All Forum Posts by: Paul Shannon

As years go on, landscaping can get out of control.  I'd keep it simple unless you want to be over there all the time watering until the plants/grass get established.  Tenants like a yard, but they don't like to/won't take care of hedges/shrubs/flowers, so you'll end up with the clean-up on turnover.  Personal choice would be to xenoscape as much as possible with a plot of grass potentially for dogs.  Simple, cheap and durable for everything, helps you scale with less maintenance.  

Haven't had luck with banks, but found a local credit union that would.  Would find some in your area and give them a shot.  

The explosion of money coming into the midwest from the coasts is not new here.  There seems to have been more Californian's investing in Indianapolis than Hoosiers since 2016.  For investment properties of course.

With that, I do agree there will be a net migration from the coasts. Mostly to the south but some to the midwest (due to how relatively cheap it is here).  That will benefit the midwest retail market and home prices will rise.  

I recently had a conversation about this strategy with a financial planner.  I had not heard of it previously.  I too had always had a bias towards whole life being a bad investment.  A couple take aways I recall:

-Life insurance is a bad investment if you look at fees and returns and compare it to stocks or real estate, for example.  On average the payout is 4% or so over the life of the policy.  4% sounds pretty good when compared to bonds, and it is basically a guaranteed dividend, so long as the company backing it remains solvent. 

-In addition, you get a death benefit for your surviving family. There are a lot of scenarios and coverages to choose from that affect the cost.  

-You can borrow against the policy for "free", but if the money is not in the policy, your death benefit would be less if you were to pass while it was out. Borrow up to 90% was what I was told.

What I didn't quite grasp is the starting value of the policy.  I believe the death benefit is front loaded as a cost, so you may put in $50K and have a $35K balance to start and there may be a lock-up period where you can't access the money.  

Not an expert, but saw your post and thought I would chime in while the info was fresh in my mind.  I'm considering it, but have access to lines of credit and am concerned about tying up from an opportunity cost stand-point.  Still have my biases about life insurance until I get more eduction. 

Appreciation is the real wealth builder, but its not something you can underwrite today when analyzing a deal, because past performance is no guarantee of future returns. Sure, you can buy in a high growth area and reasonably assume that the growth will continue leading to a higher IRR on exit. Not a bad idea.....if it cash flows.

But it has to cash flow on day one, as specially if you are scaling.  There's a place for taking a long shot in everyone's portfolio, ie betting on appreciation.  But, if you are in the business and buying on skinny margins at volume, think twice.  

Cash flow is more important for longevity.  Riding the appreciation wave is fun and can last a long-time, but the wave will crash ashore at some point.  

Don't have the link, but the blueprint is easy.  Make as much money as you can.  Track your spending and cut out waste.  Grow the delta between what you earn and what you spend.  Invest the delta.  

May want to try Jeffrey Slaughter - Wallaton Enterprises Inc. 

May want to try selling through a wholesaler.  Their buyers lists are all investors and whoever would buy it would likely be an investor with knowledge of how to handle tenants/leases. 

Could vary considerably based on extent of the issue.  If its all over the interior, it sounds pretty bad.  If that's the case, you may have to gut to the studs.  Will be a lot easier and cheaper to kill what you can see behind the walls/ceiling.  Unless its surface mold that can be sprayed/ozone machined, drywall is porous and needs to be replaced. 

It could be in the attic and basement/crawl as well if its all over.  Can add up pretty quick and could crush your return.  Not scary, but need to know what you're in for.   

Congrats on getting the ball rolling.  Having relationships with GCs is helpful.  But before you start working on a project, you have to source it.  How do you plan to find deals?  I'd start building relationships with realtors, wholesalers, and property managers first.  Get lots of leads.  You're going to need as many sources as possible, as specially in this market. 

Next is how you'll finance the deal. Even if you pay cash up front, you'll have to refi to employ the BRRRR method. Definitely get some calls out to banks/credit unions and let them know your plan. You don't want to finish your project and find out that your property doesn't fit bank underwriting criteria, you can't get the LTV or rate you expected, etc and have a problem getting your money out. As specially important during COVID b/c things are always changing.

If you can find a great contractor you can work with project after project, its like finding gold.  Most come and go.  

Biggest mistakes using BRRRR method are missing your rebab budget or ARV. I would find someone in your market who's where you want to be and see if you can go through one of their rehabs. Get a real good idea how much labor/material would cost to fix each component (example - $/sqft for carpet vs. flooring) the kind of product you're targeting. When you get quotes from contractors, you should be pretty close on your estimates, thereby knowing if their quote is in line.