All Forum Posts by: Jeff Ronningen

@Victoria Coleman 15% CoC return, no D properties, only in neighborhoods I'm familiar with, minimum $150/door/month positive cash flow

@Nick C. Wanting to get revenge is also a losing strategy both in business and in life.

@Nathan G. Elderly tenant is a smoker and her car’s not running. Says she had lighters delivered but they’re childproof and she wore a sore into her thumb trying to use them but still couldn’t get them to light. She called and said she might have to keep a candle burning. I said don’t do that and told her to crank up a burner on the electronic stove, when it’s just about hot enough to glow you can get a light. Bought some easier-to-light lighters the next day and dropped them off.

@Blake Hornbrook. FHA owner occupied loan. Less than 5% down, finance closing costs. Could buy $100K duplex with $5K.

@Jeff Adams

1) with radical intensity, find ways to increase income and decrease spending to build up funds to invest, including selling stuff you don’t need

2) prepare to house hack, best scenario is to buy and live in a 2-4 unit building

3) become an expert in a few neighborhoods close to home, research sales, monitor properties on the market, drive and walk the neighborhoods, network with owners, figure out who the active realtors are, know the financials

4) run financial scenarios of available properties in your area, determine your decision criteria and your business model (I.e. cash on cash return, positive cash flow per door, minimum return on flip, buy and hold, etc.), you can’t recognize a good deal until you’re an expert at evaluating a deal

5) talk to lenders and determine the type and amount of funding you can attain

6) search like crazy, have fun with it, be patient, only pull the trigger if the property meets your criteria, don’t massage the numbers too hard to make it work

@David Shertzer. Seek the advice of professionals. Full disclosure, I'm not a professional. However I'm pretty certain that the same entity must complete both ends of the 1031 exchange, whether it be you individually or your LLC. So your scenario would not qualify.

@Jinyu Shao. Talk to her about it without being a pest or confrontational. Ask “when do you anticipate making your next payment and for how much?” “I’m trying to plan my bills, can you update me on the status of catching up with your payments?” If you can keep getting paid and make slow progress catching up that’s your best scenario. You only have a few more months then it should be over.

When you sell a property your proceeds at closing generally will be 8-10% below the sale price due to 5-6% realtor commission, settling escrow accounts, county deed recording fees, etc.

At 80% LTV you can get the mortgage insurance payment dropped, you open up the possibility of other non-FHA and non-owner occupied financing, you give yourself a cushion to sell if needed, and you reduce the possibility of being upside down if values pull back. It puts you in a safer spot.

I said aggressively build up cash reserves AND pay down principal. Like get to $10K or even $20K cash reserves and 80% LTV on shortest timeline possible. Ideally have 3-6 months expenses saved up and liquid. Both help you weather a storm. Cash reserves get you through unplanned repairs and vacancy. Paying down principal gives you freedom to restructure loans or sell. You'll essentially have no equity at closing. FHA requires less than 5% down and allows you to finance closing costs, but it costs 8-10% at closing to sell if you use a realtor. This property seems like an oddball that's difficult to sell, as the current owner is finding out, despite the strength of the Asheville real estate market. I'm conservative and like to prepare for worst case scenario. Everything from there is upside. If you have to pull the rip cord and get out of this property, better to get out taking a loss and having learned a lesson than going through foreclosure.

@Cameron Calvert. Full disclosure....I’m not an expert in AirBnB and vacation rentals.

The numbers look pretty good. Have you developed a complete understanding of the time and effort required to manage your turns? Have you considered the impact of an economic downturn on vacation rentals, especially since you’ll be highly leveraged?

If you do it, aggressively build up cash reserves and pay down principal. Also do the math if you convert from vacation rental to long term primary residence rental.