All Forum Posts by: Justin B.

I think her point was not to be stupid about it. If there is a property listed for $100k and it's in great shape, a respectable low ball offer might be $80k. I'm pretty sure she's referring to not offering $30k on such a property. If the house is crap and needs $50k worth of repairs, then yes, $30k might work. My strategy personally is not to negotiate too much. I go in with an offer that I feel is fair. If I have to get it dirt cheap for the numbers to work, I'm not interested in the deal or wasting my time on it. I've bought 5 properties so far and only had to negotiate on one. Some people may read that and think I might have paid too much. I don't believe so. We've been ~10% under appraisal each time (except 1 where we paid at appraisal) and the other side has tried to negotiate before and we've said we were not interested in adjusting our offer and we got it anyway. To each his own I guess. I don't like the low balling and working my way up strategy. If the numbers work at the price I buy it at, I'm happy :)

The advice I received was referring to actually going inside 100 houses before buying your first one. If you count listings and drive by's it's a different story. There is no way I could have done 100 visit's before buying my first one. I did about 10 on my first one. After that, I started to learn how to choose which ones to go see so when I go see a property now, I've already used all kinds of criteria to make sure it passes all the initial checks (which most properties are discounted before I ever get to the visit point).

"Look at 100 houses before you make your first offer." And yes they actually meant physically look. I have 5 properties and I've probably looked at ~25 total properties.

"Make a lot of low offers and one will eventually be taken." Well yea, but it won't be the property you want. and I'm not sure how it works where everyone invests but if I did that, my reputation would be tarnished and no one would take me seriously.

Here is a hint. Get certified at a resort (next time you vacation). It's typically the same price (~$300), you don't have to attend classes once a week for 6 weeks and you can dive in warm water. I got certified over 2 days in Jamaica. My wife is jealous because she did her certification before she met me and she had to dive in cold water (7mm wetsuits) and attend a class once a week for 6 weeks. The cert you get at a resort is the same cert you get at a class without all the hassle. And you learn the same stuff.

@Bobby Beard This is kinda off topic but to get scuba certified you will only go to 30-40 ft (at least that's all they did for me). The open water certification (which is all the casual diver needs) certifies you up to 60ft but I've been taken down as low as 100ft before. They don't really hold you to that limit especially on vacation type dives. The BEST diving is ~30-35 feet anyway (full color, best visibility, etc). If you find a place that wants to take you down to 100ft, that's the advanced open water. You don't need it if you only plan to dive on vacations and such. Just the open water is fine.

Fair enough, but to be honest, I don't care what the banks do on their back end (or even what they call it) to make it all jive for their purposes. All I know is I have 5 loans (regardless of what you want to call them) that I use to purchase real estate (2 at 15% down, 2 at 10% down, and 1 at 5% down). These loans are in my entity's name (not mine) but I do personally guarantee them so yes I understand they can come after me for any deficiency. I'm ok with that. These loans are from a normal bank. I'm not super special and yes I do have a relationship with the bank but not one that's so special that others can't achieve. And regardless of my relationship, if I stop paying they will treat me like anyone else that stops paying :). And by no means did I say it's easy or that 95% LTV loans are abundant or the norm, but they do exist. I got one. So take that for what you will. And according to others in this post, 0% down (with cash back at closing) exists as well. I haven't gotten one yet but I know they are out there. In the meantime, I'm perfectly happy with what I've gotten so far :)

Mark, I wholeheartedly agree. I'm early in my career and life and I can do without the toys for now. I have young kids so I wouldn't have much time for the toys anyway. However if I were in your shoes and had your goals, I'd be all about the toys as well :)

It's not unsecure. It's secured by the property (and by us personally). If I default on the loan, the property goes to the bank (or they can come after me personally for the payment). And this doesn't compare to a credit card at all (which is unsecured and generally at high interest). It's at the same interest rate as if it was a mortgage and amortized over the same length as well. Just don't want people thinking this is anything like a credit card or hard money. It's a collateralized loan with a bank (regardless of the terminology you use).

And again to clarify, this *is* a real estate loan (a loan for the purchase of real estate), it's just not a "mortgage".

That's exactly what I'm saying. The key is I'm not getting a mortgage. They are loaning the money as an in-house business loan using the property as collateral. No insurance needed. These are sub-$100k SFR's. I'm sure if I was getting a million dollar loan for a huge MF I would probably be looking at 20% down or more. I assume he was asking more about SFR's than bigger MF's.

Also this is the same bank that my entire family has gotten personal mortgages, car loans, etc through for the past 20-30 years. My Father and Brother still use them as their bank (I can't anymore because I moved away and they aren't in my area but I did until I moved away and they did 2 car loans for me in the past). We've done a lot of business with them and they know us well and for a long time.

I don't want to put the name of the bank out their publicly as I don't want people calling them up going "Hey, I hear your giving out 5% down loans on investment properties!". In the beginning they did require 15% down for my first 2 even with that relationship. I also don't have any unrealistic expectations that I can get a 5% down loan anytime I want it. It can change at any time. We also prepare analysis for the bank to look at for each property we purchase to show that we can easily float such a loan. I'm sure if I was showing them a break even plan, I wouldn't have gotten 5%. My expectation though is 10-15% whenever I need it with a decent plan. We also got 5% because we asked for it and low and behold they said yes. To be honest, we were surprised but it never hurts to ask.

I started out with 15% down on my first 2 properties. My 5th was only 5% down. So it definitely pays to have a history with the bank. By the time I bought my 5th one I also had a history of 4 years of on-time payments. so anything is possible, it all depends on your circumstances. Just based on the fact that you are asking this question, you are probably looking at 20% down (give or take 5%) if you go through a traditional bank until you build history. There are other options besides a typical bank (hard money, seller financing, etc) that can get you up to 0% down.