All Forum Posts by: David Flores

@Matthew Von Dwingelo

This deal has a lot of red flags.

If the original loan was a VA loan (no money required down) and you still have 27 years on the loan that means barely nothing has been paid down. Assuming this, the house was probably previously boughten for around 380? If that. Which mean you are paying almost 300k more than the previous purchase price.

Also, how is this a zero down purchase? You would still need to get a loan for 300k after assuming the old loan. This 300k would require some kind of down payment. How was this down payment paid for?

@Lucas Carl

Not sure how you came up with this stereotype but I already have a nice portfolio. Only thing your close on is my age at 27...

I also don’t think arbitrage is a no go. There are many people that successfully do this.

@Tiffany Drahonovsky

Congrats!! Awesome little deal. Your an official real estate investor now!!

@Kyle Wilkins

Hi Kyle, I am not sure if you know what seller financing is but you can get deals fully financed through this. Essentially the seller would be carrying your down payment to the bank. You can avoid PMI this way too.

Keep in mind in a seller financing situation you would be carrying two loans. One mortgage from a bank and the other from the seller. This is not allowed though on traditional financing vehicles. You would have to work with a smaller local bank to do this. I highly recommend them anyway as bigger traditional lending is a pain to work with. I actually enjoy working with local banks and have created great relationships with them.

@Brittney Guy

What is your exit strategy here though? Looks like the rent being paid is less than 50% of the mortgage and if you are living in a smaller unit I would imagine that it would not rent for over the 50% of just the mortgage. If you ever want to leave the property you would be in a negative cash flow position. I would re-run your numbers and includes all expenses. Whether it is coming from savings or cash on hand that is part of the P&L of the property.

Finding a house hack deal that works in LA will be difficult. I know its nearly impossible in NYC. Try to look at surrounding areas.

@Justin Schoemehl

An LLC is completely optional but an operating agreement is a must when partnering with someone. An LLC will protect you from your personal life/finances. The operating agreement will ensure the agreements you make with your partner are upheld.

@Jalah Gray

FHA loan would be 3.5%. If you are not aware there is something also called an FHA 203k loan. With this you can actually get the amount for the property AND money for rehabbing/renovating. Still at 3.5%.

@Dylan Wells

House hacking is a great idea as mentioned here.

Most of my investments are in student rentals and I setup seller financing deals. This requires little capital and can 100% be another way how you can get involved. Student rental markets are great because the demand for rents is as high as any neighborhood in america. This keeps rental prices high and demand consistent. I do not know where you go to school but some colleges are in the middle of no where and these are the gems. For example, i have a couple places in Morgantown WV for WVU students. The home prices match the prices in WV but the rental market can be comparable to new jersey. Also in these town/cities that have student rentals and are in the middle of nowhere sellers are usually more motivated and will agree to seller finance situations. Reason for this is because it is not investor saturated and places usually sit on the market longer.

I keep everything in one bank account. Separating LLCs should be a consideration though. Just owning 2 properties you may not want to separate LLCs but at a certain point you should to stay risk adverse. I would say after your third property you should form another LLC.

@Tamara R.

I agree with Kenneth on a lot of what he said. Although, I would still keep the cap rate as consideration for a factor of how you rate different investments. 7% is honestly low for for a single family home.For a single family home I like to be around 10% just because you do not have as much protection. For example, you have 1 lease and that one lease could be vacant at times which means 0 revenue when its vacant as opposed to a multi-family or 5+ unit where 1 vacancy is not a big issue. All cap expenditures are also related to 1 lease which can be a huge hit compared to multis. But as Kenneth said you got involved which is key. Learn from the mistakes you made and continue investing in better deals! You are still cash flowing!