All Forum Posts by: Cliff Harrison

You will make more more money on your flip if you don't borrow money to do it.  If you have a lot of cash sitting in savings and not producing for you otherwise, using it the flip will make your flip more profitable.  The higher return on investment through borrowing others mention are higher based on the amount of cash invested, but the 'absolute' profit on the deal will be less when you pay the borrowing cost.  

So if you won't have multiple projects in parallel or other productive uses for your excess cash while your flip is in progress, I think it makes sense to use it in the flip as opposed to sitting in your savings account, collecting nothing but dust, while you pay points to take out a 12% loan.

 Manchester Avenue runs through some areas that I think are solid enough for the money, like around the Bannister intersection.  Give the address to the property or the closest intersection for a better response.

Congrats!! Very cool story.

It starts slow and unimpressively - but that $200 monthly will become an extra $2400 annually to throw at your second lowest mortgage.  Partner it with your original excess cash flow (I'll guesstimate $100/door at least) and you are knocking out a house in a couple of years.  Then when it is paid for also you will then have $400 or $4800 extra annually for the third lowest mortgage.  Then $600/7200, $800/9600, etc.   Then you have serious extra cashflow you can either stop and live on it or continue snowballing paying off more than one house per year.  You haven't spent one extra dollar that you were not planning to direct to early paydown anyway, but you get the fruit of your labor earlier and I think it makes more sense if you are planning to stop the w2 job relatively young.  This has been talked about on BP as the Snowball paydown strategy.  If you need money for deals also you can refinance or sell (1031) the free and clear properties.   I'd like to see some comparison math on this applied over a 15 year timeframe.

 Hi Andrew - congrats on getting to 20 units!  Are you doing your own PM and working full time?

On your question, in my opinion, you are better off using the excess revenues you had planned to rotate across your portfolio each month on one property and get it paid off completely.  This will increase your cashflow and then you can take this increased amount and move on to the next property.  I would target either the lowest principal balance or if you have a substantially higher rate or a worrisome balloon on just one or two in which case I would target those properties instead.   My feeling is that if a finance whiz did a mathematical model on these approaches you would come out ahead focusing on one specific property at a time for early paydown but I am not that whiz so I won't undertake to prove it with math.  It probably does not win by as much though because of the high savings on interest you will see on all the houses that you make early payments on.

10pct for capex is good but i think you are missing 10pct for expense in your cash flow figures. How old is the house and how old are the roof and hvac?  Best of luck with your investments.

I like having wholesalers in the market. I don't have the time to find all the off MLS deals and wholesalers provide a useful service to buyers and sellers. Buyer beware, protect yourself.

Sorry this happened to you. About a month ago I was involved in a deal with a local wholesaler/agent. The purchase and assignment agreements looked to be in order. He requested for $2000 EMD (on a $50,000 deal) payable directly to him. I declined and offered to give the title company $500 EMD instead or walk away. This was accepted, and the whole deal went through without any issues. Your episode makes me feel like I did the right thing in risking the deal even though I may have had a successful transaction either way. There is no reason to risk it if everyone is working in good faith.

I considered turnkey also to get started with. But after researching some turnkey houses being offered for sale including inspecting in person and also running comps it became pretty clear that prices are a lot higher than you would pay in buying and fixing, or even buying a good retail deal straight off MLS. I also saw the rent being marketed was really at the top of that neighborhood, and the proforma expenses were artificially very low. There are a lot of opportunities to be marketed out of your potential ROI when going turnkey. I think you might make some modest returns in the long run if you buy turnkey carefully and STAY invested (don't sell - you will take loses) but it will be smaller return if you did not acquire through a profitable turnkey provider unless you make expensive mistakes and then quit do-it-yourself investing. Even a mistake with do-it-yourself, if you don't quit, will teach you something. You will find it very difficult to really crush it with turnkey unless you find some special circumstances (according to me).

Be careful about where you buy property in KC.  Don't go for the highest cash flow areas, in my opinion.   Good luck.

I can't think of any challenges - only advantages.  In the normal course of your work you will come across opportunities.  And you can quickly assess the home condition and make 'as-is' offers without fear.