All Forum Posts by: Jesse Waters

I have made offer's on properties where I thought the asking price was more than fair based on my analysis and goals for rate of return (cash on cash).  Regardless of the property type I don't chase properties that don't offer positive cash flow.  

I also look at what repairs the property needs, two of my last three purchases were in need of work after closing.  On one deal I was able to talk the seller down in price as well as get cash at closing for repairs, in the other deal I could have paid less for the property and done the repairs my self but paid full asking price with the seller agreeing to provide cash at closing to cover all the repairs.  The key is to find a deal that makes everyone happy and is good for all parties.

The biggest part of making a deal to me, is to identify what the sellers needs are and structure the deal around that.  If you meet his/her needs you can often find other parts of the deal you can come out of top with.

I would try to link up with a investment group or find a local investor and pick their brain.  It never hurts to ask questions and learn as much as you can.  I have found that property managers can be a great source of knowledge, especially if you offer to buy them lunch or coffee, since you may be bringing them more business.

I try to read 2-3 books a year on REI, but when I first started out I was reading 2-3 a month. Most of them said the same things just in different ways. Other books gave me new ideas or different perspectives & strategies.

Good Luck.

Always look at the numbers. If you can earn more by investing than paying off the debt then invest. I am a big fan of Dave Ramsey as well, always be careful with debt, even when it is used for business or REI.

Depends on the lender and the loan.  I have had lenders call two days after closing a property offering me re-fi, and I have asked others who tell me between 6-18 months seasoning.

JW

Daniel,

I have a few properties around Columbia, SC.  The market isn't going through the roof, but you can find deals and get some solid cash flowing properties.

Jesse

The big down side to condo's are condo fee's and special assessments.  Generally, you don't own the outside of the building, parking lot, roof etc.  So, when repairs are needed, or the building needs to be re-sided or re-roofed they will hit you with a special assessment.  My business partner lives in a condo in Virginia Beach and he has recently been hit with two special assessments for a total of about $9500.  To make matters worse, the assessment was so high because the condo association president was inept and allowed the contractor to do the design work for the repairs and didn't get any other bids.  Assessments can quickly wipe out years of positive cash flow, which, is the name of the game.

I tend to avoid them because I don't want someone who doesn't own my property telling me that I have to pay money for, what ever, fill in the blank.  If a condo association is well run and they have been saving up for anticipated expenses and you don't have to shell out for a special assessment, I would give it a look.  Remember to factor in condo fee's and then some to cover.  After that, see how your cash flow looks before deciding which way to go.  Some condo associations also have limitations on rentals.

I also have Quads and they are generally easy to manager, although some of the tenants that move out with out notice can trash the place.  I had one move out with out giving notice, when we went in the power had been off for about 4 days, the mess in the fridge was enough to turn even the toughest stomach.

For what it's worth, that's my point of view.  Best of luck.

JW

Vincent,

Rate of return is based on the amount of money you put down out of your own pocket, not from the total purchase price of the property.  I think that wold be Cap rate.  If you purchased the property with no money down and had $100/month positive cash flow, then you would have infinite returns.  

My goal is to replace my primary income with passive rental income.  My first major bench mark will be to have enough coming in from rentals to cover my monthly personal expenses.  I anticipate that to be a great moment for me as I will no longer have to work.  I'll keep at it for a few more years and use the money from my primary job to buy more rentals.  So far the positive cash flow has been good, as long as things keep going the same way, I am aiming to be done working by the time I am 40, 9 more years.

@Mark Creason 

I have a two part plan. 

1-SFH's because they seem to appreciate faster, which, gives me more equity that I could pull out (re-fi, LOC or roll into another loan) and they are easier to sell should the situation arise.

2- Multi Family properties.  every thing is under one roof, more or less and I get a much higher cash on cash return.  However, they aren't as easy to sell, and have higher turn over.

I always try to buy something that I wouldn't mind living in, and as cheesy as it sounds, I have my wife take a look at a property before I make an offer to get her opinion, since in most familes the wife holds a lot of power over housing (happy wife, happy life.)  Perhaps those are words to live by.

I have explored commercial lending and found the terms reasonable, but most want a minimum financed amount of $300k or $500k+ with 5+ units, reasonable, but I am still playing in the minor leagues, $130k purchase price on my largest property.

Thanks all for the pointers.  I think I have come up with a few potential strategies that I am going to explore further to see which one is the most viable for my situation.

1) Blanket loan for the existing properties, hopefully to my LLC to clear my credit then I can explore home path at 10%.

2) Blanket loan and use my extra equity towards the purchase of another block of apartments, making the whole thing commercial.

3) Suck up the 25% DP's for the time being.  And do some fix-n-flips in between to do some extra fund raising.

Thanks again.  Happy investing to all.