All Forum Posts by: Joseph Firmin

Not necessary. You will want to update your insurance to reflect a rental property. Unless your previous home was an FHA loan you should not need to do anything differently and I assume since you already have the new home, this is not an issue.

All about risk and what level you're willing to accept for the right margin. The risks/rewards should be asymmetrical, meaning there should be more upside potential in the profit than there is downside potential in the loss. For the right price, there is probably nothing that would turn me away, especially if I can get in and out of a deal with little to no risk.

@Annika Neerdaels - A couple things on this. Why buy with cash for your second property? Why not purchase a larger asset or invest in various properties with the same cash, use leverage and gain greater cash flow? Is it your strategy to buy the properties in cash and then save for the next one? Secondly, Did the seller say it appraised for $153? Either way, I'd offer lower - try to get a deal (discount) and argue that you'll have to do some work to get it up to a higher livable state. $30K under asking and see if the seller will come down. If not, and you still like the deal (i.e., the numbers work) - no harm in getting it at asking. I always try to get a discount first though. Never hurts to ask... "Knock and the door will be opened to you..."

@Oscar Padilla - This really depends on what you need. If you need the additional cash flow afforded by the lower interest rate (even though it isn't much), then go that route (lower interest rate). If it was me, I'd like to conserve my capital and use the extra $5K+ in another way.

In short, no. 

If you're ready and have the cash reserves in place to ensure you can weather any storms (e.g., tenant non-payment through the end of the COVID eviction moratorium).

The last one I used was actually LeadSherpa and it was cheaper and better than those I hired on Fiverr/Upwork.

It sounds more like you are seeking a private lender. The scenario sounds like a debt investment for the investor. They put up the $$, you give them a monthly distribution (principal and interest) and then there is a 5-year balloon payment. Here's an example of one we did with a debt investor (private lender):

Terms:
Loan Amount: $80,000
10% Interest Rate
25 Year Amortization
5 Year Balloon Payment
No Prepayment Penalty
2nd Lien Position
Monthly Payment: $726.96 (payable the 20th of each month during the loan term)
Total Monthly Payments: 300
Starting Effective Date: 1st Payment Due Date – the 20th of the month following the closing date of the property.

To answer your questions - Yes, to all the above. You are into a property for much less than him and he is more of a passive investor in this case (with the exception of ongoing maintenance/costs). 50/50 doesn't seem off to me and I do like the idea of the commercial loan w/ a 10-yr term (try to get the 30-yr amortization). 

Form an LLC, this will entail an operating agreement which should spell out all the "what ifs" in the partnership including the $ brought (which should include all acquisition and ongoing management costs). I wouldn't be concerned with using "a mortgage slot" on your credit. You can always go commercial and use a commercial loan once you get beyond certain bank limits for personal mortgages.

Marquin, a couple things. If the duplex costs $500K, wouldn't you have enough cash for the down payment - 25% ($125k)? You don't have to buy the property with 100% cash unless that is your strategy. 

Another option - check into a 1st Lien Position HELOC instead of a traditional mortgage. This would enable you to access 80% of the equity in your home without you having to refinance or sell. If you'd like more info I can message you about it.