All Forum Posts by: Lee Ripma

I invest in KC and live in CA. I stated out looking at TK but after seeing where the properties are located decided not to go the TK route. Here is a simplified view of my thinking: the value of a SFH is that it will appreciate if it's in a good area. The value of MF and apartments is that they will cash flow and also increase in value through increases in the rent people will pay to live there but won't have as much appreciation. Of course there are exceptions, but this is my general simplified thinking. When buying anything you're looking for an area where people want to live, otherwise known as demand. If your tour KC and you see where a lot of TKs are located you'll see those areas are not in demand. There are lots of nice areas in KC where you can buy a SFH off the MLS in a nice area, but TK companies don't sell there. All I can say is that you really have to know a sub market and the demand in that sub market. Hopefully something in this was helpful!

Hi @John P. and @Levi T.

I'll get my partner's explanation and let you guys know! 

He is what we're doing: tenants have to hold renters insurance. Renters insurance lists us as additional insured parties. We haven't had a situation where we took any action yet. 

@Terrell Garren

My biz partner is a lawyer, so he's hip to these kinds of things. Basically, if they were to trash the place beyond the deposit (very possible) then we could submit a claim to their renter's insurance company and get our damages covered. This is more of his wheelhouse than mine but we just require that they list us as additional insured parties on the policy. 

Yes, this is true of everyone when you view them through the app! Would be great to fix!

I'm using income 2.5x the rent, over 600, and have to pass the background check through Smartmove. I'm also requiring they have renters insurance and add me as an additional insured, in case they trash the place.

I'm doing something very similar in Kansas City and am doing a cash-out refi with a local community bank. I would put together your numbers and photos and go down to banks in the area and speak with them. If you can get a referral-even better. Good luck!

You can close on two separate deals using residential financing or one using commercial. Residential will look at you and your ability to make payments on the property, I don't know your income vs the debt on these but it's possible that your debt to income ratio would cause a residential lender not to lend to you. Also if it's currently occupied then you can perhaps count 75-100% of the income towards making the debt service payments but check with lender because I'm no expert on this! I personally would go commercial at a local bank because they underwrite the asset and it's income, not your ability to make payments. However the rates will be a little higher and (usually) only fixed for 5-7 years. I my market they are 20 year am with 20% down or 25 year am w 25% down 4.75%-5%.

Just read your whole story and watched it all come together. Fantastic work!

@Ryan Smith

I agree with @Anthony Gayden I would buy larger MF out of state. With that kind of capital, you could buy a completely rehabbed apartment (or a few) in an A or B area with some cash-flow and low risk. Let's say that you can get a MF to cash-flow 100/mo/unit in a nice area. You have PM in place and there is high demand for your rentals. You'll have to set aside CapEx money but you can buy something that is totally renovated so you won't have anything major for the next few years. You could put down more than 20% to get your cash flow up. You could buy 3 15-unit apartments and get $4,500 a month in cash flow. Use that to rent whatever place you want in SD, and keep scaling up your MF holdings. You've got enough capital to achieve financial freedom right now. If you park it in renovated MF then you'll get the cash flow. If you do value-add MF you'll be able to just grow and grow that cash flow. You're in an awesome position! Since you're in a 1031 exchange situation you probably need to buy something soon but really take your time to learn MF and find folks you trust to work with.

I split my time between SD and LA and rent in both places. I buy MF in Kansas City and I'm expanding my portfolio there. It's so much cheaper to rent in CA! I look at how much money it would cost me to get into a SFH or even a MFH house hack and I just can't justify doing it, I would rather rent and buy cash-flowing assets in the midwest. Now people say you're missing out on appreciation by not buying in SD but when you look at how much just the property tax and interest will cost you monthly the number is just crazy and the downpayment is monster. For me, this is in no way the time to buy in SoCal, especially when you can easily rent something awesome. Renting=no interest payments, no property taxes, no CapEx, no downpayment.