All Forum Posts by: Matthew Becker

Take images and a video. Also, do a manual checklist.  Hire someone to do the repairs and have them send you a bill.  If they smoked, it should be pretty apparent.  Then you need to get some smoke blocker primer and repaint the place.  Hire someone to haul the couch away.  Replace the trim.  

It might be good to have a 3rd person go in and acknowledge that there is smoke damage. 
This damage will exceed the SD, but you still need to send a detailed list of damages, costs, and an SD refund from the documents. Include bills.  

I assume you have no smoking in your lease?  If not, make sure you add it.

 There does not have to be.  Get it from Knoxville.  You can order online, and they deliver.  The best deal is in the store, which is what they stock, but online still beats everyone else.  The only way to get a better deal is during the appliance holiday sales. Every holiday, appliance manufacturers offer fantastic discounts.  Every place offers rebates, and generally, they are taken right off the price.  Memorial day is next. 

I have a small syndication of 10M and am launching another in August. Giant ones struggle because they can't move quickly enough to adjust to the market. They get money but couldn't find deals that match the 8% they offered people, which was all based on lower interest rates and leverage. They never knew how to find a deal or do a value ad. They also have huge overheads and pay themselves from contributions. They need the money to live. Many people do them with less than 5 years of experience. Some of these funds are ridiculous. For example, a buddy of mine put 2M into a fund that offered 10% plus ownership—Turnkey Airbnb in Austin, TX, and the surrounding area. I would estimate that with their overhead and market drop, they are probably 40% underwater. They are not lendable because they use STR rent to create value, which banks won't recognize. I warned him he would loose his ***. He was greedy and chased money. He has not gotten a penny out of the fund for two years, and they send him updates with pretty pictures of places that they are renting, asking for more money. They have a good marketing team but can't produce.

But small funds, with experienced operators, can do well.  Our last project was $2.7M, and our monthly rent is $27K.  That is not amazing, but it creates a value of about 3.8M where I live.   I will hit similar numbers on each project.   Our clients will have pretty much all their money out in 2 years.  We are unique and build from the ground up, all in-house, and I already own all the land to develop.  However, there are solid funds that use fundamentals to create cash flow.  I did this with my own money for 30 years before starting a fund.

If you can make good cash flow at 7% to 8% interest, you will kill it when rates come down.  I am not saying they will come down.  I think they will go up.  But you will make money then because rents will increase if rates increase.  No one will build; we will have a messed up supply and demand curve.  This is a great time to buy.  Keep it small; keep it all.  

Yes, invest in a good fund with older folks and only those who put their money in. They are not that successful if they can't put in $500K. Also, talk to five people who put money into their funds and see what they say. 

Appliances help rent the house.  You can't beat a stainless fridge and stove from Cosco.  

They have the best pricing, and they deliver for free.  If you are not a member, the appliance you buy for this one property will more than cover your cost 

washer dryers can be used.  I like the old top loader washers they work better 

I would invest in a small fund, which you can own, and earn 8% on your $400K plus appreciation.  

Where are your properties located?  Why not bring on a younger partner that will grind it out for a share?  Maybe a relative or someone who works at PM who wants to get into investing.  

I own many rentals, and although I am a young 53, I am training a kid to take over for an equity share by the time I am 60.  

You can probably find someone on this platform.  Heck, depending on where you are, it could be me.  

If you sell the gains will suck.  You might not walk with much money if you depreciated for a long time.   I would take advantage of an opportunity Zone investment fund.  I operate one in a college town, but many out there that can help you invest.  I am not trying to sell you on my fund; it's already filled up, and I am not launching a new one for 6 months.   My fund is only about 1/4 of what I do.  I mostly do small partnerships with people and am the operator, but I have a team and have not taken a tenant phone call for 20 years. 

The best thing is to keep them and deal with them. It will be worth it in the future unless you die in a year, in which case it will not be worth it. 

Well, that sounds dangerous.  Where do you live?  Where is the property?  Why in this market did you offer over asking?  Things are flat. 

What are you trying to accomplish?  

People need a lot more information to help them.  Break the deal down?

Also, where are you financially? If you have $400K in a bank account and make $1M a year, that differs from taking out a hard money loan and going bankrupt.   

Lots and lots more info will get you great advice.  There are a ton of smart, successful people who are not looking to see you as something on this platform.

Sorry, I just typed it wrong: LTV. I am dyslexic and mess up letters a lot. Spell check does not always catch that stuff. 30 year is safer. Are you going to move into it?

 I do small to medium college towns.  Same thing I don't have to compete.  I see very few people focusing on College towns.  The government or parents pay the rent.   Kids don't trash places.  Poor people do.  

 I think if you have a couple grand put it into marketing and see what hits.  You only need one lead to make the money back.  One lead should make you $20K to $50K easy.  

Quote from @Priscilla C.:

Quote from @Matthew Becker:

It depends.  After you rehab it you should be able to get a loan with a 80% LVT.  So if it apprasies at $165K your loan would be for $132K.  

I am not sure where the $401 a month comes from.  Your payment will just be based on Taxes, insurance and the loan payment.  

Can you clarify?   

Ok going off of this example 

• Purchase Price: $100,000
• Rehab Costs: $50,000
• After Repair Value (ARV): $200,000
• 80% LTV: If a lender allows an 80% LTV, the investor can refinance for $160,000 (80% of $200,000).

So following this example would this mean my new mortgage is going to be based on $160,000 so let’s say for a 15 year loan I would be expecting to pay around $1,300 - $1,500 a month? I would not be paying a mortgage on the appraised value of $200,000 correct? yeah to clarify the $401 a month I just based it off a general search on a $50,000 mortgage…

 Yep, you got it. If you can hit those numbers you are doing awesome. The lender should be OK with 80% LVT if you have enough rent to cover the payment plus expenses. A commercial lender looks at debt coverage of 1.2 to 1.25. A standard refinance will look more at your income.  

Is there a reason why you want to do a 15-year AM?  Unless cash flow does not matter and you can rent for enough to cover all cost.  The interest rates for 15 and 30 years are different.  Notes held in-house at a credit union or community bank are sometimes lower.