All Forum Posts by: Daniel Kramer

@Vincent Townsend Ha thanks man, I appreciate the support!

@Chris Hutchens We just closed yesterday. It's a long story, but that goes into point #5) closing a bank loan takes a long time especially if the property is not conventional, which most "deals" are not. This property had several issues that made it a nightmare getting loans. We had to switch a couple times and ended up at a small bank with a portfolio loan. But all that could have been avoided haha.

Are there any other newbies out there who have listened to hundreds and hundreds of podcasts but completely missed the first step of BRRRR... BUY?

My wife and I just closed on our first rental property, with great plans to renovate and refinance. But we bought it with a conventional mortgage. It wasn't until listening to podcast 327 where the process is really well outlined as a lead-in to David's new book where it really clicked with me that the BUY should really be CASH. It could be someone else's cash, a HELOC from your primary house, a personal loan from your 401k, or even hard money... but NOT a conventional mortgage. How did I miss this??? The day this clicked for me was like the day I found the real estate Jesus. I am born again. Here me out:

1) You get the good deals. The auctions, the off-market postcard/bandit sign leads, the wholesales. The best deals come when you can offer something else in exchange for total price... the convenience of cash. 

2) You don't show your hand to the lender. You don't come to them until AFTER you have the asset, which is fully renovated and sparkling, and you get the place appraised. If you get the place appraised before the renovation as part of your initial loan, they have some bias toward the value of the place. 

3) You get to refinance quicker. You are out that cash for your renovation time but that's really about it because it won't be long before you have your cash-out refinance check in hand. If you first bought with a conventional mortgage, you might be sitting on that seasoning period for a year or two. And you STILL had to pay probably 20-25% down for an investment property. Plus closing. 

4) Speaking of closing, you only pay for one closing. You might have some attorney and title fees for your cash purchase, but not nearly as much as you would have through a bank loan. Closing money is straight down the drain, you don't want to do it twice on one property in a matter of 1-2 years. 

@Saravanan Saravanan @Courtney M. @Cade Andersen

Exactly - decent town between Toledo and Detroit. Lots of people in the automotive industry as well as home to La-Z-Boy headquarters. Not growing but not going anywhere. If the numbers work, it could be a steady Eddy investment but don't count on any miraculous appreciation. Furthermore, I Iike the age of the duplexes. Old enough to get some value add from cosmetic updating but you don't have any lead paint or hazardous wiring like you have in older duplexes. It likely has cookie cutter cabinets, appliances, and fixtures that can be easily replaced.

Hope you're able to work out the no broker curve ball and best of luck to you.

@Gaston Chavarin

I like Zillow a little better but that's all the same info / on market MLS.

I also track auction.com and Amlin auctions, but I've never pulled the trigger on any as I need a little more cash to get in the auction game.

I particularly enjoy browsing through county records although I'm not sure if it's the most effective method. They have a nice "advanced search" feature where I can narrow such as the property type and school district. I've sent a few letters out that way, just targeting properties that aren't for sale but match what I want.

Dan

@Darius Ogloza

It would be super cool but my guess is that the big dogs are in there and taking every opportunity they can at slim margins with all the resources to make it happen. There are some vacant buildings and lots that could be developed but sometimes the old owners hold onto those until they get top dollar and you have to have a plan to turn it around. It's not my ballpark, pun intended, as a small-fry investor.

Dan

@J Scott @Christi Hawkins

Funny, I actually just listened to #311 yesterday while working on the rehab of my first BRRR.

@Michael Laoag

I have over 29 years of residence but zero years investing. I am in the process of closing my first one.

43605 is the east side. My mom actually grew up on the east side but I wouldn't get out of my car and walk around. Others that I avoid are 43607, 43608, 43609, 43610. 43604 is either downtown or really bad. Some people might find success in these areas but it's not for me.

There are some decent value mid-range places in 43606, 43611, 43612, 43613, 43614, 43615. In these mid-range areas, I like looking for Washington Local schools as a bonus but not to say stay off of anything in Toledo public schools. And like any city, a zip code covers a lot of ground and there are blocks/corners of those mid-range zip codes that I still wouldn't walk voluntarily for fun, but those first few zip codes I named have almost no good blocks/corners.

Hope this helps and best of luck to you.

Dan

@Michael Laoag If I could do a thumbs down with simultaneous farting noise, I would.

@Gaston Chavarin

There is plenty to choose from in Toledo. Without having a ton of detail, I would say don't fret if the first one you look at isn't the one, keep searching, but also know that no deal will be perfect. At some point after you've evaluated a bunch, be confident enough to pull the trigger. Big problems in houses can actually translate to big potential for the more experienced, but don't be afraid to take an "OK" deal that you know you can handle, build the confidence, and take on a bigger project on #2.

Dan