All Forum Posts by: David Light

I'm interested in what you see in Abilene as well. 

Thanks @Elizabeth Colegrove  and @Sean Ploskina that does make sense. This lending arrangement would likely be available for other properties in the future so not a one off. I get that the other 10% is really other peoples money so I'll just use the 10%. Appreciate the quick response.

I'm evaluating a single family property and would like some input on how best to calculate my return. I am able to leverage private financing and have negotiated 10% down with cash flow from the property going to the lender until equity reaches 20%. The loan amount will be 80% of the purchase price officially, 10% will essentially be a 0% loan, and 10% is my down payment. The private money is family which is the only way I'm getting this deal.

When calculating my return I'm debating using the 20% or 10% as the cash I'll have invested. For example, if the house is 100k I'll actually only put down 10K out of my bank account up front but put in another 10K from cash flow that would have gone to my bank account. For that reason I'm thinking I should evaluate the deal using 20K as my out of pocket cash investment. Am I thinking about this wrong?

I'm looking at cash on cash return and obviously if I have 10K as my investment the numbers are much better than if I use 20K. Any help is appreciated.

I recently spent a significant amount of time writing a business plan for the next five years with a timeline for acquisitions of buy and hold single family homes and all sorts of detail. I invest in Texas but currently live in London which would make things tricky but I didn't want it to hold me back from pursuing my dream. After finishing the plan I started to look for properties and ran into a great buy on Craigslist. It turns out it was a family member that listed the house. He was trying to purchase it but hard money financing was crazy expensive for him so thought about wholesaling. Long story short we ended up loaning him some money to purchase the house at a good rate and everything documented official, secured loan etc. I've done business with family\friends before and it always pays off to have everything in writing. Instead of acquiring properties myself I'm loaning money which wasn't in the plan at all but makes a lot of since considering I don't even live in the same country. We're straying flexible and considering it a win win. I'm a year in with two properties and now a financing deal. What a ride! Thanks to bigger pockets for all the help along the way. I'm just getting started...

Jasmine Brumfield I'm currently drafting my plan as well. Currently 8 pages and I'm tired of writing, ready for action. I'd be happy to share mine with you if you want to compare notes or provide feedback. PM me if interested.

I should also mention you only update the bright teal highlighted areas.

This weekend a friend and I were talking about when we would be millionaires. He started using the Dave Ramsey calculator to determine how his IRA and 401k would grow. We realized real estate should be a part of the calculation but we didn't have anything to figure out how much cash flow and net worth we'd have based on when we bought properties.

I created the attached to help me out and thought it may be beneficial to others. You can input some of the fixed values at the top, purchase dates of houses (it assumes you buy houses on Jan 1 for simplicity), and this calculates how much cash you'd have to put in to the business and the returns you'll get. 

http://www.biggerpockets.com/files/user/dclight07/file/cash-flow-planner

It's my first stab at a spreadsheet like this so any feedback is appreciated. Hope someone else can find it useful!

As a follow up we bailed on the house and it's still on the market at a much higher price now that the wife is involved! Appreciate the advice.

thanks!

Thanks Deondra Carter I'm a little nervous because the two properties we already have were purchase in the last 12 months and I don't want to grow faster than I should. It seems to make sense looking at the facts.