All Forum Posts by: Ralph R.

@Tyler Bobo Tyler good to see an Alaskan on here. I lived in Bethal 14 years and have a sister in Big Lake. I’m in Colorado now but my hearts in Alaska. Forget your loss I’ve been down that road and it’s throwing good money after bad. It’s a better tax loss and cheaper than trying to collect blood from a turnip. Besides you know most people that are going to leave wait for the PFD right? Then leave! Next time someone is late in oct serve them right away. Get them out quick as you can and move on. RR

@Luciano A. How do you get around the Freddie and Fannie requirements for 25% down in the great state of Texas? These are loan requirements not the properties ability to cash flow?? RR

@Jennifer Stradtman. That might make sense until you are spending $75 a year for each LLC to have periodic reports filed for each LLC. Until you are digging expenses out of each LLC, tracking EINS for each LLC, keeping track of operating agreements for each LLC. I have 16 units, a cleaning business, a self storage facility, a trust, and a part interest in a campground. That's 21 LLC's. Each one has to be accounted for on a loan application, all 21 EIN's need to appear on my tax return, each LLC will have only one property? No thanks not for me. I have 4. That's enough. RR

@Jordan Salisbury I am a land lord and my PM’s have used many different programs, rent tech, Yardi, and others. Buildium is the very best from a land lords perspective. I use it to manage my storage units so it should be ok for short term rentals. RR

@Seth Atwell. I just moved to Colorado from Alaska. I used a second home purchase to pick up a house same as you. I did know I couldn’t rent it right away and since I had over 10 rentals already I had to sign a statement saying I would not rent the house and have it notarized. The Bank just knew I was going to rent it and despite what you hear on this thread they can and will find out. For one thing if you sign a contract with a PM The trick was I wanted the low down payment offered by the 2nd home. The market was exploding here. Soooo first I cash out refinanced the house I was living in to get the down payment. This refinance also went from a 15 year note to a 30 year note so not only did I get cash for a down payment I cut my mortgage payment in half. Next I bought the second home with $13,500. down pmnt. Now I had 2 homes for the same payment as my primary before the re-fi. No out of pocket cash in the down payment. The 2nd home sat vacant for 8 months and I made payments (except for a

couple mini vacations.)while I looked for a job. After 8 months I found a job and moved. This was a tight spot financially as my wages got cut in half we I moved from Alaska to the lower 48. We lived in the house for 10 months and after selling our Alaska primary we purchased our current home. I now rented the 2nd home for 5 or 6 months. I had owned it for 18 months at this time. After the 6 month tenant moved out I sold the house for 47k more than I paid for it. I then put 10k with the 47k and bought a rental for all cash. I know I’ll pay some capitol gains cos I couldn’t 1031 into the last purchase. I know I paid several payments out of pocket, but hay it got me down here. It gave me a place to move to, and because I had housing already it made it easier to get a job. And I have a free and clear rental in the bargain. At 10% down the 2nd home didn’t make much sense as a rental. Your lender threw you under the bus. You didn’t need to buy as a second home. With 20% down you could have purchased as a non owner occupied home ( rental). I’d not use him again. RR

@Josue Vargas. Interesting you should compare this to a car loan. I did exactly that a few years back. I needed some cash for a down payment on a property. I had a car that was about 1/2 paid for. I did a cash out re-fi on the car. Interest rate was 2.5%. Netted me 18k and lowered my car payment at the same time. I ended up with a duplex and a 3x2. The 3x2 was bought with no out of pocket money. If a guy had 2 cars?? RR

@Cody Malave I built most of my portfolio from 3000 miles away while I lived in Alaska. I still own a duplex I’ve never seen. You gotta Learn to mitigate risk. “You say if the market crashes”. I said in my post it took the right house. Remember I had 13,000 in the house. If the market crashed I still would have had the $100 a month. That’s .09% right? Most people don’t understand when you rent a house you are simply putting a bunch of money in the house and the tenant is paying it back to you at a slow rate. I had 13,000 in the house I sold. At $100 a month its 10 years before I get my money back. Money looses value or buying power at about 2% a year so my 13,000 will loose $2600. That’s another 26 months to recoup that. I would be better off to take the same $13,000 and make payments to myself at 100 a month. So you see land lording is a loosing deal in the long run. Flipping is tough because right off the top you are paying taxes. And what happens to a flipper when the market falls?? Besides flipping isn’t investing so much as it is a job. It’s a form of self employment. That’s why you pay taxes. Read my post on this thread wher I explained how I re-financed this year and put 150k in the bank. Tax free. And now my tenants are making the payments on the new loans. This is the third time for some of those houses. I look at cash flow as cushion not as profit and tenants are place holders. They pay all expenses on a property while I figure out how to make some money off of it. Re-fi? Hold for Appreciation? Fix it up a little and sell it?? The tenant pays the bills and I get to play with the property till I can make some money with it. Where’s the risk in that? RR

@Fred Cannon I agree with a lot of what you said but there’s another side to RE. Your correct 10% is tough BUT... cash flow is not the big boy on the play ground right now. Appreciation is. I just sold a property I owned for 2 years. It was a second home so it couldn’t be rented the first year. We bought it and used it as a second home with a 13k down pmnt. After a year and a half I rented it out for about 100 a month CF. After 6 months the lease expired and we sold it. After expenses we put $47,000 in the bank. At 100 dollars a month it would take a lot of years to get that 47k. My initial investment was a 5% down pmnt. It took only 2 years to turn that 13,000 down payment into $47,000. I’d do that everyday if I could. I’ve done that twice now and as long as the market is going up I’ll keep looking for similar opportunity’s. RR

@Luciano A. Most lender overlays won’t allow a 20% down payment they want 25% after the first one or 2. In this market it’s gonna be very hard to find a purchase price that will cash low at 20% down anyhow. Also you are going to need a substantial amount of reserves to get a conventional loan. I can’t remember if it’s 3 or 6 months for each property you own. I had to show 75 k reserves for one loan I got. They have capped the requirement since then. Point is if I have an extra 50-75 k laying around I’ll probably use it to buy another unit with a portfolio loan. Your not paying the interest any how. The tenant is. Penny pinching a little once in a while is ok but you will never get big by acting small.

@Tracy Munger nope it’s called an owner contribution. Taking money out is called an owner draw. Simple as that. Just do it electronically make a note in the memo box. Your CPA can look at the note online and put it in the proper category. At the end of the year he has most of what he needs to file your taxes RR