All Forum Posts by: Guy Yoes

I found a nice buy on 5 duplexes (paying 500K, value 638K) in good shape with long term renters. I plan to 1031X two of my current properties (value 230K). I figure putting 200K plus down and finance 300K. Yearly rent is 72K and paying 28K payment (include taxes and ins.) plus 7200 in management fees. The deal look good on paper but I'm having problems finding a lender. The banks are steering me to do commercial (higher interest). I would like to go conventional but cannot find a lender.  

I could use any advise on a lender who does duplexes. I have excellent credit and will put 40% down. 

thanks in advance for any advice.

How will it not affect everyone? Over 2.5 Trillion in credit card debt and student loans alone (and getting bigger). Debt for car loans is also at an all time high. Credit will dry up and people will not be able to borrow money , but will still have to pay what they owe. What happens when they default on their credit cards and car loans (you can't default on student loans)? Who owns the credit cards... Banks. Who get bailed out....Banks.  Who is on the hook for the bailouts....not the Banks. Our country is more than broke.  Free food, subsidized housing and health care. Who do you think pays for all this? Not the people who get the free stuff. The working class does. What happens when the working class can no longer pay for those who don't work? 

The recession is toast. Soon the US dollar will no longer rule the lands. Prepare for the fun of inflation. Wages are stagnant but the price of goods continue to go up. Higher prices cost everyone. It hurts the elderly and the poor. It hurts the single moms and those on fixed incomes. It will affect homeowners and landlords who have to repair properties and pay higher property taxes and insurance. You can only raise rents so high until they can't afford your property. 

Why are you holding cash? Inflation will eat it up. Is the money in the bank making more than the interest paid on mortgage?  The theme on bigger pockets is to use your equity to buy more and more. Big rewards? Maybe. Big risk? definitely. To me, leverage means I owe more than I'm worth.

My rentals (and everything else) are paid for and I get comments I'm doing REI all wrong. They cash flow extremely well and the money I make from them I invest in other REI areas. I get a 10%+ return on the money instead of paying 3-5% in interest. I don't care if interest rates go up or down, I don't pay any interest. I'd be happy if the bank paid 15-20% for CDs.

But, we are no longer a country of savers. Americans are slaves to the companies, banks and people we owe money, and they dictate our actions. 

Housing prices will go up and down as will interest rates. They should reflect the soundness of the markets. My point was that what happens in one market effects all the others in some way. Natural disasters, financial bubbles, military conflicts and politics will always have an effect on your RE business.

I lost my plug nickel, but here are my 2 cents on what factors will affect the housing market and rates in the coming years.

1.  https://www.bizjournals.com/bizwomen/.../national-....

Mar 14, 2018 - Americans now collectively owe more than $1 trillion in credit card debt for the first time in history, according to WalletHub's recent Credit Card ..

2.Total outstanding federal and private student loans: $1.5 trillion.

https://www.nerdwallet.com/blog/loans/student-loan...

3. The average American worker will see 1% or less growth in income in 2018

http://money.cnn.com/2017/12/12/pf/pay-salary-work...

4. Feb 19, 2018 - The value of the dollar today is much less than it was in the past

https://www.thebalance.com › Investing › US Economy › Trade Policy › U.S. Dollar

5. Estimating Returns To 2020 And Beyond, Update Jan.-2018. Feb. ... Based on its historic trend, the stock market appears to be overvalued.

https://seekingalpha.com/.../4145425-deja-vu-2007-...

None of these articles talk about the housing market. Mention of interest rates is for current credit cards, student loans, and mortgages (not future rates).

Any one or more of these "bubbles" could / will create other national crises.

Depending on your source, the average 30-year-old college grad has between 6-15K in credit card debt, 46K ( my two kids total 120K) in students loans and 133K in home mortgage.

1 in 3 people over 50 have less than 50K saved for retirement. 1 in 5 have nothing saved for retirement and are tens of thousands in debt.

Lucky I have free and clear properties. I will need them for my parents and children. ;-}

When I have a tenant move out, I spray the inside of the house. I use a gallon spray bottle and a pesticide from Lowes ( about $12.00 for concentrate, good for about 3 houses). I let the new tenant know the house has been sprayed (makes them happy and I look good). I put in the lease that the house will be treated before they move in and any other issues are on them. Thanks to some posts on here, I will be adding a bed bug clause. Never had an issue but don't want to have on after the fact.

I also replaced any wood burning fireplace with a gas log type. They look better and I don't have issues with wood near the house. 

@Account Closed You have a point, Mike, thanks for the comment. I do see some ads for Colonial Life that say they take anyone and no medical exam necessary. I would suspect the amount of the policy and the premiums would vary depending on ages.  I hope Jo can work it out.

I would think house hacking a duplex would be a good first step. You can save some money on rent and get used to being a landlord. If it goes well you can move out later, refi and buy a house to rehad / flip while you live in the house.

Unless you are an experienced flipper or know a lot about construction, I would not try to flip as your first experience. It can get very costly and is risky.  If you want to flip, find a partner with experience.

good luck.

@Jay Hinrichs

Thanks for the add on Jay. I too have a soft heart at times, but business is business.

Good posts here. I have a suggestion that may work for both parties. If they can afford the utilities and food, Take out an insurance policy on both of them. Have them make the premium payments to you and you keep the policy active. Let's say 25K or whatever would cover the rent for two years for the policy and  you are the beneficiary. They may only have a few years or months left. When one dies you get paid and the other can stay.  When they go to join the other, you will get another check to cover any other costs.  It costs you more now, but you may come out better in the long run.

Just a suggestion as a solution to your problem. You get to feel good about helping them and they can make good to you when they are gone.

@Peter B.

Peter, thanks for the comments. The aunt would like to keep the property in the family and my wife would too. Her grandfather acquired quite a few properties in the Edmond OK area in the 30's and 40's. He had 6 children and gave each one of them a property when they turned 18. The aunt got the property where her parents lived. It is the only property left from what he acquired. The 5 boys all lost their property over time.

We will have the property eventually, but what do we do with it? We will end up with 3 lots (two one street and the third behind them on another street.  The houses are small (900sqft and 600 sqft) and would cost more to rehab than their worth. 

There are new duplexes going up in the area and renting for 900-1000. We could sell the property to one of the builders buying up old properties and putting in duplexes, but the wife wants to keep the property in the family. Thinking that we get the property free and clear, the cost of building would be lower as there is no land cost. 

I don't think zoning would be an issue as they have duplexes across the street and on the next block. There would be cost to clear the land and upgrade the utilities. 

I would welcome any suggestions on the best use of the land. I don't think anyone would want it for SF with all the MF in the area. We have no intention of moving to the area so I'm at a loss for what to put there.

Thanks, everyone for your input.

I often wonder when people say "I'm going to make a million dollars in RE and retire".  Do they plan to work their properties themselves (that's not retired) or pay someone to manage them? There are few people I trust to oversee my finances (rentals, stocks or investments) and who would put my interests above theirs.

 Well, I retired last summer and turned 57 last week. I have a decent pension coming in each month and a handful of debt-free SFRs and some first position notes.  This allows me time to manage my properties and to pursue other interests and take a few trips each year.

If I had a million dollars, I would move it into notes, tax liens and other lending vehicles. At 9-12 percent interest, that would gross about 100K a year. I would sell my properties (buy more notes and with the pension clear around 10K a month and never touch the principal.

Would also consider moving to a warmer climate where the US dollar has more buying power. I would not buy a new truck, boat or motorhome. I would enjoy life, play with the grandkids and try to be a blessing to others.

For me, financial freedom is the means, not the ends of a life worth living.