All Forum Posts by: Robert Shedden

@Daniel Infante

Great to hear you've jumped into RE! I would suggest analyzing 2 to 3 deals per day just to get a feel for things. You can easily practice with MLS listings until you understand how to pick a part deals and find the hidden value. It is a lot harder than it seems. But if you keep after it, you will be rewarded. Best of luck!

@James Gates

Nice work! Did you use one GC for all the work? And how was the pricing structured? One hard price, or time and material? Any incentives if they finished early, or on time? I am searching for my first BRRRR, thanks for the inspiration/motivation!

Ha! I am no genius... I just happened to find BP and read Rich Dad, Poor Dad in July of 2018... and it shifted my mindset. Because of BP, my wife and I were able to get 8 doors by January of 2019. I found myself waaay outside of my comfort zone asking a family member for load to purchase two fourplexes. (They thought I was crazy!) I would never have done this had I not been reading the forums and listening to the podcasts. I truly stopped thinking "I can't do that," and started asking "how CAN I do that?" I just posted my deal, however imperfect it is, and hope others can learn something or get motivated.  I am grateful for the discussion we are having.

You will never know what you are capable of, if you don't try!

Yes, we purchased both fourplexes from the same owner and got them under contract at the same time. The first fourplex was financed with a portfolio lender so we could close that one in 2018 (I say "portfolio," although their rates felt more like hard money, LOL). We went with a local bank to finance this deal because we had more time; closing in 2019. It will be interesting to see which loan will work out better for our situation as we move forward. I was able to find this local bank because I asked @Craig Wilcox, the host of my local REI club, Winnebago Investors Network (WIN), if he knew of any financing options other than Fannie or Freddie. He had heard good things about the local bank and suggested I give them a call about a commercial loan. At the time, I thought I wouldn't even be able to find financing, but I pushed forward and was able to find a solution. It always pays to network with and learn from other local investors!

You are right; the property tax in Illinois is absolutely outrageous! The property tax for this fourplex is $8,277 annually. That also brings up a great point... There are 11 identicle fourplexes on the same street. The two that we purchased are in the top three as far as property taxes are concerned. We plan to protest the tax next year to bring down our expenses.

The obvious downside is that, in the event we cannot refinance, we will have a huge balloon payment due. This is unlikely, but it is a possibility. I can't predict the future, but I am optimistic that I will continue to cash flow this property...

 We found this one just by talking about real estate to our friends and at social gatherings. My wife and I were at a school fundraiser and we were telling an acquaintance about our plans for real estate. I had been on BP for several months are gave her a very brief description about our plan to buy and hold and keep adding cash flow so we can reach financial freedom. Our acquaintance said knew some else that talked about real estate the same way I did. She introduced use to a broker who owns his own firm. He happened to have two fourplexes just hitting the market. He took us under his wing and now we own 8 units...

It's a commercial loan and we will definitely refinance before the balloon payment. We can easily refinance with the same bank, or shop around for a better rate. We will have roughly 48% LTV in 5 years and may even pull some money out...

We went with a commercial loan from a local bank. The down payment was a gift from a family member and we purchased it using our LLC. This was our second purchase in our real estate investing journey. It is not a home run deal, but it did get us in the game. Now we are cash flowing, getting invaluable experience managing 8 units, and on the hunt for a BRRRR deal. If I had to do it again, I would have changed a few things... but at least I didn't suffer from analysis paralysis. I have spoken to a few local investors and they have congratulated me on jumping in. They know several other folks that have been talking about pulling the trigger for years, but have never actually went through with it...

We are investing to buy and hold; we plan to refinance before the balloon payment. The bank that gave us this commercial loan looks at the debt-service cover ratio (DSCR) and didn't care that the down payment was a gift from a family member. As long as we are managing the property and getting rent, they will refinance the loan. It is a modest fee of $400 to do this, if we keep the loan with them. We will also look for a 30-year fixed rate if possible. The property is held by our LLC so I do not believe we can qualify for Fannie or Freddie backed loans.