't know the answer about the 3% down on investment property loans. But let me know if you want the info on the Rate.com broker I've used. 

@André Hennig yes, lenders will want to see your income.  For conventional loans on residential investment real estate, lenders want income, debt-to-income ratio, and credit score...similar to if you were purchasing a primary home for yourself.

@John Moss it really depends on your goals and how active or passive you want to be in the investment. I

If you want to be very active, then $50K can Cash Flow pretty well finding a Class C/B property, renovating it, and renting it out using the BRRRR method in certain markets in the Midwest or Southeast. You can lookup what the BRRRR method is here on BiggerPockets. Again, this strategy will require you to be VERY directly involved.

If you only want to be partially active, then you can definitely purchase cash-flowing Turnkey properties with $50K in places like Kansas City, Memphis, Oklahoma City, St. Louis, Jacksonville, and others. Again, you can lookup what the Turnkey method is here on BiggerPockets, as well as Google. The nice thing about Turnkey is that the rehab is already completed and it generally cash flows from the first month of purchase.  Again, this is a buy and hold strategy.

If you want to be completely passive and have essentially no involvement in the property, then you can invest in multifamily syndications with as little as $25K-$50K. While not all do, there are plenty of multifamily syndications that provide Cash Flow from the beginning on a monthly or quarterly basis. Be aware that many of these require you to be an accredited investor, so you'll need to know that.

If you do not want to hold rental property, then you can look into using the $50K for a fix and flip.  Although that would be on the low end of the price range depending on your market.  You would most likely need to partner with a hard-money lender or investor in this case to supplement your $50K.

@Paul Latendresse I have great experience with turnkey single-family rentals.  From my experience, I believe there are several key things that are necessary:

1. Find a good turnkey operator who has plenty of experience, knows their markets very well, and treats you extremely well as a client investor.  Research, check reviews, and interview a handful of turnkey companies before settling on one to work with.  If you plan on purchasing multiple properties over time, go with someone whom you are confident you can build a relationship.  Like any other investment, invest in the people first and the deal second.

2. Do your own homework on the market and the pricing.  When purchasing a turnkey rental, it is essential to do your own market analysis and know the general range of comparables in the area in which you’re buying. Don’t simply assume that the turnkey company’s price is a good purchase price for the property.

3. In general, stay away from the very low end of the turnkey market.  Of course you don't want to overpay.  But going too far on the cheap end of the market is simply asking for tenant turnover and unexpected repairs, all of which cost money, and negate one of the main benefits turnkey property in the first place, which is to be more passive in the investment’s management.

4. Make sure you enlist very good property management.  Property management can make or break your investment.  I prefer turnkey companies that have their own in-house property management team. But if not, make sure the turnkey company has a highly regarded and long-standing relationship with the property manager whom they refer. And don’t just take their word for it. Do your own homework, check reviews, get other referrals, and make sure you’re comfortable with the property manager’s reputation.

@Jaron Walling first of all, awesome title to your post!  Becoming a full time real estate investor is a great goal and very much achievable as you can see from so many success stories on this site.  Start by educating yourself as much as possible on residential real estate. Blogs, forums, podcasts, books, etc.  Develop a plan and start moving forward one step at a time.

You can find a lot (I mean a lot) of posts on BiggerPockets about the pros and cons of getting a real estate license and whether or not its beneficial to your investing.  Read and learn more about it, talk to other investors who have done the same, and follow sounds advice.

But one thing to keep in mind is that you do need to do something that will generate income for you. While yes, there are plenty of stories about those who start in real estate with "no money" and build their way up, the truth is it will be easier and probably quicker if you have solid income and money to start with.  Becoming a realtor, or whatever you do as "job", find something that will help you generate the income with which you can invest.

@John B. the initial capital contribution is the initial amount of funds (i.e., capital) that each Member of the LLC put into the business when you first started it. Additionally, if you contributed "sweat equity" to get the business started, then you should assign a reasonable monetary value to your work as part of your capital contribution.