All Forum Posts by: Michael Moikeha

I say you pass on this one as a property you will love in and look to lock it down under a cash offer using a realtor and bank negotiator that are great with foreclosures. Then find a money partner. Chances are you won't get s shot at it as it will go to auction. What you want to do is find a place in a similarly distressed situation but the owners are still there. Then you offer to help them out of the situation as work a short sale.

I set up an LLC for $100. My state is small business friendly. I did it for 2 reasons. One, it looks good when talking to people and it does add a sense of professionalism. Two, if you are partnering with someone it makes for easy asset division.

That is the main reason that I created my LLC. We started working together and when we found a deal, we created the LLC and structured it so that when the money comes in, it stays in the company which we are both 50% owners of.

This worked for our needs.

Hey @Jacob A.

Got a little advise. Build yourself up on this site for 6 months or so to give yourself credibility. Lots of books and Gurus will get peoples hopes up and they jump on here doing what you are trying to do, and then fade away in a months time. Prove that you have worth, comment on posts and meet people that way. Get to know people organically, search for local people using the tools here and connect locally, attend local REI groups in your area and network there in person as well

Goo luck!

@Bill Exeter 

Thanks! I guess I should have said "flip" as it will be rented and used as an investment, but I plan to only hold them for 2-5 years which will be spent increasing the NOI, tightening up the expenses, and increasing its value. So not flipping it like I would an SFH, but not a long term term hold. It would be in between and accomplished in such a way to not run into those snags.

@Joe Fairless 

Hey Joe, thanks! 

I'm looking for flips which I can do all cash on and buy and holds using creative financing, and even if the numbers don't pencil great for the hold, I can do some pretty creative things. 

I would also like a 10-12 unit C class apt in a B class area to work a 2-5 year flip and 1031 exchange to a 20-40 and repeat. That I will be more picky on as my strategy is specific and there are many variables. 

Focusing locally at the moment, but could never pass up great deals. 

Originally posted by @Jeff S.:

To be only slightly more blunt, this is among the worst business advice ....

Thank you for saying it in a way I couldn't. 

@Sean Ploskina 

Awesome, thanks for the breakdown. 

@Sean Ploskina 

For my area, we have about a 3% vacancy. I allot 5% to vacancy, 5% to repairs, and currently 10% to capex I'm putting 10% to capex now although when I do quit self managing, I will be cutting that back to 5% which is the average reserve for the quality, and then take a little hit on the cashflow when bringing in property management. 

It will still cashflow at least $100 which is decent in the Portland market where most buy and holds make their value on appreciation. 

How do you evaluate your holds? What do you aim to get for repairs, vacancies, capex, and property managenemt?

Originally posted by @Frankie Woods:

Congrats on taking the plunge!  I hope to be where you are sometime soon!  Exciting!

Thanks, I'm hungry for success! My time was decided between too many activities. I was taking 14 credits, working full time, flipping a house, and working to close a sub2 during the last quarter of 2014, and I knew if I wanted success I needed to narrow my focus. 

Real Estate, here I COME!

From the sound of this, you are just not calling "reserves" "reserves." You don't take any of your cashflow out to pay yourself, so you have combined a normal investors terminology of "cashflow" and "reserves" into one group. Most investors use cashflow for debt repayment and purchasing other properties while saving reserves for repairs etc. You call it cashflow and use it "for paying down debt, making repairs, and buying more properties."

Although this terminology works for you, a smart investor will always plan to keep money in reserves for the unexpected rainy day.

All this post will do if new investors listen to you is confuse them and give them confidence to jump on a deal without properly understanding their numbers.

I am happy you are successful and this train of thought worked for you, but it is not best practice, sorry.