All Forum Posts by: Christopher Leon

@Brad Davis 

 Thanks for sharing the info, Brad. Although we are not in Cincinnati, we chose to not face the dilemma or participating in the Section 8 Program on purpose. First off, in the County we do business, it is not mandatory to consider Section 8. Second, when it does become mandatory, we hope to be not compliant with the program as we currently rent units for no less than 24 month periods. Their program does not allow that. So, it pretty much keeps us out without having to say we choose not to participate. 

 That being said, why would we choose to opt out? It's simple, I would fancy to say that more than 90% of participants do not have a good credit history. I have seen the less than 5% who actually had a decent history and I would be OK to renting to those folks, but, the fact is, the chances of getting that family is slim. I would much rather set my criteria high and get the folks that I want to rent to instead of jeopardizing the integrity of my units. I feel that most people take Section 8 because they are sold on the fact that "it's guaranteed income." Although that is true, why should I jump through more hoops to rent my product when a perfectly well off family who can afford my unit without government assistance, and has a track record of performing, can rent my unit without having to jump through hoops to tie the unit up, submit funds, and get the ball rolling? Just another business decision... 

Originally posted by @Joseph Weisenbloom:

@Christopher Leon The numbers on the property are good for cashflow but its not a high appreciation property. I factored in property management from the beginning so it would still cashflow with 10% gross rents gone.

I didn't consider owner financing is that something I can legally do while having a mortgage on the house?

 That you would have to answer yourself by looking at the mortgage, speak to your attorney, etc. I am just suggesting something you may have not thought of that could work depending on the aforementioned. I have heard of people doing it, knowing they couldn't, and the bank didn't say anything since they were getting they're payments. I am sure there is a proper way to do it - or certain circumstances render a success more than others.

 Let me ask you this, is the 10% of gross rents worth your time and potential liability if it goes vacant and your coming out of pocket, headaches, etc? I guess, I pose the question for you to answer, I don't care whether or not it does. It's nice to control assets, but I do believe in them serving a purpose and as along as it meets your comfortability, req's, keep it and keep her rented. Otherwise, maybe relieving yourself of a potential curse is the best thing for your life. I prefer to own property I can drive to within 30 mins - that's my comfort zone. Maybe yours is bigger? Nevertheless, I wish you luck amigo! Hopefully this has helped you in some manner. See you at the top!

@Joseph Weisenbloom Great question. I dont think anyone is going to be able to provide the answer for you - only you know what your comfortable with. In this business, you make money at the purchase, and cost-effectively managing the product. Sounds like you may not have made out on the purchase (depending on financing) and you cant do the latter by hiring a prop mgr for one unit and make the numbers work as good as they could be if you managed it yourself. This, of course, is just my opinion - maybe the market is different down there and PM's are better than in Chicago. Why dont you try this, offer some seller financing and earn some cash flow without tying your hands to their every complaint. You must speak with a REALTOR in your area who understand this kind of transaction so dont just hire anyone. Really have someone explain it to you backwards and forewards and make sure it works for you. You could earn maybe 2-4% a year on top of your current mortgage for the next 10-30 years (maybe sooner if the market gets hot and they can refi you out) without having to maintain the unit. Good luck

Originally posted by @Phillip Gonzales:

Good afternoon all so I have been taking Dave Ramsey financial classes over the last couple weeks. If anyone hasn't heard of him please look him up, but anyways my question is his beliefs and what he teaches on is about paying off debt, saving then invest as well as not financing anything and just paying cash. I wonder how many of you started out with an actual emergency fund and or paying off all debt before investing? 

As well, how possible is it to do cash purchases vs loans..FHA conventional etc? I am starting off with my first property soon just trying to gather as much info

 HI Lorenzo,

A very wise man hipped me to DR's teachings and it was seriously one of the best things that could have happened to me financially/business wise. I was already on my way to getting debt free via my own unfocused meandering, but, Dave's FPU course taught me how to budget, how to control my money, and use gazelle-intensity. I actually believe now, that if someone is starting off in this business, they NEED this course as bad as they need o2 to breath. You cannot invest unless you know how to take care of your own personal finances. Like Dave says (paraphrasing) the more responsible you are with a small amount, the more God will make give you to manage. I am proof-positive this is the case and would be happy to share my experience, but this reply is already going too long. So, I started off in this business completely debt free with an emergency fund and bought my first deal by getting a private lender - I used my emergency fund as a down payment (10%) and cash-flowed the deal via paychecks. The unit needed major rehab, so I opened a Menard's card at 0% interest - bought all my materials - fixed the unit - rented it after 5 months of fixing it up. Keep in mind, this was my first deal, never picked up a hammer or anything. I did all my self and lost my *** paying that mortgages, HOA dues, escrow for taxes, etc for 5 months. Thanks to FPU, I had a substantial emergency fund and I was able to get through that magical, yet, treacherous first deal. I still own the unit to this day, it rented with a long term tenant and cash flows! Your probably going to say I didn't follow DR's program (cut up credit cards, eliminate debt, etc) but, let me tell you, that course made me so advanced in terms of my gazelle intensity, and budgeting, that I fear debt for all the reasons that anyone else does. I decided to step over the boundary and use the debt, understanding it could bury me, and I used that intensity to pay it off. I payed off over $4000 in materials within the 12 month period and did not pay any interest. So, enclosing - Dave's program is incredible and, although, he is the man when it comes to personal finance, you have got to know yourself and what your capable of. Most people are just order takers, and they can't improvise or see past the method that is taught to them. I took a chance and it worked for me because I knew what needed to be done. Sorry for long post and hoped this helped.

 P.S. FPU is a great foundation builder, and once you get the hang of understanding yourself, your spending habits, and hard costs to live, it should be used as a guideline going forward in this business. If you want to go far, I think you need to keep his words close to heart, but break the shackles and make sound moves that you can control. For the people who do not have the desire to build a business or do what we do, following DR's course to the tee is the absolute safest, and conservative way to build an average net worth over a long period of time

Originally posted by @James Sotipalalit:

Originally posted by @Christopher Leon:

James Sotipalalit hi James - you could but I think it's premature. Nothing wrong with coming up with a clever name and double checking to see if that name is already taken or incorporated and stealing the website domain. If you have the luck, by all means do that, but, in the interim just get a Doing Business As (DBA) License. Atleast then you can do business in your proposed name that you can later incorporate. When running a start up, it's good to do it on a shoe string budget I have learned. Up to you though! Good luck.

Thanks for this and how do you get a DBA license and what your saying is I can run my real estate investing business without actually having a corporation name in the beginning correct?

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I think some others may have answered this already, but to get a DBA, it does vary state to state. In my state, you have to file for one at the county office, and then you have to publicize it in the county newspaper for 3 wks straight. Once you do this, they send you your license or certificate really and that grants you the ability to do business as XYZ co. Instead of your name. You can then open a bank account in your company name, accept checks paid to the company name, market yourself as that company name, etc. depending on what kind of investing your doing, you may want to speak to your attorney for your own protection. I operate as a DBA for my buy and hold properties. Attorneys do not agree with this - they say you HAVE to do an LLC at minimum, but, that's hogwash. I don't get sued. I do business correctly and I stay out of trouble - simple & plain.

Tyrell Ferguson Hi TF. Curt Davis hit it on the head. There is not incentive to bother a perfectly agreeable and paying tenant. They want to sell but they have no obligation to let you see it. I have learned buying property like this is an art. If this is your first unit, your better to start fresh and acquire your own renter. Once you familiarize yourself with the product, area, etc buying property like this sight unseen becomes simple and more profitable since time is money. Good luck

Tyrell Ferguson Hi TF. @Curt Davis

James Sotipalalit hi James - you could but I think it's premature. Nothing wrong with coming up with a clever name and double checking to see if that name is already taken or incorporated and stealing the website domain. If you have the luck, by all means do that, but, in the interim just get a Doing Business As (DBA) License. Atleast then you can do business in your proposed name that you can later incorporate. When running a start up, it's good to do it on a shoe string budget I have learned. Up to you though! Good luck.

@Tom V. You know what you have to do. Unfortunately, there is no easy way to do it. Get that money, evict them, lick your wounds and pick better quality tenants next time, and/or sell this property because it sounds like it's a very undesirable part of the market where you get poor quality tenants. This business is all about cost effective mgmt, and your learning this head on. I'm sorry this happened, but your responsible for buying the product and choosing those tenants. If you bought the property like this, then it's less your fault. I do indeed wish you luck. 

@J Scott @Doug Leedy This is better than TV Drama. Keep it comin' love me some debate! I think JS is winning..