All Forum Posts by: Brant Richardson

I invest in KC from out of state and am happy with it but doesn't IL have some good cash flow opportunities you can get into? If I had good opportunities in state I would not consider going out of state. Check out podcast #65, Wendel is investing in Chicago.

I would love to but will not be able o make that happen. I am planning to visit in early August.

For practice, some people make a few cold calls to owners who did not respond to the letters.

The HOA destroys it. With that HOA fee in mind, think of it as a 100k purchase that gives you a rent of $685/mo. Apply the 50% rule to that and you have $342.50 to cover your 80k mortgage and the left over is your cash flow. Not to mention HOA's can ask for assessments and do all kinds of things bad for the bottom line. Keep looking.

Don't put it off, call them right away while they are interested. I hope they are real motivated sellers.

2 hours away is not too far away to manage it yourself. I would not want to manage a whole portfolio two hours away but one property is doable. Do a really good job screening a tenant and manage it yourself, at that point you will probably be cash flow neutral.

If you have cash flow positive opportunities where you live now I would seriously consider selling at a loss. It's a painful mental hurdle but if you can get out of negative cash flow to get into positive cash flow then you need to get over it.

With high interest debt, like 18% credit card debt, borrowing against your 401k is a no brainer. With a 4.9% loan its not so compelling.

Ask your lender to plug in the numbers based on what you expect to pay for a property so you can see how much of a difference there is in the down payment and the monthly payment.

It also depends on your strategy. If you are looking to build your portfolio as quickly as possible then you will want the lower down payment. Both rates are excellent though and the difference in rate is not too much. For me it would be 20% down.

When you finance out so far that you don't have enough cash flow, you can bankrupt yourself with credit. Say you score a property for 50k (40k loan), put in 20k of work, it rents for 1000/mo and has an ARV of 120k. You have a great rental that probably cash flows $200+/mo. You decide to refinance out all you can for further investments and get a 75% LTV of 80k. You just financed all your cash flow out of that great rental. If you use the 80k to get more great cash flowing properties maybe you can cover a new roof, that was the plan anyway. If instead you have a vacancy in the cash flow property, need a new roof and your car engine seizes... you're in trouble. Cash flow is king.

Do a search for "business plan" on BP. There are some good articles written with a sequence of topics/paragraphs to write. I don't remember seeing a full fledge template but it would still be helpful.

As a buy and hold guy I would agree that the cash flow has to be there to even consider the deal and 1.5% is in fact what I look for. However, I want equity too. It makes the exit strategy stronger and I sleep better knowing that I have it. When the ARV gets too high it is reflected in increased property tax and rent does not go up proportionately so cash flow suffers. At that point the extra equity I get from a high ARV becomes less desirable. I think you could bump that 70% up to 80% for somebody like me.