All Forum Posts by: Dennis Shinn

@Jennifer Walsh

(Hi Jennifer, please give us the best deal that you saw, where the numbers still didn’t work and see what we come up with...) But with that said...

I agree w/ Marcus Auerbach, the most important thing is to get started. I bought a primary residence and turned it into a rental after about 8 years of living in it.

As a rental, it was a terrible deal. PITI $350 and the rent collected used to be $300/mo, but now it's $450/mo. So once you add in the expenses that I have incurred for maintenance, that $1200/yr potential profit is always gone or nowhere near the $1200.

But... through owning it for 17 years, I’ve built up a significant amount of equity (maybe around $20k-$30k. So now that I know my niche, my target areas, my numbers and my overall goals, I can now sell that property and 1031 into something that takes that negative-to -$100 cash flow every month up to $500/mo positive cash flow on a higher value property closer to the city of Atlanta.

You should never buy a bad deal on purpose, but with that said, don't be afraid to buy something and learn how to manage it and see how to landlord. As you can see, that rental was a terrible cash flow deal, but the tenants paid down the debt for years and now I can cash that in with the new knowledge that I have and I actually feel blessed for keeping that property so long. So even a bad cash flow deal has a silver lining if you have enough cash from somewhere else in order to weather the storms that will occur (I only had a $350 mortgage which was easy to maintain with or without a tenant-if you are going to take on PITI of $800 or more, you may want to really consider wether or not you would be able to withstand 6 months of no rent for whatever reason).

Other ways to think about are

1. Go to real estate meet ups and see what and why other landlords are paying what they are paying and where they are buying (emulate other successful landlords even though they may have a different strategy because they are in later stages of investing-you still probably will be better off following the smart money)

2. Consider duplexes where the PITI is paid by one side and the other side has the maintenance, and profit (or triplexes or quads)

3. Consider higher cash flow markets within driving distance (1 hour at most-you can be an out-of-state investor with property management in place if you want, but if I were you, I would manage the first one myself just so I could see what the property manager is getting paid to do).

4. Always remember, the higher the cash flow, the lower class the property probably is, so look for that happy medium of a working class stable neighborhood

I hope this helps. Be blessed. You’re on the right track with real estate, so just keep moving forward and one day it will all make sense (and there’s still plenty I don’t know-but it still makes sense to buy).

@Colin Smith

Man it’s been a fun ride. We’ve wholesaled a lot of houses. One lady gave us a vacant lot for free (it wasn’t worth much then, but that neighborhood now has new builds going up all over-the newest one is listed for $750,000). We did our first “real” flip last year and had fun with that. I learned a lot about what I could accomplish during that time. Now I’m just focused on acquiring more rentals. Even though I know how to wholesale, I just look on the mls though. A lot of the wholesale deals need work and I would rather have something rent ready unless the price is really right. And in this environment where supply is tight, the wholesale prices aren’t as good as they used to be. But, the dream is still unfolding and I’m enjoying every minute of it. I even like it when the work is hard. I’m weird like that though.

@Drequez Richo

I've been wholesaling and buying rentals in the Atlanta market for about 4 years now. In my experience, supply has become so tight that it's difficult to find a deal at 70% of the ARV. From what I've seen, the acquisition cost may be 70% of the ARV, which leaves absolutely no money to do a rehab (and the house may very well need a cosmetic or full rehab). This seems like a true cash buyer environment right now, because if you use hard money, and buy an 80% deal (which is much easier to find), you won't make any money because of the financing costs. I don't want to be discouraging because there are people that are doing well in the business right now. But it is definitely different from a few years ago. Supply is super tight right now.

@Colin Smith

You are 100% right about the w-2 making it easier to finance. At first I thought we would only acquire cheap rentals (under $20k) and could pay cash. But I realized that it’s better to use leverage and acquire the biggest properties we can in order to enjoy better appreciation. Fortunately we went to a real eatate meeting one night and met a private money lender who will lend on rentals with a 30 year fixed commercial loan (it has to go in the business name and not my personal name though, and there is a five year prepayment penalty’s-which is understandable). I’m loving it. We can acquire whatever we want with about 25% down.

@Mellinda Thaxter

Hi, it all worked out for the best. I did fences and decks like I said I would for about a year. Then I took another leap of faith and started wholesaling full time and I stopped taking fence and deck jobs. I have added another property to the portfolio and we are about to close on another rental hopefully in about a couple of weeks. When we close on this one, I will finally be financially free (if all tenants pay there rent). That will be a major milestone for me. The next milestone will be to acquire $1 million worth of property. I have gone back to doing fences, decks and handyman work to be able to add to the war chest so we can buy more rentals as well (but it is very stress free and it’s work that I enjoy doing). God is real and I have moments sometimes where I feel extremely blessed to be able to wake up and look at and analyze deals as an occupation.

@Yosef Lee

Great job!

Housejerk is an organization that allows people (Realtors, Attorneys, Insurance Agents, Property Managers, Hard Money Lenders, Mortgage Brokers, Buyers, Sellers, Entrepreneurs and people generally interested in RE investing) to earn money while they learn the business. Its just like a REIA because we meet every week (as soon as I was introduced to it I jumped at the opportunity to be around like-minded people). And at the meetings, there are different speakers who are proven to be successful on the subject that they are speaking on. You can network and bring your deals here and post them up on the web. The kicker is that you can earn money whenever you sign up a new member to Housejerk. So you earn while you learn.

Great job!

I own a mobile home.  But it has a permanent foundation.  So I pay real property taxes (taxes for houses) instead of nominal property taxes (taxes for mobile homes).  I think that when it comes to mobile homes inside of parks, the money is made by owning the dirt that those homes are parked on.  Lot rent can be as much as a mortgage (but you might find something more reasonable), but unlike a mortgage, you will never own the dirt so your lot rent will never go away.  With a trailer on a permanent foundation, when the mortgage is paid off, your cash flow will go up.  Basically, I would buy a mobile outside of the park.  There is podcast with a guy who only invests in mobile homes.  Maybe that will help. 

Well BP Family, I quit my job about two weeks ago.  Every time the job would take away the overtime, I would be at a financial stand still and thus, would not have the ability to build onto my RE portfolio.  So I told myself "forget the job" (at the steel mill).  I looked into the future and saw failure written all over remaining there.  So the decision was, either I can stay here and fail by getting by and just paying bills my whole life, or I can give it a shot and take my future into my own hands and start making my own paychecks by doing something I actually like to do (building decks and fences).  I except the fact that I may have to get some kind of job when building season is over, but its definitely better than waking up to a nightmare Monday through Friday.