All Forum Posts by: Jonathan Towell

The live in flip is a great way to do it, regardless of how many units there are. My wife and I bought our first house, lived in it for several years, then rented it when we moved into our second house.

My only regret... I wish we had done it with more units, like a duplex, triplex, or fourplex.

Why are you creating an LLC and an S-corp? Why not one or the other?

10.5%, ouch!

Debt is super scary. A couple of ideas for you...

1. Try to fix the rate for as long a term as possible. Variable rates can be dangerous.

2. Plan for multiple exits. Option 1: Rent long term. Option 2: Quick sell. Option 3: Refinance. (There are other options, make sure you have a few.)

3. Keep emergency cash reserves.

4. Don't use debt.

5. Crunch your numbers. Get a seasoned investor to check them until you have experience. Make sure you numbers show positive cash flow.

6. Pay down the debt faster than scheduled.

I hope that helps. I wish you the best!

I'm in Lubbock, Texas where property is much lower cost than other parts of the country. For example, we have a 1340 sq ft house in good condition, in a good neighborhood, with a good sized yard, that is worth about $90k.

Lubbock has a good, robust economy. Rent and property appreciates about 2-3% each year.

You can get $50k houses here, but they will be pretty small, old, and in bad neighborhoods.

I'm interested to know if there are good, $50k houses in other parts of the country (with good economies). But, I'd be surprised if there were.

Most lenders want 20-25% down on the purchase price. To avoid that, you can take deed to the property via a seller finance. A month or two after you own the property, take it to a lender. On a refinance, you can pull out 75-80% of the value of the property. By doing this you can pay back the seller, and maybe even pull out some cash for your next deal.

I wish you the best!

I would think you offer price, plus your estimated repair budget should be well below the estimated value. 20% below? I'm not sure because I've never done a flip, but if doing this to buy and hold, I'd want to have at least 20% equity in the deal when all is said and done.

1. Your repair estimate could be wrong. You need margin for error.

2. If your cost plus repairs, holding costs, and closing costs all end up equalling the value of the house, then you might as well have just paid retail value for regular fixed up property. Why spend all the time, effort, and risk when you could have just bought something for what it is worth?

Trick question?

A good investment is anything that provides cash returns while appreciating in value and minimizing risk. There are duplexes that meet that requirement and duplexes that don't.

Did I get it right? :)

The only way I know of is to have access to pull comps. The only way to get comps is off MLS which requires a realtor license. Or, to have a realtor friend willing to pull comps for you.

Umm, yes! Collect all that rent up front! Why would taking the rent money each month make the tenant any less risky?

Some people save up money and pay in advance. They'd just rather not worry about paying it each month. And, they don't understand or care about the time value of money.

But you are an investor, and you care about the time value of money. You know that the cash in your hand now can be deployed to other uses like more property, paying down debt, or even an interest bearing money market account.

I wish you the best!

You can use all that to negotiate. It never hurts to ask. Show the comps and make a strong case.

"Sweeten" the deal by telling her she can carry back the note so that she doesn't take a tax hit on getting all the money in a lump sum. Then, she can keep earning on the money as you pay her interest.

I hope that helps. I wish you the best!