All Forum Posts by: Ray Johnson

@Kyle Schlosser Can you clarify the type of asset you're discussing with the bank? This will help other provide a better referral source, Is this for 1-4  units or 5 or more units? 

@Dennis Maynard There are many ways to solicit investors for your project, one of those ways is here on BP, additionally you can attend some of the many LA meetups to engage investors. What part of LA is your project located in? Also know what you're offering the investor for their equity placement on the deal. Have you created your deal package yet?

@Jay Hinrichs this is why I don't invest in many parts of the US, most states/neighborhoods won't meet my criteria. I look at more than just cash flow, I like keeping it as simple as possible and to do that, with the exception of one property, all my other properties are in Class A, or Class B neighborhoods in Orange County, CA., Washington, DC, and Los Angeles. I don't own any properties in areas where the average credit score is 600, that would mean landlord problems for me which I avoid at all cost.

@Jeremy G. How detailed are your rental ads? 

All of my properties are in large major metropolitan cities so I make sure to weed out most of the people that won't qualify and would be wasting time, I also ask them over the phone if they read all of the minimum qualification requirements, that's my way of reducing the candidate pool down to potential candidates.

 My ads include:

1) Minimum credit score of 700

2) Credit and Criminal Background Check

3) Maximum DTI ratio of 33% for anyone on the lease (all tenants over 18 must qualify and be on the lease)

4) Renters insurance is required to lease the property

5) All applicants must apply and pay the $35 application fee 

6) Must sign lease addendum for No Smoking, No illegal drug use (including Marijuana), No pets of any kind.

7) Previous residence references    

Even with these requirements I still get a good showing and a good candidate pool.  

Great post @Ross Denman It's nice to know that some companies are performing quantitative and qualitative analytics ensuring delivery of quality products and services. In a hot market like Indy where so many OOS investors are shopping hopefully they manage to find you and not some of the quick deal sellers taking advantage of the OOS investors.   

@Brennan Medford you purchased for $220k, How much is your rehab costing you? What will your ARV be once you're done? I'm assuming you'll be moving out after 1 year and onto the next property, What type of cash flow will you get on the unit?

@Terrez Jarrett When you say is it possible to make money, that will depend on what you consider making money, most people that deal in the $45,000 property markets are looking for monthly cashflow, the property is $45,000 for a reason and you need to understand what comes with owning properties in this category, this is considered specialized real estate due to the additional experience required to be successful investing in this market. What are you looking to do with this property, Flip it or Buy-and-Hold?

Pro - You'll get some form of cash flow on this property for the short-term. Best case scenario is to flip it to an out-of-state investor who's willing to risk operating in this property class.

Con - You'll have a hard time collecting on your projections for that cash flow over the long-term. You are one HVAC, or roof repair away from wiping out 3-5 years of cash flow. 

@Tom Gallagher I take a diversified approach that consist of the following:

1) A portfolio for Individual stock purchases with a minimum 1 year growth target

2) A Long-term stock portfolio to include dividend stocks payouts for over 1 years income building

3) I keep most of the liquid funds in a Goldman Sachs account paying 3.55% this is what I use if I need to move on a property quickly.

4) I don't touch my 401K, I use this account balance as my required Reserves every time I make a purchase, this will come in handy because the underwriter looks at the statement on each deal, you can essentially use the same source of funds over and over again without ever touching it.  

@Albert L. I'm assuming if you're giving away 1 million dollars, this will be a for profit charity, or a Non-profit structured entity?

If so, This should give you some advantages when acquiring deals as these type of structured entities do get priority in some purchasing channels. 

@Alberto Izarraraz one thing to keep in mind is if you get into flipping properties, that additional income will cause your Income based repayment plan to increase, so you'll need to make sure your flipping business accounts for the higher taxes from flipping, and the higher repayment income class you get bumped up to. Is there any chance your job qualifies for the student loan forgiveness program? That was the route I went after school.