All Forum Posts by: Keith Kellermeyer

Hey Tanisha!

Yes, I would absolutely reach out! You could do so by skiptracing the phone number of the owner and calling/texting them, leaving a letter in their mailbox, or just going up and knocking on the door to see if anyone's home. If the property is tax delinquent, look for it to go to the auction block soon, this is the time of year that counties put properties up for auction.

Hope this helps!

Hey Thomas!

First of all, welcome to the forums!

What is best depends on what your goal is. If your goal is to live with your portfolio covering your expenses and living financially independent of a traditional job, then you can do so with your original plan of just investing in a few small multifamily properties and focusing on cash flow; no need to upgrade!

The benefit of "scaling up" is leverage. With more units, you are able to spread cost out across more units, invest for higher returns, and leverage a larger down payment into forcing more appreciation. Also, a big factor is that for most areas, any properties that have 4 units or less are considered "residential" and are valued based on Comps, rather than on Net Operating Income/Profit. Since large multifamily is valued based on NOI/Profit, you are able to increase the value of a large multifamily by simply lowering expenses. Here is an article about valuing multifamily real estate.

What you asked for: (pros and cons of holding onto the small multifamily)

Pros:

• Easier to manage yourself with less units
• Ability to diversify where these properties are and minimize risk (one property suffers, others can help carry the expense)
• Invest in each property as needed, able to spread out expenses over a long period of time

Cons:

• You are not able to scale as quickly as 1 large MF unit
• Harder to self manage - expense for management fee
• You will have to replace 5 small roofs instead of 1 large roof (this goes for A/Cs, Furnaces, Water Heaters, etc
  

There are a lot of pros and cons to both. If you're after enough cash flow to become financially free, you can use either method!

Hope this helps!

Hi Juaneka!

When doing a cash-out refinance, you are asking for a loan with your property as your collateral. Anytime you receive a loan, you can expect to have to pay interest (in this case, your payment goes up), otherwise, the lender wouldn't make any money :)

If you do not want your payment to increase, there are a few options:

1. Re-negotiate the length of the loan to be longer - a longer loan term can reduce your payment amount
2. See if your lender will let you defer payments for the first 12 months - this will allow you to secure a 30yr mortgage on the investment property and pull your cash back out of the investment, or it will give you time to get that property to start cash flowing, which will cover your $285 payment increase.
3. See if you could pay interest only on the 100k refinance - this will reduce the $285 payment, and may be easier for you.

Taking out a loan (a cash out refinance is a loan) will cost money in some form. You just need to make sure the investment you buy can cover the costs you will be incurring and produce cash flow for you!

Hope this helps!

Hey Adam!

The seasoning requirement differs depending on your lender. Some are 6 months-1 year where some are 90 days or even 0 days! It all depends on the lender's criteria. Lenders do allow cash-out refinances on investment properties, yes; some up to even 80% LTV. It will depend on your lender though.

I'd recommend trying to get creative with who you try to refinance through! Credit Unions are a good example of lenders who are outside certain bank-restrictions imposed by US law. Check out your local credit union!

Hope this helps!

Hey Randy!

Congrats on the deal completion! I was curious what you plan to do with the property now that you own it? Will it be a complete rental, or maybe a house hack for you? What are your expected numbers on the property?

Again, congrats!

Hey Jake!

I prefer Brandon's method - I learn best from real life experiences, hands-on, and being taught by someone in person. I'd definitely suggest you pick the learning strategy that works best for how you learn! But, I'll break down your options a bit:

Option A - An excellent option for you to mitigate your losses (if any). Hard to find someone to essentially mentor you, but if you bring cash, people will come. Screen your "experienced investor" and make sure they've done some real deals first. If they haven't, this will be one of those "$20,000 lessons" you mentioned.

Option B - Having your own knowledge is always useful - it matters how you best go about learning. You certainly can do a healthy amount of studying and get into it on your own, but that may not work best for you.

Option C - Do both, and more! This forum is a great place to do everything you said - network with experienced investors, study articles on RE investing, listen to the BP Podcast episodes and extract nuggets for your knowledge, purchase books, attend webinars, and more and more. Signing up for the Plus or Pro memberships also gains you access to more learning tools, webinar recordings, calculators, etc.

Overall - Find what learning method works best for you and just follow it. Make a daily commitment to keep real estate in your schedule and in your day somehow. That way, it never fades and you eventually make a deal happen; whether that's from networking with an experienced investor, or learning enough to get your feet wet.

Hope this helps!

Hey Federico!

The short answer is yes! You can purchase a house-hack almost anywhere and be successful. But, you need to first determine what you measures for "successful" are.

Do you want to have your tenants cover your mortgage and costs of living, and ride the wave of appreciation up? Or do you prefer to purchase a small multi-unit property and generate cash flow while living in one of the units? First, define your criteria for "success". Then, evaluate a deal to see if it is "worth it".

There have been many success stories that have occurred in NJ and the New England area. Check out the Deal Diaries on the site and see what people have completed recently!

Hope this helps!

Hey Angel!

Do you plan to live in the home while renting out a portion of it(AKA Househacking)? Or do you plan to purchase it solely as a rental?

First thing I would say is to establish your criteria for a "successful" investment. Do you want an 8% Cash-on-Cash return? Or maybe 12%? Do you plan to purchase with a 3.5% FHA loan and live in it for 1 year, or put 20% down with a conventional loan? Would you be interested in a fixer-upper or do you want to buy turn-key?

First, establish your criteria. That's your MINS! (Most Important Next Step).

Hope this helps!

Hey Jordan!

If you're confident in your knowledge, I say try to find a confident, knowledgeable partner and go in 50/50. The more experts/consultant/turnkey you involve, the more profit is taken off the top to pay those experts.

Your best option would be to pick a strategy, define the criteria for what you want to invest in, and execute on that strategy. Determine things like, what type of property you want to BRRRR (SFH, MFH, Mobile Homes), what market you are set on and believe in, and your maximum comfortable budget for projects.

You're doing the right thing by asking this exact question! The first thing you should do is outline criteria/strategy (even a small strategy) that you are comfortable with and execute on it! Find people in those markets by searching here, call agents in those markets, see if there are Facebook groups for KC REIA. Go get 'em!!

Hope this helps!

@Dave Poeppelmeier Thank you sir! I certainly made one of the best college-housing decisions of everyone I knew at the time. It saved me the cost of renting while going to school, and I captured the tax benefits, loan paydown, and appreciation by house-hacking.