All Forum Posts by: Jon Kelly

@Sam Dykes Of course you can. Your expenses will be higher due to closings costs and interest. If you get the deal priced appropriately it's still possible. 

@Kean Chew ARV is market dependent, so look at similar properties in your market and find areas your property may be lacking.

With $6k and not knowing anything else about the property I would do: (1) new paint, (2) upgrade kitchen, or (3) redo some flooring with vinyl plank 

@Davis Chem why did you ask for the meeting? what about real estate interests you? what area(s) do you want to learn more about? 

@Samuel Eddinger I actually think it's a rather simple approach and think it's something you can use going forward. I'm curious what others have to say. 

The reason CAP rates are popular is because it removes the financing variable and allows investors to analyze deals on an equal playing field. The assumption is that you are well aware of what your own financing % is, maybe 3-5% for example.

By using "D" you can quickly determine if it meets your "D" threshold or not. 

Another way to do this (and I think a lot people do) is look at several metrics and determine if it meets their goals or not (e.g. CAP rate, COC, IRR, monthly cashflow per door, etc.).

haha, that's brilliant - zero debt to income makes you a less risky borrower. Not too many people would disagree there. 

Making an investment vs. paying off all debt is a question people ask all the time. All I'm doing is suggesting a different approach. There's pros / cons to each, which is what @Alex Pirila was interested in. 

What happens if you don't make an investment and that additional $1,500 goes to buying the bigger house, new car, larger TV... oh and then all of a sudden you're back up to $60k in debt without an investment property... oops

Low debt to income is meaningless if you have $0 in capital to invest. If he pays it all off then it will take years to save up for the next property. Carrying debt at <5% isn't a bad thing if you can buy an investment property with an IRR >12%.

@NIcholas Hamel That's not common at all. I own 2 mixed use properties and do not occupy the space. I would reach out to as many local commercial lenders as you can. 

@Alex Pirila Selling would be a great option. As @Anthony Dooley mentioned, if you refinance and pull cash out then your mortgage payment increases and the property has negative cashflow. 

I would re-underwrite the deal and ask yourself if you would buy it as an investment in its current state... A $325k property with <$200/mo in cash flow seems. The COC return is less than 3%... The answer is "NO" you would not buy it.

Sell the property, pay down a portion (no reason to pay it all off) of your personal debt with the highest interest first and buy another investment property. 

@NIcholas Hamel 1. $12k finder's fee is crazy

2. Did you consider a commercial loan for the property? Go to any local lender and ask to speak to their commercial loan officer and mention you have a mixed use property. 

3. If you're still looking for a private investor I would begin by reaching out to your local network (agents, property managers, investors, friends, family, etc.). You can also create a post on BP describing exactly what you're looking for and the area you're investing in. You can also find HMLs on the BP site by going to Network > Hard Money Lenders > enter your state

@Chad Kinsley it depends how much work you want to do. Your ROI is lower with turn-key but it's much less of a time commitment than buying a distressed property to fix up. If you're investing out of state and you don't want too much of a time commitment, then turn-key can be a great option. With turn-key you're paying a premium because everything is completed and put in place.