All Forum Posts by: James Triano

@Riley Gilson

I've had some success at the Sheriff's auction but beware of the status of the deed (do a title search) and who is foreclosing.  I also highly recommend you read as much as possible about your local municipal process and the laws in your state.  There are very large differences state to state even though the process and theory behind it is the same.  Education is key but you can have some success and get some great deals there. 

@Chuck A.

1)  I believe you need to live in the home for some specified period of time.  I agree with the others, I wouldn't lie but I would ask them what that timeline is.  Is it an option for you to move-in to the house before you rent it?  If so and you can secure a lower rate then it may be worth it.  If not, just opt for the higher rate and do it the right way.

2)  Those sound like pretty decent terms.  I've noticed that a lot of banks like to only carry 15-year notes on investment properties especially if they're a portfolio lender (they keep the loans instead of selling them to a big bank).  I would still consider doing some shopping around.  I've called 10 banks in one day before and have received drastically different terms from all of them.  Ranging from "30 year fixed with 10% down" to "no way we're financing you".  So, I'd suggest you shop around.

Considering your question leaves you with two options, either paying down mortgages or investing at 7%, then I would suggest that you continue to invest. I'm assuming that this $25k is not the only liquid savings you have. If it is, then I would keep some portion (6-12 months of living expenses) as a safety net. Then, I would continue to invest like crazy at the 7% interest rate. Remember, even if your mortgage interest rate is 7% (not likely if it's recent enough), it is still a business expense on your rental properties. This makes the effective interest rate lower because it's lowering your overall tax burden as well.

The Average American, or Average Joe (Josephine), is something we hear a lot about.  They have an average amount of credit card debt, an average amount of cars, and average amount of kids, etc.  This is all well and good, but averages are, just, well averages.  There are people above and people below (duh).  But I wanted to figure out how they stacked up to the Average BiggerPockets member.  Here are the stats:

Age - Male, 36 | Female, 39

Kids - 2.5 kids

Cars - 2.28 cars per household

Household Income - $53,657 (Male $53,684 | Female $36,151 with Married Couples Averaging $81,025)

Average Home Price - $188,900

Mortgage Debt - $110,000 per household

Retirement Account Balances - ~$63,000 in this age bracket

Vehicle Debt - $26,530

Student Debt - $30,100

Credit Card Debt - $5,747

Note: These figures (with the exception of credit card debt) are for individuals who HAVE these types of loans, it excludes people with no debt, however, I would assume that the Average American owes money on a car or student loans.  PM me if you're an auditor and want to verify my numbers. 

How do you stack up against the Average American?  If you WERE (or ARE) the Average American, what exactly would you do to get into a better financial position by the time this Average American turns 50?  How can real estate help Joe and Josephine get to above average?

@Eamon Conheady

You will likely be required to have a physical address in Wyoming.  From my experience with using LegalZoom, you can sign up for the registered agent service and electronically receive correspondence through them.  It is expensive, but it's worth it for me to not have to worry about it.  

As for the bank, I would just use a national bank, if possible.  Or, at the very least, a regional bank who you're able to use where you're located and in Wyoming.

@Natasha Keck

I'm a pretty big geek when it comes to this stuff.  With cloud-based products and mobile devices, we are quite lucky to be able to have everything in digital format - at least that's what I do.  I use a combination of Dropbox (file storage), Evernote Scannable (iPhone app allows you to easily take a picture and PDF any receipt and document and load it into Dropbox - it's amazing), Word Online (for lease and other templates), and Excel Online (for all financial and statistical tracking) for virtually every aspect of my business.  Just as a note, I'm only at four properties right now, so I'd imagine as I scale up, I may have to move to QuickBooks or the like for an accounting solution.  Luckily I work in finance for my day job so I get paid to learn more and more about how to efficiently track data and dollars.  

I have a file structure in Dropbox like the following:

 Company Name

Templates and Documents (this houses all of my leases, applications, and move-in/out templates) 

Processes and Procedures (any operating procedure for work I do)

Property 1

Accounting & Finance

Expense Receipts (this houses all of my receipts which are numbered like "000001 - Home Depot - Materials for Faucet").  These receipt numbers are then input into my financial spreadsheet so I have backup documentation to reference if I need to. 

Financial Tracking (this includes any other documents related to finances and my actual financial tracking file with my balance sheet, income statement, and cashflow)

Property Documents (closing, mortgage, insurance, tax documents)

Dimensions & Measurements (I keep dimensions and measurements for everything - you never know how handy this is when out at Home Depot or Lowes)

Photos (obviously pictures of the property)

Tenant 1 (this folder houses all tenant documents like a lease, general information, contact info, etc.)

Tenant 2

Property 2...

I do use Excel for everything and it works very well.  It's very pliable and can be adjusted to track any sort of statistic or metric you need.  I think one of the biggest issues with investors is not understanding basic accounting and finance concepts that would lead to massive insights and gained efficiency.  Hope this helps!

@Michael Oldani

Not a stupid question, everyone has to start somewhere.  Can you answer the following questions for yourself:

1) How much money do you earn and spend each month?

2) How much money do you currently have in savings, retirement, and other accounts?

3)  If you had to live for 6-12 months without any income, would you be able to afford that?

Typically for a home purchase you should save up about 25% of the home value you plan to purchase to get a conventional mortgage. Additionally, you would want to have 6-12 months of mortgage payments in a savings or other liquid account to show the bank you have sufficient reserves. If you don't have 25%, there are other ways to get financing for an owner-occupied home through FHA or VA mortgages as well.

To answer your question on getting pre-approved, if you're working with a real estate agent, talk with them and see if they have any banks they'd recommend.  If not, I would first start with your current bank (who you do your personal banking through) and see if they offer home mortgages.  Hint: Local banks are typically much better to work with than a big Wall Street bank. 

You're right @Brent Coombs  that was a typo.  I would recommend Option #1.  I have the two options confused.   Option #1 is to go with another property purchase and Option #2 is to reinvest in the existing property.  I would expand the portfolio into another property and go with Option #1.  

@Jordan Sutherland

First of all, congratulations on all of your success thus far and congratulations on the new addition to your family!  You're well ahead of the financial game for your age. 

While I think you should really push to buy another home, you did mention that things tend to get tight sometimes.  With that said, I think it might be best for you to stay put in 2017 in your current home and purchase the rental property instead.   If you can find a great investment property that can cash flow a few hundred dollars per month, this will give you some added flexibility this next year and only build on your savings.  Then, in 2018 or 2019 (when you've got a 7, 4, and 2 year old, you can make the jump to a bigger house that the kids will be able to grow up in for a long time.   Just my thoughts on that.  I know it is certainly easier said than done with a growing family in a 3 BR home!

Congratulations again, I don't think you can go wrong with the way you've set yourself up!

@Alex Lawson

I would recommend you go with Option #1.  With option number one you're limiting yourself to one property and only one additional unit.  With option #2, you'll be adding two units and you obtain title to an additional piece of property.  Sounds like you're on the right track though and it's a good problem to have!  Good luck!