All Forum Posts by: Mack Benson

I would be sure to include a contingency in your offer that the tenants are paying and are current. If the seller is self-managing, and is a mom and pop owner, the only way I can think of to verify this is with the sellers bank statements. They can redact everything else so long as the dates and amounts show. 

If the seller is using a property management company, that property manager should be able to provide you proof during your due diligence.

Washing surfaces very well may not solve the issue. For a heavy smoker you may need to paint the rooms, including the ceiling, to get rid of the smell. Another option is to rent an ozone generator, a lot of times that can get rid of smoke smells but it may take too long. Also, if there is carpet and a pad, you may need to replace them both.

Wondering if you are too young is a limiting belief.  A limiting belief is something you believe to be true that limits you in some way. There is absolutely no reason to believe you, at 19, are too young to be a real estate agent. As long as you can enter into a legal contract I think you could be old enough to become an agent. You are most likely in a position in your life where you can work for an experienced agent so you can learn from the best and become the best. If this is something you are interested in pursuing then by all means go for it. 

Your local REI meeting is probably the best bet. Typically there will be a needs and wants time or a place for people to post the deals they are currently working and you can network with them.

Other than REI meetings, you can try real estate focused meetups in your area but the biggest thing is to network. If you are looking or wholesalers for flipping leads reach out to some flippers.

I was able to locate a couple wholesalers through a google search in my area and got on their mailing list but those deals were mostly junk. It did give me good contacts though.

ABN = Always Be Networking

Good Luck!

Without knowing the expenses and cash flow it's hard to say but assuming 50% of the income goes to expense that leaves $1,650 per month, $1,440 of that goes to debt service leaving you with about $200 per month of cash flow. It's true that you will gain equity faster with a 15-year mortgage it will basically wipe out your cash flow making you break even. Taking the 30-year option will allow you to double your cash flow allowing you to scale faster.

As long as you have a positive cash flow on the property it shouldn't negatively impact your DTI.

If your goal is to continue with the property you have then I think the 15-year may be a good option. If your goals it to take the property you have and use leverage to scale and grow your portfolio then perhaps the 30-year option will be best. 

You can usually get an FHA at 3.5% down which will give you a higher mortgage because you will have a higher principle balance on your loan. You will also need to pay PMI until your principle balance falls to less than 80% LTV. However, the main benefit to house hacking is it allows you to start investing with a lower down payment than other loan programs.

One thing real estate allows investors to do is use leverage to increase their own asset balance. An FHA loan allows you to have the highest leverage possible in real estate investing, and as long as the numbers work out, it can be a great first investment.

Soliciting feedback is definitely a good idea, especially in this case. 

I guess the idea I was going for with a property manager would involve more of a sales pitch and in hindsight would probably not be the best fit for what you are shooting for. On the other hand it would be good to know what to look for in a great property manager and how a stellar property manager uses systems and processes to implement best practices on the properties they manage. 

I can clarify what I meant when I mentioned the 20 or 30-unit plus properties. When I have gone to networking events in the past I usually see PM's talking about residential (SFR-quad) or large multifamily (100+ unit) properties. I haven't heard much from managers who specialize in the mid sized properties of maybe 20-75-units.

Leverage is one of the most powerful tools available to a real estate investor. If the deal cash flows at a 70% LTV and you only leverage it to 60% LTV you are leaving dead equity in the deal. On the other hand if you need to have an LTV of 60% for the deal to cash flow is it really a deal in the first place? For multi-family I am shooting to have only 20-30% equity and without I/O have the DCSR be at least 1.3. This will cover the debt service and expenses with having enough cash flow to make the deal worth while. If I need to decrease the LTV to 60% in order to get my DCSR goals where they need to be then I have too much equity in the deal and my cash-on-cash doesn't align with my goals.

I think you need to ask yourself if you are trying to make a play for appreciation or cash flow? Dead equity that you could use on another deal doesn't pay you in cash flow but it may help you in the future with appreciation.

Do you have a social media or online presence? Social media is likely one of your best options for a low cost. There are a ton of Facebook groups in my area for investors and people are always looking for property managers. Like @Christopher B., getting in with your local REI could also be helpful. In general the best way is word of mouth, can you speak with your current clients about your goal to scale? Perhaps one of them has larger properties but don't know you are interested in managing it. I honestly think networking and talking to everybody you can about what you are trying to do is going to be the biggest bang for your buck.

Good luck!

This is good stuff @James Hamling! I can't think of any questions at the moment but perhaps you could have local contacts for syndication attorneys, solo 401(k)/IRA, insurance agents, and property management companies that handle 20 or 30+ unit properties and time for general networking. Having experts in these fields may also be of benefit to others. Topics like PM best practices or raising rent or implementing RUBS.