All Forum Posts by: Ryan Fox

@Ernie Sturzinger- There have been many helpful comments above, but I'll add the following:

Really account for all of the expenses you will have for the 16-unit, including those that are unforeseeen.  A drunk driver just drove into one of my properties that I financed in a similar way - fun!

There has to be some solid plan for getting a value-add from the investment for a no-money-down scenario to make sense.  Can rents be raised?  Are you leaving yourself a cushion in case you have to list it and sell it?

Make sure you can lock-in the rate on your securities-backed line of credit / margin loan at a rate where you are at least break-even with cash flow.  

Consider diversifying what you do with the securities-backed line of credit / margin loan (i.e., lend some funds to an experienced flipper, flip a property), that way you don't have all your eggs in one basket.

@Brendan Miller- Yep, the driver was insured, and we're going after his insurance.

This is an example of why you need reserves before buying a rental property.  On Sept. 3rd, a drunk driver plowed through my single-family rental in Independence, MO.  The link to the news clip is below.  The news got everything right except the tenant was not the owner.

https://www.kctv5.com/news/car-slams-into-independence-home-family-forced-to-leave-due-to-damage/article_84511d76-0de6-11ec-9501-0ff81f381a0a.html

Luckily, no one was home.  My insurance coverage is in effect, but there is a $2500 deductible.  I can cover that because I saved.  This isn't something that really can be anticipated, like buying a home with an old roof or old HVAC, but one needs to plan for it.  

I'm posting this because I've never seen a post about someone going through an insurance claim.  I'm sure I'll learn something along the way, and will update this thread once more is known.  

@Connor Martin- Welcome!  I'm a fellow Nevadan who has invested out of state in the Kansas City market.  

@Caleb Johnson- Nicholas DeCespedes was referring to a margin loan, which is essentially a loan you can take against stocks or bonds you own to buy more.  

Another type of credit line you can take against a stock account is something called a securities backed line of credit, and it usually has a lower interest rate but can't be used to purchase a security.  You can use it to buy real estate. 

I use Bershire Hathaway Guard.  I like that they cover things that not covered in other policies, like sewer backup.  Haven't had a claim yet so I can't evaluate them in that way.  Just make sure you pay your policy ON TIME.  A couple years ago, I had a mix-up with my bank as to who was going to pay the insurance.  The payment was 5 days late and they had fully canceled the policy.  Once they received payment, they re-instated it.

I like that my 4-plex units are large enough to have 2 bedrooms, and all the utilities are separately metered.

I have a rental in that area.  It rented out fast, good area.  
Less expensive than Newport Beach lol.

@Brian Adams- Yes, that would be helpful.

Even if you get past the zoning and permitting issues, anyone who buys the property from you will have to use commercial financing.  This will probably be a detractor.