All Forum Posts by: Kenneth Garrett

@Aaron Hanson

I had attended a training they had put on and built a relationship with him. The arrangement was I would secure the funding on the BRRRR project and he bought the property with a private lender and completed the rehab. I then bought him out the following year. We both made money on the deal.

@Brian M.

You can acquire commercial loans on single family rentals and up.  When you get to 5 units or greater in a building you must use commercial lending.  Residential is not an option.  Experience will come into play.  If you have experienced people on your team that will help.   I partnered with an experienced investor on my first one and after that I was good to go.  I’m not saying you can’t do it on your own, it really depends on the lender.

I have found the best options with lenders has been small local lenders and credit unions.  The big banks are difficult to work with in my opinion.

Portfolio lenders will most likely want to see some experience. The ones I have talked to don't seem to considered with DTI as long as the property cash flows. Hard money lenders I would think would do the same. I only use private lenders and small local banks. I have talked to many portfolio and hard money lenders I just never pulled the trigger. I did not like the terms. Interest rate was too high. 6-7%.

@Colin C Barrett

They are in violation of the property maintenance code.  Your lease should address code violations.  The tenant has control of the property so therefore they are responsible. See below.

301.2 Responsibility

The owner of the premises shall maintain the structures and exterior property in compliance with these requirements, except as otherwise provided for in this code. A person shall not occupy as owner-occupant or permit another person to occupy premises that are not in a sanitary and safe condition and that do not comply with the requirements of this chapter. Occupants of a dwelling unit, rooming unit or housekeeping unit are responsible for keeping in a clean, sanitary and safe condition that part of the dwelling unit, rooming unit, housekeeping unit or premises which they occupy and control.

@Brian M.

There are a couple concepts to consider. You can use the cash flow and depreciation as income that helps improve DTI. It will need to show up on your tax returns and you'll need at least two years of it. A second option is to use commercial loans where your DTI doesn't matter. What does matter is your DSCR. It must be 1.25 or better. You'll need to own the property in a LLC or other entity. The interest rate will be about 1% or higher then a traditional residential loan.

Good Luck.

@Jennifer Schultz

Calculating returns can be done many ways and looking for a formula that works with STR's is very subjective. I've complete many BRRRR projects and my cash on cash return is 100% within 12-18 months that's much different then a STR that I may vacation at as well. There is an intangible benefit you can't put a number to it.

I prefer to look at cash on cash as my formula. Based on my current numbers my CoC will be in excess of 25%. That's a number I can wrap my head around. If things continue at that rate in four or less years you have recouped all your money back out. You can then repeat the process or enjoy the cash flow Then your cash return can become infinite.

If your looking to retire on the cash flow then you need to look at your entire portfolio to see where your at. I have a number of LTR. Those take less effort to self manage. I think I will end up with at least 3 STR. This will replace all of my W-2 income and I can travel to my STR. An intangible you don't get with LTR.

It took me 6 months to find my STR investment. I mostly focused on Destin/Crystal Beach. I ended up buying in Miramar Beach on the west end so Destin is right next door. It's been a great experience. I did great over spring break and June and July are completely booked. It's a great profitable investment and I can use it a couple times a year.

@Richard Pallarino

You don’t need it to look super nice.  If it’s broken and breaking apart you should repair it.  If it’s bad shape it is a code violation and the city may require you to fix it anyway.  You can seal coat it for under $200.  It makes a big improvement unless it’s broken apart.

@Joyce Williams

We did a background check which includes credit and financial. They were employed, they were just bad people. The eviction moratorium was lifted only if you were not COVID impacted.  We always conduct a thorough background check.  Sometimes you do your screening correct, but it just doesn’t work out.

@Joyce Williams

Yes, because of COVID we used an attorney.  Yes we received a judgement as well, but we need to file other documents to enforce the judgement.  We don’t expect to collect any of the judgement, but we can always hope.  If they try to buy a car or home it will show up on there credit report. That’s probably the only way we will collect anything.

@Tony Gorokhovsky

I just bought a property in the Florida Panhandle.  Doing great with the help of @Avery Carl and her team.  Took 6 months to find the right property and got outbid many times, but persistence is the goal.  I live 950 miles away.  Spent three weeks there rehabbing and furnishing it.  I’ll have my investment for rehab and furniture back in the first year.  Cash on cash return in excess of 20%.   I looked at Airdna but I followed at @Luke Carl concept of enemy method.  Search your competition and see your actual competition versus some algorithm.