All Forum Posts by: Ian M.

Jordan Lives I am with Brandon Turner and others that like small MF's. HOWEVER, in my market many of the deals at the moment are in smaller single family homes (SFH) and some duplexes so I am starting to turn my attention toward those b/c that is what my market is dictating based on how i invest - cash flow. I think that is the biggest thing you need to determine - are you investing for cash flow or less headache/better neighborhoods/better POTENTIAL appreciation (I personally don't think you should ever invest for appreciation, its just speculation - ask me how I know). Once you've figured that out it will help you make some decisions. Also, if you do decide to go the cash flow route you will probably want to determine what you minimum cash on cash return should be based on your preferences.

Tons of great advice on this site. Sign up for the newsletters and podcasts and you will have a great arsenal of education in your mellon to help you figure this out more quickly. Good luck!

Matthew Hicks my initial suggestion would be no based on the same recent question I had with the guy that does my tax assessment challenges (he charges 1/2 of what he saves you for year 1 only, then you save the full amount years 2 and after, its a no brainer and he used to work for the county assessment office too - PM me if you want his name). Anyway, his response was that they could actually charge you more if they decide that the property is worth more (and they may ask you all the questions you just presented at which point they would decide its worth more). My suggestion would be to count your blessings that they don't assess it more, but they will catch up with you eventually!

Dan Costantino I third Brad Dornish. He set up my entities and makes himself available at the ACRE meetings that Jerry Kisasonak mentions, yes for free. He's very busy outside of those meetings though so take advantage of it there! I dont know about an ICA contract, but as Steve Babiak mentions he does have an inventory and has an online store at dornish.net. I just recently bought his course on seller financing solely for the contract in there - $99. Again, no affiliation other than using him for my stuff, i get no cut from him....unfortunately! Good luck.

Doug R. I've seen your postings on the Facebook page that @Jennifer Lee refers too above. Feel free to add me to your list both here and there as a fellow Pittsburgh metro investor.

I'm pretty sure @ J Scott just posted a SFH analysis spreadsheet recently. Check out the downloads section.

Dawn Wilkins the advice Raymond B. mentioned is good. I used Brad (Dornish) to form my entities in PA. He is also on the local REIA board (ACRE). They form the entities for lots of REI in Pittsburgh, so his company is well versed in REI entity formation. Good luck and welcome to BP!

Linda Devlin congrats and welcome to BP and investing in the Pittsburgh market. You may want to check out ACRE (the local REIA), but beware that its like most local REI meetings with guru sellers. It is informative though and you can learn if you make sure to focus on that aspect and not just buying a "system". On another note, if your husband is an HVAC contractor, please hit me offline as i could always use a new good one. Good luck!

I agree with Steven - if your home is worth $250K and you have only an $85k line, is there a reason you couldn't just do a normal refi? That seems like a slam dunk based on what you said, unless theres something you didnt mention. Especially locking in rates where they are - that seems like a pretty good situation to be in - most aren't that lucky these days! You would likely even be able to do a cash out refi and purchase some investment property if you wanted.

Nick K. - no problem on the questions. i still have tons myself and will forever. the only way i learn.

The loan I am talking about is a commercial one (for a residential property), but you may be able to do it on a residential property as well, depending on the lender. I doubt very seriously if you would be able to do it on a conforming loan (Fannie/Freddie/FHA backed) - typically in your own name, amortized over 30 years. this one is in an entity name over 20 years. Also, correct on the 80% LTV (20% down). the lender will allow a private holdback on the downpayment. this went away for a while during the lending squeeze, but in some places (like my area i guess) may be beginning to make a comeback. My relationship is with the mortgage broker, not the institution per se, but its also dependent on my personal info (FICO, income, strength of job, etc..) which is why they would be able to do it. even though the loan is in my entity name, its personally backed. Im not a big enough player to get non recourse loans (backed entirely by the property) yet, but that's the goal at some point - even though they are typically higher rates. Though i understand they are doing this for self directed IRA's. if you have a good business plan, that's certainly a good start. But if you are just starting with that bank, i would guess it would likely need to be a smaller deal and one that you could cover expenses if something went sideways at least until you built up some credibility with them (based on FICO, income, etc..). that's what this institution looked at for me. particularly in this lending environment (though my broker tells me its getting better).

I found my mortgage broker through another investor (who's also one of my real estate agents). i would suggest finding several brokers that are savvy with investors as opposed to personally owned properties. try the local REIA in your farm area at the meetings or just go on their website if they have one. it takes time, but it can be worth it. also i would suggest trying a few brokers (or the local banks themselves) to get a better understanding of the typical terms in your investment area. it could be vastly different from place to place.

@Nick K. you can also get private money (friend or family or close acquaintance NOT HML, they are not PM) financing for the down payment or part of the DP and finance the rest conventionally. It would depend on the lender and would likely have to be a portfolio lender as Jon mentioned (local bank or credit union) in order to do it with less out of pocket, if not zero out of pocket. Some lenders are allowing this again and I am trying to do the same - putting 10% down of my own, then creating a 10% note financing through either the seller or my private lender, then paying 8-10% on the note with a 2 year balloon. you can use the cash flow to pay this off for the next 2 years if you don't need the cash flow at the moment. Once you have that paid off you can begin collecting more cash flow. Alternatively, you can simply make those payments on the 8-10% private money note, then, if the numbers work, refi out of the private money note. just be careful to make sure the bank will allow this (some dont) as you MUST disclose this. Also, know that rates will likely go up over the next 2 years. Lastly, make sure the numbers on the deal will support paying the notes.

Disclaimer: I am not an attorney or financial professional, therefore the above is NOT advice. It is simply opinion and ideas, thoughts and conjecture.