All Forum Posts by: Kyle McCorkel

Sara Abernethy If you go unsecured offer them a nice big interest rate as an additional incentive for the extra risk. I’ve done unsecured private loans on just a few deals but have offered 12% interest only just to get my foot in the door. I’ll lower it in the future as I get more experience. Only other thing is make sure you can add value so you can refi or sell to payoff the loan plus mortgage. For example buy for 50k, mortgage for 40k, private loan for $60k (10k for down payment plus $50k for rehab). Then the property should be worth $150k.

Mrinal A. Agreed with Travis Wylie Be aggressive, be bold. Buy a 4 unit and live for free. Huge wealth builder! Look in Hershey, Palmyra, Hummelstown and Middletown. You probably want to avoid anything with Harrisburg school district. High tax, high crime unless you really know the area.

@Nick Hundertmark

Yeah sounds like you can do it; just not with a conventional lender.  Conventional lenders have all kinds of restrictions on how you pay for the down payment.  As Travis mentioned, commercial loan or portfolio loan.  I've got a portfolio lender near you, shoot me a PM and I'll provide the contact info.

@Ryan Wilson

Principle reduction is not cash flow.  Cash flow is money in your pocket.  Principle reduction is not in your pocket.

So when you figure cash flow it should be income minus expenses (vacancy, insurance taxes, maintenance, management) minus debt payments (both principle and interest).

And for your ROE after refinance, you are saying that your remaining equity is $66K after refinancing, right?

Will your debt payments really go up that much switching from a 15 yr. to a 30 year?

@Ryan Wilson

Can you outline your numbers for the ROE and cash on cash calculations? After refinancing your ROE should be higher...

As long as you are assuming a 30 year loan with a nice low interest rate.

Ryan Wilson Figure out your Return on Equity (ROE): total annual cash flow divided by equity in the property. Compare that to the cash on cash returns of other properties. Cash on cash = total annual cash flow divided by total cash invested. Total cash invested would be down payment plus closing costs. Your ROE will be very low since you have been paying down the mortgage. Listen to Get Rich Education podcast, episode 6, and let me know if that makes you question your decision to pay down your mortgage.

Jason Abel I’ve tossed around that idea but never really pursued it seriously. And unfortunately I’ve never met anyone locally who is doing Airbnb. So I’m not sure if that means there is an opportunity or if this is just not a good area for it. I think midtown Harrisburg and Lancaster would be good. Hershey might have good demand but the higher home prices might make it more difficult to cash flow. There is a website called AirDNA that provides data on Airbnb demand, occupancy, etc. but it is a paid service. Might be worth it for the information though.

David Schulwitz As others have said, just use the cash. Think of it this way, you’d rather use the bank as a bank, rather than using your PROPERTY as a bank. Banks are used to store money, properties are used to store people :) Good luck.

Ericka Grant Without knowing many more details, I’m pretty sure you did not over spend. Sounds like the unit needed the new floors and new paint and you just bought this property.

Do any of the licensee's out there do any marketing for distressed, off-market sellers? My question for you is whether you are required to disclose your broker and licensed status in your advertising.  A few examples:

• Let's say I send out direct mail to all absentee owners in my farm area, trying to pick up rentals or flips.  Does my letter need to have my broker's information on it?
• Let's say I want to put a sign in front of each of my rehabs.  Something simple that says "I buy, fix, and rent houses", with a phone number.  Same question...do I need to put my broker's info on it?

I have no problem with disclosing the fact that I'm an agent, and if these marketing techniques got me in front of a seller I would disclose my licensee status immediately.  I'm just afraid that it might overly clutter the ads/signs/letters if I need to adhere to the strict guidelines set by the Real Estate Commission around advertising.

I will of course speak to my broker about this, but wanted to check what others have done.  Your past experience and insight on what works or doesn't work is greatly appreciated!