All Forum Posts by: Paul Haviland

Again, you should refer back to the OA, but I would imagine the equity compression would occur proportionally to their initial equity contribution. To compute each LPs new stake you would take their initial equity multiplied by 5/8.

Hi All - 

I too would be interested in attending and meeting a few more investors from the area.  Unfortunately, 11/22 wont work as that is opening weekend for deer hunting and hopefully I'll be busy.  I hope it is a productive meet-up, and please keep me posted in the future.

Thanks,

Paul Haviland

@Michael Brunner

In an SFH here in Madison and surrounding area, I would expect the tenant to pay all utilities (Heat, Electric, and Water). Some investors choose to keep water in their name because if it isn't paid, it can be rolled onto your tax bill. However, most municipalities are good about letting the landlord know that the tenant is behind on the water bill prior to them adding a lot of extra fees and slapping it onto your taxes.

Hi Mike- 

I live and invest in Madison and have a lot of friends going through a similar dilemma.  I'd be happy to talk through this on the phone or in person, but here are my first thoughts.  

- PMI can be a killer. Instead of looking at putting down extra money to reach your LTV necessary to eliminate it, potentially look into requesting a new appraisal if you think the value has gone up from your purchase. I just did this on a property I purchased 18 months ago in Middleton and was able to eliminate PMI without adding additional capitol (except the appraisal cost). You might not meet the LTV the bank requires, but it may help reduce capitol necessary (house is worth 20k more than you purchased, would only need ~5k added to principal to hit required LTV).

- To sell or to keep?  That is the question... When I talk with friends about this very issue, I often ask them to compare the option of keeping the home to moving that equity into a better investment property.  We don't just want to keep the home because it is easy.  Some things to keep in mind are the following when doing the math on the choice.

- Good financial analysis as SFH as a rental (Note: I would trust a good/local property manager more than a banker on going rental rates. Especially if your uncle isn't in the area).

- How much equity would you be able to realize after a sale.  (Note: It's not cheap to sell real estate.  I know, I'm also a realtor). 

- What would you be able to buy if purely for investment purpose with that equity (as Down Payment funds) and what do the financials look on something like that?  Your mortgage will not be as attractive because it wouldn't be owner occupied (higher rate and higher down payment required).  

For the most part, I have that it does make financial sense to keep your initial purchase (especially if you put little money down), and it was a relatively inexpensive home.  

Good luck and welcome to the world of investing!

Welcome to BP. I live in Madison, and left my corporate job almost two years ago to focus on real estate. Feel free to PM me, I'd be happy to have a call or even meet in person. Be well, Paul

Welcome Tim.  I'm sure you'll find what your looking for with BP.  Feel free to reach out if/when your coming down to Madison.

Zander Solutions - they are a big reputable company in Madison, and I've had them help clients create new egress windows in a lower level without exposure. I'm sure they could easily handle something like this. Good luck! Paul

@Angel S.

Congratulations to you and your wife on your start.  I started the same way (owner occupied duplex), and it is very popular with the BP Community.  I always enjoy connecting with investors in Madison to learn what/how they are making the market work for them.  

Feel free to send me a message if you would ever like to meet up.

Thanks,

Paul 

Sorry - I accidentally "posted" before I was finished, and I didn't see where I could edit/update my post.  To finish my above post...

Finding the "deal" I don't do anything special here, but just look at a lot. I find some of my properties on the MLS (typically they have some type of a problem that needs solving), however more often now they are not on the MLS and I find them through networking.

@Darren Budahn

Good Question - What I typically do is have my offer contingent upon the Seller providing a  promissory note of $X (typically 10-15% of sales price) on another property I have.  Obviously the Seller would want to know that they will have safe position (enough equity to cover the 2nd).  The bank I have been working with doesn't mind.  They asked some questions the first time, but I have a half dozen loans with them, and are OK with it now. 

 By utilizing this method, you have to buy the first one and create enough equity, but then you could repeat again and again and cut your down payments in half.  Typing this out makes it seem very easy, but it can be a challenging discussion with the Sellers or their Realtor to make sure they feel comfortable and know their money is secure.  

@ Dave Wilson

My pace has been dictated by two limiting factors

1. Down Payments

2. Finding Good Deals

My goal is to acquire positive cash-flowing properties while utilizing as much leverage as possible (these two forces act in opposite directions - often, more leverage = less cashflow).  By increasing my leverage, I have been able to maintain reserve requirements and ultimately save for more down payments.

More specifically "how" do I increase leverage is a much longer discussion, and I have utilized several approaches.  (Commercial Financing, Seller 2nd's, full seller financing, bulk purchases and often several of these in combinations)