All Forum Posts by: David B.

Hi All, 

Seeking an excellent property manager for a property in Old North, Columbus . This would be my first property in Ohio and I’d prefer someone who can really work with me in the future to evaluate property as well as manage them effectively.

Would love any companies/people you recommend. Thanks! 

DC 

Thanks for all your responses guys. Very helpful. 

upon consideration, I think the loan was probably an short term ARM and that's where the misunderstanding came from.

But all of this is great info. Much appreciated. 

 Last question - do I need to create a separate business for this? Licensing? Anything like that? Or can I simply reach out to title companies, join real estate clubs, and begin sourcing borrowers?

 Joe - fantastic advice. I'd considered getting into lending but frankly am uneducated as to the steps I would take (which you've kindly given some pointers on). Some follow up questions if you don't mind...

1. So given that you've suggested lending, I'm assuming you wouldn't necessary use the credit line to actually purchase real estate? Too risky? Perhaps the profits could be saved up to invest in real estate instead. 

2. When you say "borrowers can be found at any REIC" does that stand for Real Estate Investing Company? Would I simply contact these companies and offer lending to them? What other potential strategies for finding borrowers are there?

3. How high do you think I could (or should) reasonably charge interest on the loan? 10-12 percent roughly? Seems like I'm trying to make 7% over the interested charged to me on my LOC.

4. Do you mind explaining how a title company would do the underwriting/paperwork? Would I simply contact them and bring them the borrower and have them write it up (for a fee?) 

5. What happens when/if a loan goes into default? Am I able to collateralize against anything? A house for instance? not sure what standard practice would be. 

Appreciate the thoughts Joe. Treat me like a newbie here... I'm very interested in this strategy but need a little more understanding. 

Best

Hi there, 

I was recently interested in investing in a ten unit complex, and the lender I was working me with quoted me @8.5 percent. Also, I've watched the SFH market go into the 6-7.5 percent rates.

however, when I was working with a friend to help underwrite the ten unit complex deal, he told me he was getting quoted on rates in 5.5%  range. I also heard someone say this on a podcast recently.

is it true that commercial lending is cheaper at the moment? Should I be looking more for commercial deals cuz of cheaper money?

Would love your insight. Thanks! 

Hi everyone! 

I’m looking for advice/strategies on how to use a 950k line of credit that is provided to me through my bank. This is due to the assets they currently manage in my behalf. 

I’d really like to utilize this money effectively to purchase real estate and build more wealth, but I’m relatively new to the game and not sure what strategies I should implement to grow while protecting myself.

Couple things to consider about the credit line -

1. The line of credit is subject to fluctuation should the market go crazy. It could drop if I took a heavy loss in the market. That said, I’ve been mostly cash throughout this stock market tumble and instead have been buying the dip. Thus far I’ve suffered minimal losses. However, I would never want to be over leveraged and forced intro a recall cuz I loaded the whole credit line while the market tanked. I would consider being heavily leveraged for a short time however, if I had an appropriate exit strategy. Otherwise I think not blowing out credit line is wise. 

2. The rate on my credit line is fairly low - about 3.75 percent annually. Very cheap money. However it’s not fixed. Could go up… although I doubt anything like what we’ve seen In RE. 

3. I’m predominantly looking for cash flow, however I’m trying to stay in great areas that I think are still (relatively) appreciating. 

I’ve considered buying quality buy and hold assets with the line, but with current market conditions that’s a little nerve racking. I’d like to have a firmer exit strategy. However, I do have this idea that if I bought - say - 3 assets using the credit line, that I could potentially sell 1 to cover the down payment of the other 2 down the line. Or refinance. 

Brrrr is also a good option, although I don’t have experience doing it. Same with flipping, which seems high risk at the moment. 

Or perhaps I just hold off on using the credit line, and if the RE market takes a drastic shift I maintain my credit to purchase some awesome assets on the downslope. 

Anyways - I'm certain there’s a way to be using this credit to be building more wealth. Im just not sure what the best way is given this market. Would really love any thoughts/ advice from more experienced investors on the forum. 

Thanks all!

Hi all!

So I'm almost closed on my second SFH home deal here in Salt Lake City, Utah.

I’d like my next deal to be a cash flowing deal (which the SLC deals are but just barely). 

My strategy at this point is to buy 1 new primary a year (in appreciating markets), and then an additional cash flow deal per year (in better cashflow markets).

However, with the higher interest rates, it seems to me (and I could be wrong) that it’s harder to find cash flowing deals. 

So either I have to find really select deals that cash flow, or alternatively put more money down on deals so they cash flow well. 

Iv been debating putting 30-50 percent down on multi family properties in quality cities. Or maybe even buying some cash. However, I know (or rather I’ve heard) that putting lots of cash down on deals isn’t desirable as it limits growth. In full honesty, I don’t completely understand why it’s so undesirable. If I have one quality property, and I’m getting great cash flow from it, even if I put down more money that seems better than 2 or 3 properties I put a minimum down on and I’m seeing very little to no cash flow on… still reconciling this. 

As a newbie, I’m not sure which strategy to employ at this point. My questions specifically are 

1. How much should I be putting down on properties to help them cash flow given interest rates. Seems like more than 25% is necessary in a lot of circumstances. 

2. If I put a lot of money down, or even buy cash, and we enter into a recession then it seems like I’m kind of vulnerable from that angle too. How do I reconcile this? 

3. Do investors putting minimum down see any real cash flow at this point? More than a couple hundred bucks a month? It may be I’m just not experienced enough to catch those deals at the moment. 

4. What are good COC returns numbers looking like at this point for you? I'm aiming for 9% minimum. In your experience are you able to find much better than that?

These are a little broad, but would really appreciate Any and all thoughts as I navigate starting my investing career and these crazy economic times.

Thanks! 

 Jon - 

Thanks so much for the detailed response. It's nice to hear that I'm no so far off the mark. 

This was actually a property with a garage that I was going to convert into an ADU, which already had a studio built on top of it. So in essence, after the conversion the property would have been two free standing units on the property. I estimate the cashflow would have been 1,000 + a month.

Unfortunately... I DIDN'T GET IT! lol 

I ended raising my bid all the way to 2million and I still didn't it under contract. WOW. Crazy market man. 

So back on the search! I'm curious - what are the other neighborhoods A-/ B class neighborhood you keep your eyes on? I've been looking into silver lake, echo park, woodland hills, and even places in the flats (Noho, Lake Balboa) that I could possible BRRRR. This property happened to be in Studio City Hills, so I made an exception as I really value that area.

Thanks everyone for their thoughtful responses! Trying to learn more every day. 

D

Hi All - 

I'm a relatively new investor who is seeking to grow a appreciating portfolio first, followed by cash flowing properties.  I have enough assets that I'm not in need of cash flow at this moment, and I'd like to focus on assets that will build me more wealth long term. (that said - since I rely heavily on dividends for income, I don't want to completely negate cash flow either. Nor do I particularly want to lose money). 

I have a property I think I can get under contract in a prime Los Angeles location. It was listed @ 1.6, but I think it will sell closer to 1.8.  It is in an AA+ neighborhood that is hard to replace, and it's really beautiful. It is a turn key property - so not something I can build equity into. 

The rent will just break even with my P+I+taxes and insurance (9,500k monthly) and maybe even fall short. It will not cash flow, unless i turn it into an Airbnb and then maybe... though Ive never owned an airbbnb and that would be a learning curve.  It has 2 bedrooms, a pool and a guest house, so  maybe not ideal for airbnb (i'm told airbnb thrives with 4 bedrooms) but still an excellent property. 

My question is it worth buying and holding even if it doesn't cash flow, and may in fact cost me money? I know many believe we're at the top of  the market, and that there may be a correction in the future. However, this is the type of property (in the right area) that could very well appreciate almost a million dollars in the next seven - ten years. 

I've heard others say that with inflation, they're banking on appreciation and buying high desirable properties to profit from it. That is in essence what I would be doing with this property - buying a high value assets that may cost me money in the short term, but in the long term will grow in value. That's real estate investing 101, but I guess I'm wondering if that's worth doing in such choppy economic times?

I wouldn't be considering this investment strategy if i didn't believe the property was valuable. Otherwise, I would much prefer a BRRR strategy or cash flow or something that I have a cleaner exit on. However, I thought I'd ask you more experienced investors if you have any thoughts about this. Any and all are appreciated.

Thank you!