All Forum Posts by: Kerry Baird

We started out by buying for cash flow.  We used tax returns, work bonus payments, any extra money for down payments and for renovation.  I found motivated sellers from the notices of default in the local paper, wrote them letters and bought houses with seller financing.  Fixed and flipped some of those, held 3/2s that rented best.  With the flip money, bought more keepers.  We bought houses for appreciation later on in our journey.

If you find one or get approved for an unsecured BLOC, please do share.  

Hey there, @Mario Faris.  I have buy and hold LTR houses and a few STRs in Brevard County, FL.  It is now a growing MSA and many houses in need of renovation.  My rentals have been in demand, going quickly up for rent.

@Brandon Stiles, I haven't found very many people who answer about business lines in these forums.  Most folks are newer and don't post much about growing the business side.

I do recommend you go to the Business Credit forums on the MyFico site. There is a table that I found helpful, with credit cards that report to the business or EIN side of things vs reporting on our own personal credit. We still have to PG the credit...personally guarantee...even though we have been in business in one LLC since 2012. That's the business that I just was approved for an Amex Blue card. It does not report against personal. We have an Amex Platinum for our STR business.

People on that site talk about their approvals and put in their FICO scores, time in business and so forth, making it very helpful in getting started and avoiding cards/banks that report on the personal. My own bank, TD, offered a credit card for my STR business, but it reports to personal. I am looking for a small community bank that will not do that.

I have to bring my trust documents, my operating agreement, tax returns, the IRS EIN document.  I worked to get Dun and Bradstreet numbers, but had a recent lender say he can't see that.  I still haven't gotten a BLOC, but am looking at the MyFico site for that now. 

Following on the previous poster, we did use hard money to fix and flip, also regular mortgages before I learned how costly they are for short term loans in closing costs (coming and going), and then DSCR mortgages that do not report to personal for LTRs and STRs. I try to buy with seller financing now, and I renovate with Home Depot line and our own cash, and then refinance or sell later.

TO expand on the HOW you scale.  If you live in a unit, you can borrow against your equity more easily than if you do not.  To find a relationship lender, call or visit the small local community banks and credit unions near the property.  Have your income statement both actual and projected, real estate owned, your detailed plan for going forward, have your FICO score, tax returns.  Ask if they have an appetite for portfolio lending and if they have in house underwriting and lending.  You'd place your rents there, to their benefit.  They might offer business lines of credit or renovation loans.  It will take some time to find the "right" flexible lender.  

My first thoughts in reading your post is that we were able to buy a lot of houses while we were in the military, taking money from deployments or tax-free income to buy houses, which we did over time.  

I didn't have the time or inclination to do the STR until we had a broad base of LTRs to help bridge the financial gap that we encounter in the slow season. Simply the time to do the STR business well would have been challenging if we were deployed (your version of out to sea). There is always something that breaks, a remote that goes missing, something breaks or stops working during their stay. I do have a handyman, but it can be time intensive OR money intensive as I hire someone to run something over to the guests and have to pay them to do it.

It is possible to get a mortgage on that first house, and will be better while it has a tenant in it than when it is vacant.  It is a bit more challenging to get financing until you can show income for 2 years on your tax returns. However, difficulties aside, you have to learn how to source cheap houses (I suggest off-market) and renovate.  It was our plan to flip, flip, flip…use cash to buy a keeper.  Repeat.  You have mad GC skills that we did not have.  Find a probate house or a distressed situation, buy at a discount.  Then do some needful things to sell or hold.  

You could do some work yourself, and then project manage, once you figure out how to buy cheap off market deals.  Then progress to renovate to rent and hold. You can build equity while you also build cash flow.   

Our early plan was 5 houses, paid for, to offset my Air Force pension for the time when I got out to be Mom.  That grew to buying, fixing, keeping and flipping 39 houses.  We currently have 15 keepers, which is a great size portfolio while we have kids in school and college.  5 paid for houses will also do the job for you, if you have a pension from your service. 

That cash flow is nice and high.  We worked to cultivate cash flowing houses as the base of our investment pyramid, followed by fewer, nicer houses in an appreciation area (fancier houses in a beach side location), which we use for STRs.  They barely cash flow and grow significantly in equity.  The cash flowing houses allow us to buy those houses that build more wealth. 

My thoughts, should I be in a similar place: see if you can find similar properties to the one you have now.  Save that cash flow up for your next down payment.  I have been able to find sellers by looking for similar properties to mine and hand write “I want to buy your house” letters, outlining the benefit to investors of seller financing.  

For example, they will receive a lump sum for their equity, and receive the rest of their equity over time, which spreads out the capital gains taxes they pay. I offer 6% interest-only for 5 years, but you can tailor this to your own strategy.  Finding properties off market and getting seller financing reduces closing costs by a heck of a lot, and often you can find sellers will not be over the top on pricing, as their properties need some work when they aren’t actively looking to sell.  

This is something you will encounter if you sell your current property; that you will get some of that equity back but there is a lot of money that will be lost in closing costs, taxes, agent fees and the like.  The property you have now is a keeper with both cash flow and equity.  I’d look to find more of those, as I regularly do by riding my bike in my “farm” area and talking with sellers. My bio talks about the deals I’ve done with seller financing.

I have used Hero mortgage for a portfolio of houses in Texas and a STR purchase in FL. Went smoothly, and he got the deal done. I am pleased.

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I have solid wood chairs at the dining table, and really like LaZBoy for their amazing quality of couches.  I have had a spate of cheaper outdoor furniture breaking, things with arm rests to include Adirondack chairs.  I have been getting wider, stronger outdoor furniture when possible.