All Forum Posts by: Salvatore Lentini

@Ezra Henderson - I would tap the equity in those properties. View the LLC loan as just a 3% 15 year loan. Right now those 10 properties are sitting there with 100% of their equity in your name. If you do a cash out refi you can use that money to accelerate your portfolio and your cashflow. What you need to be sure of though is that the properties you buy cash flow really well. $200/month is too skinny. You don't want to get into a situation where the properties you buy dip into the red each month because then you will have a have a hard time paying those new loans and your private lender for the LLC.

@Victor Baronich - I agree with @Mark Cruse, SFRs are not bad they're just a preference for some people and not others. While I'm not a fan of boarding houses, I know investors that do really well with them. I'm not a fan of Section 8 but I know others that ONLY do Section 8. Every type of investment property/strategy has its pros and cons. I have SFR, MF, office, commercial, triple net and mixed use. My SFRs do not throw off a ton of cash flow but have increased in value $1m+ over the past few years. That's real money (especially when you do a cash out refi!). Way more than I would've made off of them if they cash flowed well each month. So don't JUST look at cash flow. Look at your equity build up due to appreciation and principal paydown. And don't forget the depreciation benefit to your tax returns! You don't want to be losing money but sometimes "break even" is ok if you're making money in other areas. I like having a mix of different property types, because like I said, they all have their pros and cons.

@David Emerson - you have a 45 day window to shop around.  Not that you'd want to wait that long in this environment.  I wouldn't sweat it though.  A credit pull doesn't affect your score that much and it bounces back after a few months.

@John Wilson - that's it. The commercial property trading world is more segmented than residential. There is no one universal MLS for commercial. Get to know commercial brokers and get on their mailing lists. Many commercial properties don't make it to market or are listed with a commercial broker who shops it around privately or through their curated list of buyers. You can occasionally find commercial properties on the MLS. Not as common but they do happen.

@Mohammed Nasser - most people that invest in real estate are not brokers or realtors.  In fact in my experience, most brokers and realtors are not investors.  Even though I run into it all the time, every time I find out from a broker or realtor I meet that they don't invest in real estate it never ceases to amaze/surprise me.  How can you be so "invested" in an industry career-wise but not actually invest in it.  So, become a broker if you think that's how you'd like to earn a living but don't become one if you think that's how to become an investor.  And before any brokers or realtors come at me saying that they invest and I'm wrong... I'm not saying ALL....just A LOT.

@Greg R. - long story short...nobody knows.  Not even smarty pants economists.  The thing about real estate that tends to lower the volatility compared to certain other investments is that it is not very liquid.  For comparison if Tesla's Musk were to get arrested for something serious, the stock would plummet instantly.  In real estate, if a homeowner decides to sell, it takes (at a minimum) months from the time of that decision to the time they close on the sale.  With Tesla stock you don't need it to live.  You need a house to live.  Yes, you can rent or move in with someone else but there's only a certain percentage of the population that is ok with that.  Others will do what they need to do to stay where they are or buy where they need to be.  So prices could go down due to higher rates but they could also continue to go up for some time even though rates are going up... just because there's little supply out there.  Or prices could drop 5% and stay flat for 5 years.  Bottom line, the choices are not just 1) continue to sky rocket 2) plummet.  Maybe you can buy a rent to own?  Lock in today's price for a couple years from now, if prices are higher in 2 years you win, if they're lower, don't exercise your option to buy.

Ha ha!  Wow.  Funniest post I've seen in a while!  I say go with it.  You'll probably have 100% occupancy if you lean into it.  But if you decide not to, there is definitely no legal reason why you'd need to mention it though since ghosts are not an actual thing.

@Eric McCarty - the percentage of people that can buy a property with their own cash and rehab it with their own cash is very low.  Are you sure he didn't mean "cash" as in buying it with private lender money or hard money?  All of my properties in my first few years of investing were bought with "cash".  I made "as is cash offers with quick close".  It was cash but not my cash.  The reason why cash offers are strong is because conventional financing takes forever and is not a guarantee.

Even now, it's rare for me to buy a property with my own cash unless I'm doing it because I know the property is a steal and I need to grab it right away and I know I can refinance it quickly to get my money back.  For instance, a few years ago a commercial property popped on the market for $450K (and it came with an adjoining, buildable lot).  Great area, high land values, already had a tenant in place that wanted to stay.  I checked with my bank and told them I was buying the property cash but needed to know if they'd refi at 75LTV of whatever appraisal came in at after I bought it.  They said they would.  I offered $425K, seller accepted.  Inspection uncovered an issue we wanted addressed.  Instead they gave me a $25K seller credit because they didn't want to spend the money to take care of it (problem after closing cost me $7500 to fix).  After closing got an appraisal and refinanced with a bank.  Appraisal came in at $650K.  Was able to get all my money back and then some.  So now I'm into the property for zero and a recent appraisal came in at $850K because the block has gone under major development.  That's a way to use cash but only temporarily (my cash was only separated from me for 45 days).  I'm not sure I'd ever come across a scenario of using cash for 6-12 months.  Not worth it to me.  Money is not that hard to come by when you have a good deal.

@Erik Kostyuk - yes there are lenders that will do loans without W2 or tax returns but you'll want to make sure you have decent credit and some capital reserves so you don't pay a super high rate and kill your cash flow.

@Alec Strahl - one of the most important aspects of real estate investing (if your plan is to grow) is to figure out how you're going to get your money out of each investment.  Relying on cash flow to replenish your capital can work but it takes a long time.  Forced appreciation is the fastest way to grow your rental portfolio.  It also depends on what types of rental units you buy.  If you want to get 100 single family rentals, that will require a lot of capital and a lot of time.  You can get there quicker with multi family but it all depends on you and what your plans are.  Some people love single family, others love multi family.  There's no ONE right answer.  I know successful investors that buy boarding houses and I know successful investors that only buy townhouses in nice neighborhoods.  There are many paths to success but you need to get on a path (you can always adapt and change along the way).