All Forum Posts by: Patrick McGowen

Ryan,

Welcome to BP. I have only been member for a few months and have learned a ton even though, like you I had a property under my belt already. Good luck.

Thanks for posting George. Since I am in Bozeman market, I sent you a colleague request. Cheers.

Welcome @Frankie Stevens glad to have you on BP. Study, strategize, study more, network, study more, then DO. Good luck.

I am having a hard time visualizing this property. It looks like 8 units, are there two doors to the same unit?? I agree about color. If you need the pavement, how about removing the railing on the ground level, and remove the sidewalk behind where the railing was, replace with some landscaping. This sidewalk is not usable anyhow because of the barriers. If you do this, you might even cut at least a few inches of the blacktop out to give a little curved bulb-out of this area to break up the straight line.

@Don Konipol I believe actually the company has an existing facility in Williston, ND and is seeking investors for their next endeavor in Culbertson, MT. These towns are both near the border and very close to each other. @Annette Hibbler you were very helpful in the information you sent me and it seems like a good opportunity. I am still working on a decision, I probably need to make a trip to Culbertson and stay at existing motel in Williston before investing. But you may want to clear up city location in your postings.

Thank you all so much for feedback. I am so clueless on stocks, I don't know much beyond PE ratios. Figuring out best option for him has been a good learning experience for me. My son is very solid in math, but being sophomore in high school any heavy statistical analysis might be beyond him, although he would likely be able to pick it up. I got intelligent investor, I think I will read that too for my own knowledge (even though I never plan to invest in stock market), have him read IBD regularly and if he gets through that pick a book / web tutorial on technical and/or options side .

This may become a little overwhelming for him. I am thinking of a way to incentivize him. Like if he gets through reading and digs in enough to understand it, and develops a business plan/ or detailed gameplan (metrics/philosophy, etc). I will add a $5,000 loan to his pot. He can use my $5k to trade with as long as he discusses his trades with me before hand. If he loses it all, I will consider it tuition, if he gets ahead, we will split profits.

thanks @Mary B. and @Suzie R.

The intelligent investor is one I came across just reading reviews. I will give that one a try.

P

I know this is real estate forum, but I am looking for good suggestions on stock market investing book(s). I figure suggestions from this group are less likely to follow typical financial advice of buy and hold mutual funds in an IRA (or some similar mediocre approach).

Here is the reason. My teenage son wants to invest in stocks. He was given some Disney stock as a gift about 10 years ago. This has been great as he tracks the price, sees the dividend each year, etc. Along with these stocks and consistently saving 10% of any money he earns, he has a little to work with (about $1500). With the stock market probably being overpriced I suggested he take a more active role in investing. No time like the present to start learning and why not make mistakes now when his losses will be small. Since I am real estate focused, we started reading Scruggs book on mobile homes together and I was going to help him get into his first real estate investment with a local mobile home. We got about half way through the book and have come to realization that he is just not interested in real estate and wants to invest in stocks. So many strategies, penny stocks, day trading, options… I have very little knowledge of stocks and want to get a good book or two for him to learn on his own.

How do I educate my son on stock investing? Please help.

I am by no means an expert, but here are my thoughts. Above is correct, current limits for cash out refi or heloc is 80% ltv resulting in about 60k assuming your appraisal comes in at 360k. You might be able to get some non-conventional lending with local bank, but most banks are going to have the same LTV and conventional loans on your home are the best terms available. Shopping around for other banks may get you lower closing costs or slightly better interest rates, but the loan amount will likely be identical.

You might ask about terms for HELOC vs Equity loan vs cash out refi. The total amount is about the same, but different conditions. Heloc is more flexible, this can be good or bad depending on how you plan to use it. It can act like a checking account, if you need money you pull it out, when you have money you put it back in (by paying down what you owe). Typically you only get charged interest on how much you have borrowed, not how much is available. In fact, many investors used HELOCs as such during the housing bubble. The problem is that banks can close HELOCs when the renewal date comes around (typically once a year). When the bubble burst, banks had to shore up their balance sheet and started closing HELOCS, investors relying on them for emergency funds were not able to weather the storm. HELOCs are typically going to be an adjustable rate which will be lower in the short term, but will likely increase in the future.

Since you want to flip, this flexibility might be better, but consider this strategy. Do a cash out refi to get max amount out at a 30 yr fixed rate. Use that to flip a house. If you finish rehab and flip it, now you have more to work with (say 90k) and can do a bigger deal, or do two at a time. If you hold the property, now you have cashflow from that property and you do it right, you can get most of your 60k back out with a mortgage on that property.

A 60k cashout might increase your monthly payment by as much as 300/month, so make sure you can handle that.

Good luck

Looks good to me. Some thoughts, but this might be more personal preference:

I don't see property management fees, maybe you will do it yourself, but you should consider your time.

I would want to be comfortable with market (are jobs increasing is housing market stable etc.).

I assume AM means adjustable mortgage? I would get a 30 yr fixed if I could even if it was a % or two higher today. If you stick with adj. make sure you can hold onto property if interest rates climb say 10% (which I think you can with the spare cashflow).

Lastly I would go into it with a plan for the 15k rehab. You might be tempted to keep all the cashflow until repairs become necessary and then you will be hurting, or you might be tempted to put all your cashflow and savings from earned income into repairs which will slow down your asset acquisition. Maybe the plan would be to put half cashflow to repairs. This would take 9 years to complete, which seems long, but maybe a couple years down, appreciation will allow you an equity loan to knock them out.

Good luck