All Forum Posts by: Matt Crusinberry

@John Morgan, I don't disagree with Dave Ramsey all the way in regards to disliking debt, or you for that matter. But not all debt is bad (i.e. money you borrow from the bank at 7% and re-loan out at 20%, thus making 13% with other people's money). This would be considered good debt, and it's re-loaned out on properties that you purchase for more income. A good portion of this is done by purchasing and working the right deal. 

Anyway, if I was in your position and I had a property free and clear, I would contact more lenders. Find out what they can do for you as well. Don't just get one person's bid, get a lot of bids from these banks. Smaller banks are usually better, because you get a chance to build a relationship with them and that will go far. Also, I would just be careful not to over leverage. Make sure your property is cash flowing (i.e. after expenses, including fixes (%), cap ex (%), and vacancy (%) for your area). If you're still cash flowing after pulling all that out, go for it. If you find out that you can do a better deal with something else, sell the property and do a 1031 exchange for a multi-family (to alleviate capital gains taxes). I hope this helps, and good luck.

@Rashaniqua Cason, As per Fannie Mae, you are able to get 10 investment properties. Then you may also use portfolio lenders (banks) to have as many as you qualify for. Again, these are all dependent on your ability to qualify. So the question would be, how many do you qualify for? The things you'll need to be concerned with is... credit, debt to income ratio, your ability to have down payments (how much cash you have). When you pass 4-5 or more, these requirements become more stringent. If you meet banks (portfolio lenders) or the government's requirements, there isn't a timeline (with the exception to seasoning, but that's lender dependent to include Fannie which is typically 6 months ((if I remember correctly)), but it can be shorter for other lenders). You can also put them into business' you own, but if it's new (LLC's)... the requirements are pretty much the same (your ability to pay them back/off).

There are also other ways to acquire properties as well (e.g. owner financing, partnering, etc.). This is something that you may want to check out for future investments. Good luck and I hope that helps. 

Although it's more difficult, HELOC's can be obtained on an investment property. Also, I personally prefer to refi a property so I can have my funds back. This allows me to use that money to continue to invest in more rentals and refi again (Buy, Rehab, Rent, Refinance, Repeat... BRRRR). Also, you get better rates on a refi over the long term.

@Rashaniqua Cason, You can either refinance your property or do a home equity line of credit (HELOC) on it. Both have different stipulations, which I suggest you look into. Banks will typically lend from 65% - 80% of the property's value (LTV). I don't know how much you have into the property or what it's worth, but I would do some basic homework on the subject. Good luck, and PM me if you would like some help.

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@Account Closed, I don't buy properties with a lease option, I sell them. I wouldn't allow someone else to do a sub-lease either from one of my properties, and I think that is what you're getting at. You may need to be more specific when you write your question. Like doing a sub-lease to rent it out to someone else to buy it later. Let me know if this is what you were trying to get at. Thanks

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@Account Closed, I am an investor as well, and that was from an investor's angle. I'm not sure I follow you when you say from an investors angle. An example would be, I buy a house at 50k, I put 20k into it. The ARV is 100k. I rent it out for $1400 a month (plus $1400 security deposit). I than have tenant give me 3.5% down ($3,500) as an option to buy at my ARV. I also charge them $100 extra a month that I put toward closing cost for them (if they go to closing). They pay me $1,500 a month. In my lease I have them pay all utilities, do their own maintenance (i.e. snow removal, lawn care, etc.), and tell them to take care of the property as if it were theirs. The lease option is 3 years in which they have to close on the property, not before or after. I pay taxes, insurance, and anything associated with the property that would fall into capital expenditures. It's still my property!!!! At the end of the 3 years, if they go to closing, I give them $7,100 back for down payment and closing cost. 3.5% FHA loan (3,500) plus 100 bucks a month set aside ($3,600) equals $7,100. If they're unable to close, I keep the $7,100 and we either renegotiate or they leave and I find new tenant. Now, please help me understand what you mean from your stand point as an investor?

To alleviate confusion as well, and make sure we're talking about the same lease option...

"A lease option (more formally Lease With the Option to Purchase) is a type of contract used in both residential and commercial real estate. In a lease-option, a property owner and tenant agree that, at the end of a specified rental period for a given property, the renter has the option of purchasing the property." (wiki gave me this little gem, mostly because it was the first thing that popped up when you google it.)

@Jeff R., How would it be a guesstimate? I use it as a way to prove a point (example) with the large gap when dealing with the 70% rule. And yes, that's what I meant when I said without closing cost, which would come from my 30% as well (or not, deal dependent). The 70% rule would than be utilized as a quick check on property value (to me in PROFIT) for me to see if this is a deal. This is much like the 2% rule or the 50% rule of thumbs, they're just quick references to see if I want to move forward with a deal. And I mean move forward in the since of run my numbers a little closer, like having my contractors out to view the property. However, my aim is at 70% or better when I do houses that are $250k and below (ARV), or I find another one.

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@Nicole Obregon, I would start with family and friends. Let them know what you're doing and/or trying to accomplish and go from there. Continue on down the line with people you know from other organizations/groups that you meet up with (e.g. church, etc.). Just try and spread the word as much as possible, and have your friends tell their friends, all the way down to acquaintances.

You also may want to pick up the book by Matt Faircloth (Raising Private Capital). Good luck!

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@Juan David Maldonado, Sentimental value is going to be a tough one to over come, however I would run the numbers and show her the possibilities. You may need to walk her thru the entire process, but if it's worth it... maybe she'll get on your page, especially if it pays for her living standards. You may also want to try and convince her that it will still remain in the family, and that it will for the foreseeable future. I don't know that I personally would attempt this action though, but as long as you can sleep at night. Good luck!

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@Account Closed, How we do ours is we have the renter fill out the paperwork as a normal lease, which includes everything a basic tenant would pay for that property (i.e. utilities, and any associated maintenance, first month rent, security deposit, etc.) if they were renting from us. Then we have them fill out the option to buy paperwork with a 3.5% deposit (FHA loan) of the sale price of the property. We also charge an extra amount that we give back to them for closing cost if they're able to close at the agreed upon date. We typically ask for 3 years. I know other's break it down differently, but if you want more specific stuff feel free to PM me. I will help where I can, and there's no need for payment. I hope this helps and good luck!

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