All Forum Posts by: Malcolm Douglas

No expert but 15% seems very large.  Immediately you are pocketing 195k (1.3m x 15%) and then your partners are out.  How much do they stand to make at closing, or rather, what incentive to they have to see this deal through after close?

Buy and hold is simply buying a property that is ready to go from day one. Little to no rehab required and your intent is hold for a significant period of time.  Also known as turnkey.

BRRRR (buy, rehab, rent, refinance, repeat) is acquiring a distressed property that needs renovation. Once the building is renovated you can rent out the units. After x number of months (also called seasoning) you can refinance your property using the new value of the building after rehab, also called After Repair Value (ARV). The goal is create a wide enough spread between purchase + rehab costs vs ARV so when you refinance you are able to pull out the initial cash you had to put into it. Once you get your cash back, you move on to the next property and repeat the process. If done successfully it is a great way to quickly build your portfolio, and wealth.

Makes sense. Disclosure: I have zero intent on pursuing just curious what experiences people have had from something like this.

The below article indicates Chicago will be selling vacant lots of land for $1 each to those who qualify, such as living on the same block.  Granted, these lots are in some of the rougher areas of the city but I was curious if anyone has dealt with a similar scenario in the past and what sort of opportunity they saw and/or results achieved.

http://chicagoist.com/2017/09/13/the_city_will_sel...

 Thoughts?

@Jay Hinrichs  Makes sense.  Probably all the more reason not to over leverage and have a good relationship with a lender.  Even if they can't prevent a freeze they can likely give a heads up which would save plenty of headache and time.

@Jay Hinrichs valid point re Houston. Please tell me there is no way they could call a HELOC after a natural disaster like this? I would think insurance is the safeguard here.

@Jay Hinrichs - That is good to know.  What reasons would cause a lender to freeze/call?

@Kyle Collette - Thanks for this post.  I've given this strategy more thought and consider it a new tool added to the financing tool box.

Tax hit is a good reason and should be definitely be a large factor as well.

For me it's a risk preference thing. If I believe I can refi investment out immediately, creating infinite returns however you make down payment, I would rather use cash than add leverage on something that can be as volatile as stock. One day this bull market will need to correct and stocks can lose value fairly quickly. However, 66% LTV does give you cushion. Each person's risk appetite is different and I completely understand your points. I just suggest you make sure you understand the costs/risks when planning out.

Yeah I would be very careful about this and make sure you understand the consequences should your stocks (collateral) decrease in value enough where they meet a margin requirement, or become less than the LOC itself, you could see the loan called at an inopportune moment.

Is there a reason you don't want to liquidate the holdings and simply use cash?

Another big bet being made, this time on the south side.

http://chicago.suntimes.com/news/up-to-20000-homes-in-latest-plan-for-u-s-steel-site-on-south-side/