All Forum Posts by: Cory Binsfield

I have the same challenge in my market. There are not a lot of multi families. 

To make sure I'm meeting my goal of one property a year, I decided to acquire 3 seperate properties on every street. I call these real estate pods as in tripods.

A good commercial lender will allow portfolio loans. This has worked for me and might work for you. 

All you do is refinance 2 or more properties into one loan or purchase 2 or more into one loan. Its a great work around and the lender likes the fact that they are spreading the risk among more than one property. 

I'd focus on nice 2 to 4 unit in a nice neighborhood. Here's why

Nice properties attract nice tenants 

Your first property will make or break you. In other words, if you have a terrible experience due to your lack of experience, you might get discouraged and never buy real estate again. I've seen this happen with new investors who focus on cheap properties in cheap neighborhoods (that tend to attract not so nice tenants due to financial difficulties). 

Don't trip over pennies on the way to dollars. A 3.5% down payment allows you conserve capital and purchase a nice property. You can always refi out of the FHA loan once you pick up more properties.

Single family is nice but doesn't allow you to maximize your rent while hacking your housing. Eventually, you will get tired of roommates.

Flipping is a job. Buy and holding passively provides way more benefits including tax write offs directly against your wages or self employment income if you can qualify as a real estate professional. 

If your goal is to maximize time, wealth, and replace all your current income , then buying and holding is the way to go. The key is to minimize your down payment so you can buy more properties. 

I would ask the owner if he wants to sell and get a price out him.  If he is nuts, move on and find a motivated distressed seller.

It seems like you are getting too caught up in analyzing the deal. Unless the seller is motivated, you will never be able to "convince" him to sell and all this number crunching is a waste of time.

Sean, you are spot on with the barbell approach-index funds and real estate. Here are some pointers based on my experience in doing what you propose. 1) Once you retire early, you can ratchet down your tax exposure to little or nothing. In theory, if you only take 3% and live a frugal lifestyle, your effective state and federal tax bracket would range from 5%-15%. 2) By focusing on cash flowing properties, you could hire a PM while working then take over and self manage while retiree. This would allow you to become a reit professional and gain further tax write offs. 3) During the last crash of 2007-2009, markets plummeted 60%. A 60/40 portfolio of stocks and bonds fell way less. This is the power of owning bonds (safe bonds like short term to intermediate treasuries). Avoid the stupid bonds-junk, agency, corporate, etc. 4) My cash flowing rentals saved me during this period AND I used the crisis as an opportunity to expand the reit portfolio. Bottom line, if you own bread and butter rentals that cater to the masses, you can still be a part of the classes. Its the Sam Walton approach to real estate. You have a solid plan. Now go buy 10 cash flowing houses over the next ten years. Once you buy one, the rest become a breeze. On a final note, turn key is not an option if you want to maximize your return. Just my opinion mind you. Im sure a lot of the turnkey folks will hate me for this statement.

Still looking for a financial advisor? I just stumbled upon your post. Feel free to contact me via our BP profiles

1. The millionaire real estate investor 

2. Hold-see BP podcast 153

3. Building wealth one house at a time (the original edition. The others....meh)

i haven't used this service but I've heard great things about them. It's a service called cozy.co. They provide free online screening. Tenant pays and is able to use same application for multiple landlord applications. Might be a work around for you? I would definitely not allow a report from a tenant since you need both criminal and credit and housing history verified. 

Great discussion folks. I've never used hard money and finally understand why the HMLs offer such onerous terms.  Yet, if you have a screaming deal the terms are definitely worth it. 

In terms of skin in the game, what's the big deal? I would never rent to someone with no deposit, no income verification and horrible credit who boasts to me how many times they have successfully rented. Land lording and lending are truly alike! 

It sounds like you own some free and clear properties. If this is correct, I would go to a local lender (no big back with a huge national presence) put on a suit and tie and show them how you would like to take 2 or 3 properties as collateral and use the proceeds to buy, fix and rent over the long term. You would want a slick presentation that shows all your financials. Or use the BP calculator to show your buy and hold cash flow along with dent service, etc. 

Once you stabilize the new rental, you would then go back and pay off the original money with a 20 year commercial loan. On both cares, you should be able to get an interest rate of 5.75% or less. 

While you are doing this to get more deals, you could be working on private investors on the side. Honestly, if you came to me and said you would give me 6%, I wouldn't consider it worth the risk. This is why hard money lenders demand 10% or more plus points and short durations on loans. 

I have 3 primary contractors for maintenance and remodeling.  Other folks like plumbers, electricians and sewer guys are on my preferred list. If they are too busy, I drop down to my back up people.