All Forum Posts by: John Morgan

I'm buying a SFR tomorrow. My contractor bid the rehab for 25k. I wrote him a check today for 50% of the rehab cost. Then I'll pay him the other 50% when he completes the job. That's it, nothing more. He did another rehab for me recently and it worked fine for both of us. He needs $ to pay all his vendors and materials up front.

Anyone recommend owner financing? I have a couple properties I own outright and I’m tempted to try this route but don’t know much about it. I have a couple properties I still have a mortgage on and the tenants want to lease to own. But I understand that probably can’t be done.

@Huso Akaratovic

I’m closing on a cash out refi on a rental property I own outright tomorrow. The lender I used is giving me a 4.1% interest rate on a 15 year loan. My loan is for 140k. They may be able to give you a better rate on that small loan.

This happened to me in May. They paid their full $1,400 deposit and gave me first months rent. I had a flea infestation problem outside the house and didn’t want them to move in until we got the flea problem under control. After 3 major spraying outside treatments, my pest control guy told me they could move in the next morning . The house got broken into that night (copper stolen in the attic from my HVAC system) and my tenants decided to back out. I gave them all their money back and thought that was the fair thing to do. They had signed a two year lease and I was excited about them as good solid tenants. However, things happen and I didn’t feel right keeping all their money under this circumstance.

I think we're over thinking LLCs. I haven't heard of one person being burned by the DOS clause when their bank found out about their LLC. I bet if they had an issue with it for whatever reason, they would just make you switch the deed back to your name. And I've never heard of anyone's LLC being sued. If they see it's in an LLC, I bet 99% of the time they don't go after you for more. Would be interested in hearing from anyone who has had a DOS from a bank or their LLC sued.

@Cheryl Vargas

Yes, 15k isn’t bad after paying 30% to a management company. It grossed 30k last year and 33k the year before. But I end up paying about half that amount to the management company , utilities, cable, internet, inspections, maintenance, taxes, insurance etc. So I calculate I walk away with about half the gross income when it’s all said and done. 

And fortunately it has increased in value 75k in the last 4 years. I just did a cash out refi to buy a SFR for cash that will net me $500/ month more after this refi loan expenses.

i was told by many four years ago we were at the peak and things will pop. Several of my friends had cash on the sidelines waiting for prices to come way down. They’re still waiting. Maybe housing prices will come down, but with the economy hitting on all cylinders and the unemployment rate at historic lows, I don’t see real estate prices coming down much..other than the really expensive ones.

My first real estate purchase was a nice two bedroom cabin in Branson, MO four years ago I paid 130k for. I pay a management company 30%!to deal with it since we live out of state. It does well 8 or 9 months out of the year. If you average all my expenses including management fees, it nets me around 15k/year. Not bad, not great. It's fun to visit for free any time we want which is nice too. Since then, I've bought 6 SFR in my local area that have a much higher ROI. But it's fun to have a nice clean cabin we can visit any time we want and have someone else take care of it.

@Mark Yesa

Several people told me I should have waited 4 years ago before my first purchase. I didn’t listen to them all and dove in and slowly bought 7 properties. Their values have gone up over 250k between all of them since I bought. I’m glad I didn’t listen to them. Rent has gone up quite a bit too which was a bonus for my SFRs.

I would also recommend ditching your real estate agent. You can do better on your own. Find some wholesalers in your area and get on their email list. They'll bombard you with great cheap deals if you have cash. And if you need to buy one off the MLS because you need to do a traditional loan, call the listing agent. They would rather have you buy the home because they'll get the full 6% commission vs 3% if you use your agent. Their name is on the MLS listing you'll find on Zillow. They sometimes tell you more info about the property or seller's situation that might come in handy when making an offer. Or how competitive your offer will need to be if there are multiple offers. Good luck and enjoy the ride!

My lowest ROI is a nice home in a great school district. It cost me a lot more than my six other rentals, and my rent is less than 1%. My tenants seem to have a higher turnover rate at this location due to them looking to buy as their incomes increase. On the other hand, my cheaper properties tend to attract "lifers" who don't ever want to leave. I get over 1% of purchase price in rent at these and don't have to worry about the yards at these properties. Most of the homes in these hoods look like rentals and their appearances aren't as attractive. For me, it's all about ROI. Am I proud of my nicer properties? Yes, but I'm happier to get a much higher return on my "beaters" with tenants who don't ever want to leave.