All Forum Posts by: Mike Sumsky

@Eric B., welcome to BP!

I'm a full-time investor in Bremerton, and I venture to Pierce and King county as well at times.  You should come to this Thursday's REAPS meeting in Bellevue.  It's the annual Deals of the Year meeting and would be a good chance for you to connect with a lot of other local investors.  

Jesse, since it appears that you're looking to hold these long-term and don't have any money for a down payment, you can cross hard money off the list.  The interest rates will be too high for you to get a cash flow, and these are typically short term loans anyway.  

You absolutely can finance these deals 100% with private money. Most people start with their inner sphere (family, friends of family, acquaintances) that have money saved up and either want a better return than they can get from a CD or money market account, or something that is more secure and predictable than the stock market. They may have a bunch of money in an IRA that can be converted into a self-directed IRA which can then be used for real estate investing. Your job is to find great deals with both sufficient equity and sufficient positive cash flow to create good security for your lender and yourself, and start flapping your lips so people know that you're an investor and you work with private lenders.

Of course there's the legal side of working with private lenders that you'll need to be aware of, you'll probably find several articles and forum posts that will go into more depth on this topic.  Good luck!!

Nghi, since we're both here in Washington, this is what I've seen.  

Active (no mutual acceptance) -> Pending Inspection (offer accepted, inspection contingency not satisfied) -> Pending (all contingencies satisfied). 

Jon, free houses aren't always free.  You're going to have to come up with closings costs to purchase, which may mean covering the sellers closing costs as well if they can't pay them.  In my state, that will mean about 4% of the sales price in closing costs, it might be different in California.  What kind of cash flow could you get on this place?  It would have to be a helluva positive monthly cashflow to consider buying in my opinion, and I would probably rather just sandwich lease-option the property.

For me, systems made all the difference.  I'm currently self-managing 33 units (21 different buildings).  My 'systems' starting out were very bad. I relied on excel spreadsheets to keep track of rent paid, then also had to enter income and expenses separately into quickbooks.  Late fees were very rarely enforced and therefore several of my tenants pushed the limits.  Of course I've learned a lot over the years about being a better property manager, but one of the things that helped the most was software.  About a year ago I started using Buildium to manage my properties.  It's been a night and day difference since.  I feel like I can handle twice as much now.  

Great meeting everyone last night.  Stay in touch on BP and I'll look forward to seeing you guys at a future meetup.

@Loren, in my opinion, your rentals should pay for themselves and provide positive cashflow.  I don't think it would make sense to leverage your home to raise capital if it means going into a negative cashflow situation.  You can spend some time on this forum and learn lots of ways to purchase cash-flowing real estate without any of your own money.  

I was a little slow in finishing my reply.  @Dawn Anastasi beat me to it and had a great response.

The 1% and 2% rules doesn't refer to rents vs. what the property is WORTH, it refers to rents vs what you BUY the property for.  Obviously your goal is to buy under market value, and the area you buy will also determine how likely it is that you can find a property that matches those criteria.  I own several duplexes in Kitsap county and I've found that I can meet the 1% rule very easily, but 2% is still out of reach for the most part.

@Evander Ochoa, don't refinance into a 30-year in order to increase today's cash flow.  Whatever extra cash flow that you gain right now you will probably find a way to spend it (happens to everyone), and in 15 years, you'll be really glad that you paid that property off.  You'll have a paid off property before you're 40 in addition to other real estate you accumulate in that time.  Congrats!