All Forum Posts by: Dave Savage

@Blake Anderson before worrying about conversion costs, I would check with the building inspectors in your area to be sure you can actually do conversions.   Many cities are trying to lower densities and won't let you do those types of conversions.  

IMHO I would continue to look for duplexes - maybe even consider doing some direct mail right to the owners of those properties in your area to see if you can find a deal.  I can't imagine the headaches trying to do a conversion with proper permitting, etc.  vs just waiting until a good double shows up

@Leon Stevens do you have any equity from personal properties, receivables from another business, etc to use for this line of credit?   It might be tough to get one established without a track record and/or equity.  

I would head to every local bank and ask though as you never know. Also check with other investors in your area through your local REIA to see if they have similar lines of credit.

@Account Closed I would attend your local REIA events and meet other multi family investors and find out who they use for a real estate agent. Then start working with that agent to identify properties as soon as they come on the market and be ready to analyze quickly and put an offer in.

In the meantime make sure you have a mortgage lender identified and get pre-qualified to strenghten your offers.  

@Dominick Davis I would consider trying to become a PM for an apartment complex etc in addition to your full time job so you get some experience, lower your monthly expenses while rebuilding your credit.  

It will be hard to convince someone to do a 0% seller finance deal with no experience, poor credit, and little cash.  I would look to gain experience over 18 months while building your cash reserves and credit.  

@Kusiimwa Micheal attend your local REIAs, find other investors and offer to Drive for Dollars for them in exchange for learning the business from them.  Free education and you might be able to build it into a partnership.  

@Jay Leisten I agree with @Ben Leybovich on this one.   It is hard to flip a deal with that type of capital all cash and make a profit.  

You could consider two options different from your original plan:

1. Find a HML or Private Lender to bankroll a $50k property that may only need $10k of material and the rest is your sweat equity. This would allow you to put $10k down (will be required by most HML) and then the other $10k into the property

2.  Partner with another investor where they put up the cash for the purchase and you put in the cash and sweat equity for the rehab.

Otherwise you need to find a seller that would sell it to you with seller financing but without significant marketing budgets and expertise this is hard when you are starting.  

@Anthony Deringer I would talk to the city building office you are looking to buy in to see if they would allow the up-conversion in # of units before counting on that additional income.

I know here in Rochester, NY they would only approve this change in very limited situations, and most likely it will be difficult in your area as well.  

Personally I would keep the leverage on your SFH as it should be cheap money and will allow you to leverage into a bigger apartment building or multiple buildings to diversify your risk using that capital. You can keep your down payments high on the apartment buildings to lower your risk.

Not using the equity in your house to leverage into greater income producing activities would be a losing proposition over the long term from a return prospective even if you are very conservative with your leverage as you are an experienced investor and should expect to make safe bets.  

@Mike C. start looking 1hr outside of the city and you will find many areas you can invest in with a lot less money.   You are going to have to drive there but it will allow you to get started.  I am sure other investors can point you to those areas, but driving north through Jersey leaving NYC a few weeks ago I saw many areas that looked like they could be in a reasonable range not that far away.  

@Mason Keith what do you think the ARV of these houses will be? That will affect the value of this proposition.

One other thing to consider: You need to find a bank that will do a cash out refi without 1 year of seasoning which can be done with some local banks here, but you need to check in your area, especially if you are holding these propertieis in a LLC.