All Forum Posts by: Austin Fruechting

I don't know that market and am not going to comment on the price...

If he's older and owned forever; I would look into setting up a seller financing with little down on a longer term and something like a 5 year balloon. Pick favorable terms that allows you to make some decent returns during that time while adding all the value you can, increasing rents, etc and then refinance.  If there's enough room to add value, it could be worth "overpaying" a little if it gets you the deal now with much less down on favorable terms. 

Just know it can take a very long time to find a tenant needing that space, especially in a smaller town. The amount of people looking for commercial spaces will be very limited. The timing of you having your space ready will have to coincide with just the right tenant, at just the right time, looking for that type of space.

And if you find one and they move out, you can have an incredibly long vacancy again and wait for that perfect scenario above to happen again. You need to make sure you can weather the carrying costs of long vacancies.

The flip side is if you get tenants, they are usually going to be very long term tenants. 

Can you raise rents from their current rate if there are new appliances? If so then the rent increases from the appliances will definitely increase the value of the property. 

Correct. I will probably never pay an extra dime towards my primary residence because it's such cheap money and I can come out so far ahead by investing that money.

I have focused on cash flowing properties to achieve financial freedom (less than 7 years from start). I love the "BRRRR" strategy to get moving quickly.

Making the best decision you can at the time given the information you had doesn't mean you made a mistake. It's like poker, the idea is to make the right decisions at the time... if you have 2 pair and fold to a big bet on the turn to a guy with straight or flush. So what if you would have rivered a full house? You didn't make a mistake. Folding was the right decision given your ~9% chance for the full house.

@Steve K. - HA, I appreciate the kind words but that may be a bit extreme!  

There was nothing special about me. I'm just an example of what is possible for an average person, investing in average small properties, when doing things right. That's why I'm on here trying to help others, because I think anyone can do it if they really want to. 

Hopefully it gives you the fire to make sure you succeed... two months isn't much to learn everything, start, and get deals to closing.

Definitely pay off credit card and any high interest debt before investing. 

Then invest instead of focusing on the low interest debt (like you house, student loans, or anything ~5%)

It's all a about the margin between what you can make investing and what the money is costing you.  If you're getting 15% cash on cash in real estate, but paying 20% on credit cards, you aren't coming out ahead by investing.  However you come out SO much farther ahead investing for the 15% cash on cash instead of putting it towards you personal home loan. 

Short answer: BAD IDEA... 

Planning on being able to purchase a properties, pay to rehab them, pay for closing/carry costs AND pay yourself a living salary with just a 75% cash out refinances is a very risky proposition. 

If you torture data long enough, it will confess to anything...