All Forum Posts by: James H.

I am not sure why you feel the need to use hard money. You can find some more distressed properties that could *potentially have more equity when you are done, but those HMLs take such a big bite, you area often times just as well off using conventional financing on properties that only need cosmetic touch-ups. I have looked into hard money and you really need to be on your feet to make a success of it.

With 100K at your disposal, you don't need hard money.

The best way to pitch a deal to an investor is to pitch a deal that has a lot of equity in it. Otherwise you could switch your technique to finding fools.

The banks want 2 years period, not per property. I'm sure every bank as their nuances.

As far as market slumps and debts; who really cares? Even if you bought a property in 2007/8 that cash flowed 200/month and it still cash flows that much now (rents are actually higher now) then what does it matter what the valuation of the property is in a snap shot of time? You will see appreciation over the long term (10-15 years). People that bought their houses in the late 90's still had plenty of equity in their homes during the most recent crash, provided they did not pull equity out on the way there.

How is it any better having put all your cash into one house and that one house going down in value? That's actually worse IMO.

Hi Curtis. By prop no. 5 I mean your fifth house. I don't see that good of a return on 120K houses when I run the numbers most of the time, but I have less experience than John and would not argue with him about what good price points are around here.

As far as your discomfort with loans, it will take you, in all reality, at least 3 years to get 5 loans unless you have an extremely high income and do not need to count rental income for your DTI ratios. The bank won't count rental income until you have 2 years experience. However, they will count the mortgages against you.

In any case, lets say you have 5 houses and owe 70K each after down payments. Say the PITI is about 700 a month (pretty conservative). Lets say you have a reserve fund of about 10-15K. Lets say the rents are about 1100/month/house..

Now you have 10-15K in reserves plus 2000 a month rolling in after your mortgage payments to take care of business. If you get a vacancy, the 1600 a month from the other properties will cover you no problem. There is virtually nothing that can go wrong with that kind of reserve fund and that kind of operating income that could not be addressed and the funds rebuilt within about 6 months just from rental income alone.

If you buy just one house, you will have an operating income of only about 800 because you will still have taxes and insurance. And you don't have tax benefits, mortgage paydown benefits, and only control about 100K in assets rather than about half a million. You are putting all your eggs in one basket and in my opinion have exposed your money to higher risks because there is no diversification.

You need to go back to the drawing board and reconsider what you think bread and butter is for a DFW rental.

If you buy 3 rentals cash with 100K, you are talking pretty low income stuff for DFW.

I would rather look at 5 houses in the 85Kish price point that rent for 1200/month and put 20% down on each one. Now that would be bread and butter, leave you with excellent cash flow. The 15-20K left after down payments will probably get eaten up by closing costs and make ready expenses, but if you have a W2, you can be saving money from that during the approximately 2 years it takes you to get to prop no. 5.

For 1.50 per sq ft in just materials, you could use tile throughout. Is Allure preferred over tile?

Thanks for your reply Serge. I hope my questions didn't come across as rude. From the posts of yours that I have read, you appear to be very astute. I am far from hitting walls at my stage of investing as I am only looking to get my second mortgage right now. But I am thinking about the future and possible multi-family and just wanted to see what makes one path different from another.

1. I have not paid for a mentor
2. I have not worked for a mentor, paid or free
3. I have not mentored for a fee
4. I have shared my knowledge freely with anyone who has asked. Since so many people have been willing to share their knowledge with me (for free), I only feel right passing on what I know. Truth is, most people say they want to know and then they get distracted with a shiny object.

Mike H. and Serge S.,

What is the difference between you guys and these other guys like William Bannister, Ben Leybovich and other guys that are doing multi-family stuff?

It looks like you guys are concentrated on SFH and the financing is not so great on those after a certain number. Would there be anything to liquidating the properties you have to put up the equity for small apartment buildings? Have you thought of that and ruled it out? What are your plans to push forward?

I know this is askew of topic, but if you have several (say 10) properties under seperate LLC's and you want to borrow some or all of the money from each LLC's bank account to something (like maybe another property) how is that accounted for from a legal and taxation standpoint?