All Forum Posts by: Keith Kellermeyer

Hey Archie!

No, deferring your mortgage to invest in stocks is not a good idea. Using debt to invest, and potentially lose, could cripple your financial picture. I'm not positive on this, but doing so may even be against the law? Gambling with bad debt is one of the several ways the economy crashed in 2008.

Hope this helps!

Edit: A quick edit here, when I originally viewed your post, only the title appeared, with no body post, so I missed all your details. That being said, I still stand by that it is a bad idea to do so.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $70,000
Cash invested: $20,000

SFH purchased pre-foreclosure. Purchased as a place to live for college, rented out 2 bedrooms to friends. Build 4th bedroom out of converted garage and began renting out entire home in 2019. Planning to renovate 400sqft shed in backyard to create another rentable space!

What made you interested in investing in this type of deal?

Moving out of my parents house. Renting always sounded like throwing money away to me.

How did you find this deal and how did you negotiate it?

Off-Market brought to me by a real estate agent my father was working with as a contractor. Only negotiated to keep appliances, price was already fair.

How did you finance this deal?

Savings from working from 16-20 - 20% down

How did you add value to the deal?

Created 4th bedroom, redid all finishes and painted, new A/C, paint, floors.

What was the outcome?

BRRRR

Lessons learned? Challenges?

Living in your project is not an easy task.

Hey Mark!

I grew up just south of Denton and went to school at a university there. For a new 3bed 2.5bath townhome, I think $1750 is actually kind of low - especially if you're closer to TWU. But this is just based on what I've observed :)

Something that seems interesting to me is that this home is 1670sqft, but only 3 beds. That would be more than enough for a 4th bedroom in a college town - I own a rental 4bed 2bath house just south of Denton with ~1500sqft. Maybe this new construction could have some modifications for a 4th bedroom? This would certainly drive up your income and make the number look better!

I'd say the #1 thing you should be sure of is what is your criteria for "success". If you believe any return is a good return, then yes, this property cash flows on paper and should work for you! If you criteria is to make an 8% CoC return though, this probably wont work. Define your criteria first, then let this determine if a deal meets your criteria or not.

Hope this help!

Hey Neiman!

When people ask me what I do/what I invest in, I tend to give them a few key pieces of information:

1. Criteria (SFH, MFH, Mobile Homes, price, etc.)
2. The word "solution"

"I look for home-owners who are in distress and in need of a creative solution. I focus on Single-Family Homes below $350k in the Orlando-area."

Like Anson said, emphasizing you are helping people and bringing solutions is important, but specifying measurable criteria will not only help you hone in on your focus, but also help whomever you are pitching to know exactly what you are looking for.

In the words of the great David Greene: "Know your criteria!"

Hope this helps!

Hey Christopher!

It sounds like you want to know when this property will go to auction.

You may want to check with the Clerk and Comptroller's Office. I believe the TDA process is automated in Florida through RealTDA.com. The Clerk and Comptroller's Office will most likely be able to help you search if a TDA has been filed yet, based on a property address.

Hope this help!

Hey Michael!

There are pros and cons to inheriting tenants. I would recommend you get a brief history of how the tenants have performed from the current landlord (missed/late payments, how long they have lived in the property, how long their current leases are) and see if these existing tenants meet your requirements.

Pros:

• No money spent on advertising/placing tenants
• You receive rent payments immediately (helps offset your initial costs if the units were vacant)
• You can start to build stockpile of cash for when those units do turnover, rather than having to come up with capital to renovate off the bat.
• Higher cash flow (rent payment income, no vacancy expense, no turnover cost to re-rent the room)

Cons:

• Tenants could be nightmare tenants (damage, no payments, refuse to leave) - but you can get this info from the landlord/neighbors/tenants themselves.
• Don't meet your tenant requirements
• Clash of personalities

Personally, I think inheriting tenants is a good thing, so long as they are paying rent and have a decent track record with the current landlord. By inheriting tenants, you have the opportunity to turn them into life-long tenants of yours, to go in and create a great reputation with them by fixing things that the previous landlord neglected, and building your rapport as a landlord and investor.

Hope this helps :)

Hey Alex! I do not have any recommended CPA or Financial Planners, but I did want to direct you over to this Bigger Pockets Article from the other week about 401k and self directed IRA's and found it to be informational and expanded my view of options for moving my retirement accounts with my company. https://www.biggerpockets.com/renewsblog/understanding-self-directed-iras-faq/?utm_source=newsletter Good luck!

That's alright Wesley, it's taking me a bit to type this out on a smartphone haha. A good book that would cover everything you're trying to do is Brandon Turner's book on How to Invest in Real Estate with No and Low Money Down. I'd check that out for sure, it includes many creative ways to finance deals!

Hey Kelsey! I'm currently reading Brandon Turner's book, The Book on Rental Property Investing, and listening to Scott Trench's book, Set For Life. A lot of investors push the book Rich Dad Poor Dad, which is next on my list. A few additional authors you may want to check our are J. Scott and Anson Young. Also, my favorite flavor is vanilla too! You can't go wrong with vanilla!

Also, in regards to your question about 75% of the income able to be used as part of the loan agreement, that normally comes into play once you have proof that you have previously managed rental property. For example, I've been renting rooms in my SFH for 3 years now, and claiming the income on my taxes. When I go to get a loan or refinance, a bank will see that I have been producing this rental income for several years and that it is part of my overall income, which makes them more likely to work with me on financing a new rental property by counting 75% of the potential rental income into their calculations.