All Forum Posts by: Eric James

I'm under contract to buy a 6 unit, mixed-use property with seller financing. The seller will provide $700,000 of the $945,000 required. They are giving me 45 days to show proof of funds for the $245,000 so I need to find it!

-I can't take any more loans from my 401k.

-I have 3 properties right now:
    -Property A, worth $400,000, is currently financed at around 72% with potential to pull out $31,000 to get to 80%.
    -Property B, worth $500,000, is currently in the process of being refinanced at 80% to pull money out to buy a separate property.
-Property C, worth $600,000, is my primary residence currently financed at 86% with potential for a HELOC to pull out $23,000.

If I can find $245,000 at 6% the property will still cash flow $400 per month at closing after all expenses, 5% vacancy, and 5% toward repairs. With potential rent increases and filling a currently vacant unit, it will cash flow over $2000 even fully financed. 

Any help in where I should look would be appreciated!

Just ran across this:
https://haus.com/resources/the...

The inventory comparison is interesting, but most interesting is their index reportedly only has a 2 week lag. That means the recent wild ride in interest rates hasn’t really hurt prices. I wonder if the higher end is cooling off, but because their index is based off a pretty modest home, it’s not reflecting that. Presumably some of those in the market for a 450k home are now looking at 350k homes.

Of course I’m being sarcastic here. I have a question about entities. Before I ask my question, I have to say that I have spent a few days looking through the forum and even though I found really good information I haven’t found an answer that fit my situation. 
I'm partnering up 50-50 to do a new construction BRRR with a Home Builder. This person has his own LLC but since he usually build and then sell the houses that works for him. My plan is to create a new LLC where we will be 50-50 partners. Is there a more tax efficient way of getting this done? Are they any implication to refinance the property after built since it will be in 50-50 partnership? I'm currently looking for a CPA to help me set this entity right from the beginning so if you have a recommendation it will be highly appreciated.

I heard this notion 3 times in the last couple days: going to wait and safe my money until inflation is over and prices come down again, one of them a fellow investor!! 

It seems to me that people think inflation is basically price increases and when inflation comes down to again, the price increases will basically reverse to where they were before, because inflation is just temporary he said. 

I can see how the evening news are pushing this believe when they talk abour rising prices, instead of the devaluation of the currency, which is permanent. We would need negative inflation to go back to pre-inflation price levels.

Looking at a long term inflation chart and the time periods it took for inflation to rise, peak and fall I am thinking this could take a while - maybe another year or two to reach peak and then start to reverse. Home prices will probably do the same, just because the dollar bills are getting smaller. 

It sounds like the phone is the best thing.

Yes you spent 8 hours in travel and touring, but sometimes people don't view time spent of others like they should. Especially if you were the Seller and never saw you. Unfortunately even as adults, "out of sight, out of mind."

Background:

I just turned 40. My net worth is 3.2 million. 1 million liquid cash, the other 2 million is equity in my houses including primary residence and rental properties for a total of 8 properties. Cash flow is about 30K a year because I cash out refinanced a couple years ago to buy more properties with the equity rather than using cash on hand. Real estate has been my bread and butter, it's how I made my 3 million. At this point, I make 1 million a year off of it (appreciation, cash flow and principal pay down). Again, I make 1 million a year off appreciation and such when the market is good, which is most of the time...factor that in.

I was planning on buying two more houses with a total of 300K down to ride the appreciation wave long term, two more houses that will be paid off when I'm older, etc. I had planned on retiring at 40 with 1 million, this was the plan I made when I was 30. Now I have three times that but life is more expensive and complicated than it was 10 years ago. 

My living expenses:

Because I rent out part of my house, I mostly live for free housing wise. Outside of that my living expenses as far as base are 1K, but realistically 2K. That includes money to date, buy a trinket here and there, etc. To be really comfortable I'd like to have 4K a month passive income in retirement. With a paid off house, in a low property tax state, utilities, taxes, maintenance, insurance should round up to 1K. That leaves 1K for gas, car insurance, food, incidentals, internet, phone, etc. So that brings me up to 2K per month. But I'd like another 2K buffer as I have occasional rental expenses such as repairs, appliances, etc. plus I date a lot and when in a relationship we have a tendency to travel. I've been to Tampa and Orlando 4 times in 3 years with 3 different women (one of them twice). 

The why:

I'm tired of working and life. I've had many recent heart breaks and I don't want to work anymore. I haven't wanted to work for a long time but now I'm really done. I had two health scares and almost died at 29 and 34, I'm not promised another day. They say stress causes cancer. I've worked so hard, MBA, 18 career certifications that were hard to get, own and manage rentals, two full time tech management jobs, two part time jobs. I've been working so hard. To top it off I've had a series of failed relationships last few years. After having a long period of stability with one girl for 9 years, I'm an emotional mess, dating is getting harder as I get older, the women are not as good looking and all seem to have baggage/issues. After a recent life assessment I did, I realized everything in my life that I worked toward came to pass. But my relationships are rocky. I'd like to take time and heal, grow and find a life long forever girl. One that stays. Even through the bad.

How I'm thinking of doing it:

-Relocating from WA to a cheaper part of Texas, Tennessee or Florida. With the equity of my primary residence, I should be able to buy a paid off house for cash. That will drastically reduce my living expenses.-Take 1 million cash and put it in index funds or split between Apple, Tesla, Amazon, Google and Microsoft and live off 3% withdrawal rate of about 30K a year. Supplement that with rental income from properties as is, which is about 24K a year cash flow.

OR....

-Still relocate, but cash out refinance 1 million out of the houses before retiring. Between living off index funds and 1 million pulled out of the houses, that money should EASILY last me 10 years, realistically 15-20 years. By then the rents will have risen enough that they will cash flow enough I don't have to cash out refinance anymore for money to live off of. There are some people who do the cash out refinance thing every few years to live off of. Bonus is that it's tax free, it's a loan so not taxable income.

OR....

-Still relocated, use the 1 million to pay off 3 of the rentals, which should give me about 6K a month cash flow plus another 1K from the others that are still mortgaged. Move into a paid off house and retire. I like this because I've always lost my money in the stock market no matter what I've done. Options, swing trading, day trading, index funds, you name it. But real estate I've always made money. It's how I made my 3 million. At this point, I make 1 million a year off of it...so in a year I'll be worth 4 mil, in 2 years 5 mil, etc. At that point I could really retire without worrying. Maybe I hold off for now and grind a little longer. But two full time jobs, two part time ones, 8 houses and all the studying has really worn on me. Add to that endless heart ache from relationships last few years and I'm emotionally done. I want to destress and go live. 

Some problems with this:

If I move to FL, TX or TN, I'll be too far to manage the properties. My best friend will move with me but he said his parents could help out. So far I've been doing ok with video tours and hiring contractors lately. Not cheap but way cheaper than a PM. Liquidating them and moving them is risky as I may move somewhere else if I don't like it, or move back. But the properties make it very difficult to relocate since they are easier to manage locally. If I hire a PM, all my cash flow is basically gone.

United States Total Housing Inventory, 1984-Present

I doubt I'm going to be around see that event happen and actually be in any position to invest myself. The trend seems pretty damned clear.

 Nope, too much money chasing to few goods (properties).  This is inflation similar to that of the 1970s thanks to the government.  I'm still astounded townhomes in LA right now are going for 200k over asking... 

We just tried to put in a cash offer on a house, only to find out that our hard money loan could not be consider a ‘cash offer’. 

My question is twofold… 

1. Is this normal?

2. If this is normal, why in the world would anyone use hard money and pay the points, fees, and high interest instead of just using conventional financing?