All Forum Posts by: Danny Webber

forget 1%, COC and cap rates here... focus on principal reduction, appreciation (very high) and squeeze out some minimal cash flow where you can

1% rule (gcf or ncf), COC and cap rates are only accurate when looking at historical data so I am not a fan of using those for long term investment planning

Equity/appreciation stacking/principle reduction always outperforms GCF long term

look for area appreciations, business expansion, chamber data, room rents, taxes, hoa, etc....

and look for a sfr with garage apt or something similar or something you can park at travel trailer on to rent out... lots of options other than just sfr/dups

@Nicole Vessells

all virtual for now

Def if you can subdivide or if it can be converted to commercial. If not, you will need a diff strategy.

t

Who has the best lists for purchase now?

One of the large misconceptions in the REI space is that you will not need a lot of cash to acquire multiple properties. That is simply not true these days for a number of reasons. Certainly, there are exceptions to this rule. I myself have purchased numerous properties with little to no money down aside from closing costs. But..... there are always cash costs. These costs can be but are not limited: closing costs, holding costs, rehab costs, marketing costs, opportunity cost, etc...

Even using private/hard money and the BRRR method will almost always require some capital even if it is financed in the 1st or 2nd note in addition to cash out of pocket.

Below are some numbers I ran based on a 10 property portfolio acquired over 9 years assuming you purchased them in Texas and 3 out of the 10 were acquired using the BRRR method requiring less money out of pocket. I believe this is realistic in today's Central Texas Market.  

Q. How much cash or cash equivalent will I need to buy 10 properties in Central Texas assuming a 9 year acquisition time period? 

A.  +/- 400k based on my calculations + app 86k in reserves required by most lenders (6 months for each property)

Some alternatives to straight buy/hold 20% down purchasing as above include utilizing: 1031's, Non Qualified Loan Assumptions or other alternative acquisition strategies. 

Any and every strategy can work if applied at the right time in the right way if you are wanting to reduce the cash out of pocket. Your best bet in my opinion is to learn as many acquisition strategies as you can and when to use them.

Other items to consider: dti's, portfolio loans, equity stacking, partnerships, mortgage wraps + more

Danny

(excuse typos)

Do you mean a purchase contract or assignment contract to the end buyer?

If you have 10% down you can possibly get into a NQLA- Non Qual Loan Assumption or maybe a BRRRR

But, keep in mind you will still probably need closings costs/dn pmt money on the closing and on the refinance. Most PM lenders will not fund 100% of a deal (cost/rehab) to a new investor unless the LTV is awesome. They will want skin in the game of some sort.

If you do a second home it will have to be a decent distance from Austin to get through underwriting. You will also need reserve funds of some sort for the underwriters when you refi.

Doable but will require some zig-zags

You will not see much of a boost in rents or value doing this. Rather you may see it get leased quicker. I would set it up to be used as an office or bedroom. (small closet)