All Forum Posts by: Steve A.

Hi Mike,

Sent you a text since if you're in Indy, you're probably on the verge of sleeping.

If you're in California, however, let me know and I'll give you a call!

Hi,

I have run out of room based on my W-2 income to finance more properties. I have an 800 credit score, a master's degree, and several rentals, so I am more creditworthy than average.

I am seeking houses in central Indiana (not opposed to more far-flung areas like Crawfordsville, Arcadia etc) that will rent for 1.5-2% of purchase price. I am indifferent to multifamily or single family.

If you can offer reasonable terms and have access to properties fitting this profile, I can buy quite a few from you. Please email me at scalexander686 AT gmail DOT com or PM me here.

Thanks

Actually, it looks like I was mistaken. 95% LTV puts me in FHA territory, which I do not want to deal with again. What is the highest lenders today will go on a conventional cash out refi? 80%?

Hi Everyone,

My house zillows for $242,000, Some of my lenders have valued it at this amount when financing my other properties. I bought it at the bottom of the market a few years ago, and as such the loan balance is only $110,000 plus a $26,000 HELOC I used to buy another property. The main loan was FHA and as such, comes with a nasty $111/mo PMI. It's at a 4% rate.

Currently the total payment for both mortgages, including taxes, insurance PMI, everything, is $1035/mo. By my calculations, if I refinance to a conventional loan at 4% and at 95% LTV, I'll have a payment of $1067/mo and 90 grand in my pocket. With this 90 grand, I can buy myself about $1800 of free and clear monthly cashflow, which is HUGE for me right now.

I've looked a few places and haven't found anyone who does cash-out refis for 95% LTV. For instance, my mint.com account says "No Loans Found". I have a 750 credit score and good W-2 income.

Can anyone who has gotten one of these recently point me in the right direction?

@mike

Haha well honestly the 2% criteria is important to me because I've been doing alot of reading around here and it seems to be the gold standard. Realistically, I would accept a nice SFR in an appreciating area for as low as 1.5%. I am concerned primarily with cash flow, not appreciation, though, and this is why the 2% rule seems particularly relevant. As far as cash flow is concerned, I would like to do 24 deals in the next 12 months. The bare minimum I would find acceptable would be a $200 net per month per deal after accounting for the 50% rule and the mortgage. Hopefully I'll do better than that. I picked up a duplex today that should do $400, for example. I can't give a number based on units or doors, since I'm doing a blend of SFRs and multifamilies and they are different animals. Each of these deals assume a 60k purchase price and 15k down. So if I did a 120k deal with 30k down, I'd want at least $400 net per month, for example.

As for ROI, I haven't really though about it to be honest. This is all play money to me as I live on barely anything (single, roommate, simple tastes, paid off everything). The absolute cash flow is much more important to me than squeezing out more ROI, although by all means it doesn't hurt!

Finally, I'll be taking 30 year mortgages and ideally will keep acquiring for at least the next 10 years before starting to deleverage. The only principal paydown will be from the mortgage payment. This could change if I hit a limit on the number of properties I can acquire or some other unforeseen issue...then I would have to start paying them off a bit quicker.

I should also mention I have no car payment and maintenance is maybe a couple hundred a year, no student loan, no wife or kids, very healthy, only real obligations are $900 house payment, $200 in utilities, $200 in gas, $300 in food so my overhead is pretty low here. I'm not going to let loose and have fun until the job is done.

@Mike D'Arrigo undefined

@Barry Ratliff

Financing will be secured using my business partner's income, which is substantial.

@Taylor Jennings

Ah! Can't believe I missed this. When is the next one? Inbox me and I'd be happy to exchange phone numbers.

Wow, the outpouring of help is unbelievable. Thanks everyone!
@Mike D'Arrigo

@Mike D'Arrigo

@Mike D'Arrigo Thanks for the words of warning. I do agree that multifamily tenants are of a lower quality on average. I would indeed like to grab some SFRs for the portfolio, but it's difficult to find ay locally that meet the 2% rule. I think I'm going to do it backwards...just a couple risky multifamilies up front to make sure I don't need to go back to a day job, then start adding some lower yielding, safer SFRs.

@Shawn Holsapple I definitely agree there are slim pickings on the MLS. Luckily I have a decent intuition as to what renters like, being a renter myself for many years. I actually picked up my 2 latest properties (SFRs) off the MLS for $42k and $54k and both rent for $750. So not quite the 2% rule but not awful, and both are paid off. I'm going to use leverage from now on, though.

The issue with these uber-cheap homes is that no bank will finance me for a home like that. The minimum appears to be $60k..that way I put $15k down and the bank finances $45k...they seem to have trouble doing loans for less than this. I want traditional 30 year mortgages.

I'm hoping for rents in the $1000+ range to keep tenant quality decent, from now on. This is for a SFR that I buy for the price I quoted. However, I have higher expectations for my multifamilies. I'm looking in Noblesville, Home Place, Shelbyville, Martinsville, Sheridan, Westfield (yeah right) and a couple other small areas. I mostly stay away from Indianapolis because I am not experienced enough to deal with it yet. I know the area well and can tell a good neighborhood from a bad one, but I am nervous. I do own a house in broad ripple that appreciated 200%, but prices there are just too high to come near the 2% rule these days.

Any advice?

@Yang Xiao I am not preapproved because I am currently closing on the last rental I can finance by myself and do not want to rock the boat. Immediately thereafter, I will be applying jointly for mortgages with a guy who has 5 years of 1 million $+ income. We both have FICO scores near 800. It should not be a problem. Do you do turnkeys? If so PM me.

@Andy Robison ndy and @Rob Anderson I worked a cubicle job and hated it until I started doing internet marketing. It's pretty much passive. It will probably not last forever, so I want to accumulate as much RE as I can, while following the best practices, to ensure I never go back to the cube. I bought the properties cash, I have never received $ from any relatives. Is it really true that I could go to an REI meetup and find way more opportunities than by simply sitting here browsing the MLS?

@Jynell Berkshire I have no problem doing a rehab, but as far as I know (noob alert) I can't finance any properties traditionally that cost under $60k, for reasons stated above.

Thanks for your analysis. This is what I was looking for. 54k is totally fine, especially given my existing 20-25k. At 28 years old, I should be able to compound that exponentially through the years.

I would like to concentrate on duplexes and up for te increased yield due to economies of scale and the emphasis on cashflow instead of appreciation.

Hi guys,

I will have $15-30k per month to invest in buy and hold rentals in the Indianapolis market over the next year. I've been here for 28 years so I know the area fairly well.

The plan is to put 20-25% down on multifamily residential properties. I do not have a full time job and can manage these just fine. I can also devote every single day to finding deals.

Where can I find the best deals on property in this market? Straight off the MLS? Wholesalers? I want to buy every single one at the 2% rule mark.

My goal is to make a six figure income with these by the end of the year. I already have about $2k net per month of passive income coming in from my other 5 units.

Any help as far as acquisition is concerned is much appreciated.

Hi!

So I am in a rather unique situation where I made quite a bit of money suddenly and thus cannot obtain financing for investment properties, since it's based on the DTI from my W2, which I have already maxed out.

One of my business partners would like to do a real estate joint venture with me. My proposal was this: we buy properties using his DTI capacity (which should be enormous as he makes alot of money) and in exchange he gets to write off all of the depreciation from the property, because, as I understand it, only one person gets to write this off anyway.

I use a property manager for my current rentals and I plan to keep them for this venture. However, I am quickly learning that rental real estate still isn't quite passive even with this.

The plan is to purchase one small multifamily building (duplex, triplex or fourplex) per month with 25% down.

I am worried that I may not be seeing the long term repercussions of letting one person write off all of the depreciation. Does this seem like a good deal for me to you veterans or should I try to work out a different arrangement? Without my partner, property accumulation will slow from 1 every month to 1 every 6 months or more. I actually quit my desk job, both since it was killing me, and to do real estate acquisition full time. So the prospect of sitting on my butt for 6 months is not appealing, since I haven't quite "made it."

If we plan to transfer the properties into an LLC using a warranty deed, is this going to create issues as far as having one person write off the depreciation as well?

Thanks

@Vanessa Blais

Hey Vanessa! Wow, sounds like we are somewhat similar!

I do have an LLC set up, with a min wage salary and the rest set up as S-Corp "distributions" to avoid nasty FICA taxes. Only thing is, I've only been doing IM since October of last year and REI since last month, so the banks will consider this income, but not until at least next year, and probably not until the year after that. This is what they're saying, at least.

0% of my traffic comes from Google or SEO. It's all paid. My primary sources are RTB inventory (Sitescout), PPV (Trafficvance), and CPC based media buys like Revcontent, Adsonar, Adblade. Maybe I need to have more confidence in my ability since I've come this far, but I feel as if at any second this could all come tumbling down. I'm an affiliate, so if an advertiser yanks an offer, I'm done (well technically I could swap in another similar offer but it usually doesn't perform the same and requires testing all over again). There's also the dreaded "burnout", or "banner blindness". I have yet to experience this since I haven't been in the game long enough, but for instance one of my most profitable sites has 830,000 visitors a month. I don't know if that's enough to keep a long term campaign going relatively passively without burnout.

My affiliate network owner has also set his global redirect as one of my landing pages and we are splitting the money...this is nice because it costs $0 and throws off anywhere from nothing to $3000 per day (I get half). But again, who knows if this will be there in 6 months.

Basically I've lived in Indiana my whole life, and it's not exactly a thriving metropolis for a 28 year old single guy who still likes to have fun, isn't interested in a family, and hates cold weather. I want to get out and see the world so I can find a place I like, but I must do it responsibly. The last thing I want to do is return home broke and take some gig waiting tables with a master's degree, haha. I think the probability of that happening is near zero if I have $4,000 per month coming in passively from REI, even if the internet eventually fails me.