All Forum Posts by: Salvatore Lentini

@Jaden Griggs - when I said not putting it all in to the deal, that would be in a perfect world.  Ideally you want to use as little of your own money as possible.  Not for the reason some would think.  I don't mean use other people's money so you don't risk your own.  You've imposed an artificial limit on your investment ability.  You have $25K but other people just in your world or your network alone have literally, millions of dollars.  You have to think beyond deal number one.  Many investors get trapped on their first investment.  Not trapped permanently but temporarily.  If you buy a property using all your $25K when can you buy investment #2?  If it's a flip, from the time you start looking, to finding, to acquiring, to rehabbing to selling...probably 6 months.  But then you have to start the process over again.  You're lucky if you can acquire more than one investment per year with that strategy.  I was able to flip 2 properties and buy 8 rentals in my first year and my partner and I owned 100% of them.  Have you heard of hard money loans?  These are similar.  They're private loans.  High interest loans.  They have a lien on the property.  You use their money to buy, rehab and either flip or keep as a rental.  If you flip, you pay them back when you sell the property and keep the profits.  If you keep as a rental, you refi and pay them back that way.  The private lender gets points up front and a certain number of guaranteed high interest monthly loan payments.  I just replied to your message as well.

@Gabriel Jordan - does the property need any rehab?  Would rehabbing add to the value?  If the seller owns it free and clear you can propose to partner on the deal.  They hold financing on the property.  You pay them a set amount per month for a designated time period (say 12 months).  You pay for the rehab and then when it's done, you either flip it or keep it as a rental and pay them off plus a percentage of the profit.  You can get into a property on the cheap and they can make a higher profit in the end.  You can also have the monthly payments deferred to the end.  Lots of ways to make it happen if they are open to the idea.

@Michelle Backer - you have the right idea.  So many new investors that live in high cost of living areas look to the midwest or other cheap areas to invest.  I'm not a big fan of that strategy.  I had 19 of my 200 rentals in Dayton OH for that exact reason and you pay for what you get.  Low priced houses, low quality tenants, low quality property managers, low quality contractors.  After 7 years I sold them all.  Thankfully I bought them dirt cheap after the '08 meltdown so after years of break even I made money when I sold them.  I seriously doubt if I were to do it again now, 7 years from now I would not be so lucky.  I grew up on LI and lived in NYC for years.  The trick to looking upstate is finding enough population density and avoiding the seasonal, 2nd home areas.  Otherwise you'll have a seasonal rental which if done properly can be great but probably not the best idea for your first few rentals.  Nyack?  White Plains?  Are those areas overpriced now?  You need to find something next to the overpriced areas.  NYC population is so dense that it will continue grow to the next up and coming area.  That's where you want to be.

@Jaden Griggs - Do you know anyone here in the US?  Having "boots on the ground" is crucial to success, especially early on.  I've partnered on all my deals since I started 10 years ago.  I'm closing in on 200 rentals.  In the beginning my partner (brother in law) was in charge of finding private investors.  Along the way I found my fair share as well (my realtor, my attorney, my bank teller, my realtor's friend, neighbor....all invested with us).  We'd do high interest only loans and pay them back as we rehabbed, refinanced and kept our properties.  As deals got larger we'd bring investors in as equity partners.  We started with $60K properties and our recent acquisitions have been $5M+.  I would not suggest putting all $25K of your money into your first deal.  

@Gil Segev - the reason you really need to make sure a rental cashflows from day 1 is not so much the money you make off it each month but the padding it provides.  If you calculate $250/month cashflow and you're off by $250 because you can't get the rent you thought or taxes go up or repairs are more than you thought... then you break even.  If you buy something that breaks even and you're off by $250, how long can you afford to lose $250/month?  You'll also have a hard time financing it now and refinancing in the future.  Rentals are a long term play.  They are a GREAT way to generate wealth over many years.  The cashflow component is what will make the difference in being able to hold them long term or needing to sell them after a few years.

@Joshua Post - you've come to the right place.  BP is filled with information and the community is eager to share.  Analysis Paralysis is very very very common.  I had it for 9 years and now I'm closing in on 200 rentals.  Start asking questions!

@Esi Okpetu - if you're serious about the property you could get it under contract and then get several estimates.  Use the high one to make a counter to their $10K.  Anything your contractor finds and you put in front of the seller will now be required to be disclosed if they don't continue the deal with you.  Most of the time the seller will just lower the price further or give you a seller credit at closing, or seller credit to be held in escrow to be used for the repair after closing.  Foundation issues can be a big problem but they can also just be scary on the surface to most and easy to remedy.  I can't tell you the number of times I've looked at properties with "foundation issues" that were really just superficial cracks or settling that had occurred many moons ago when the property was first built.

@Shaun Fogleman - Past jobs they've done and references.  Keep in mind, it is very easy to weed out contractors as there are A LOT of obvious bad ones.  If you get a bad vibe upon meeting with them...trust that feeling because they will only get worse, not better.  The tricky part is separating out the smooth talking contractors (that suck) and the capable, dependable contractors.  That's best done through word of mouth, how long they've been in business, how busy they are...  Ideally you can start with a smaller project and if they work out then move them on to whole building reno.  That's how I continue to build my team now as I have a lot of properties but in the beginning it is more difficult, especially with a flip because you can't dole out small jobs.

@Michelle Backer - Price isn't everything.  ie would you rather buy a property for $300K with 20% down at 7% interest amortized or $320K with $20K down paid in installments of $1000/month for 300 months?  In the 1st scenario you need to come up with say $60K in down payment and your monthly payments would be $1600/month.  Financing in this environment can make a huge difference in your ability to buy and cashflow.  I'm not a huge fan of investing out of state unless you have a partner with boots on the ground there.  It's hard to keep tabs from afar.

@Paul Tan - Cashflow is SLOW.  It's great once you've built up enough of it but in the beginning it is almost nothing.  I'm a big proponent of having an "Escape Plan for Your Money".  If the biggest hurdle to real estate investing is making the leap, the 2nd biggest hurdle is getting your money out to buy investment property #2.  Feel free to message me for more details on this.  A little planning can make the difference between buying 1 property every 5 years (if you're lucky) to buying multiple properties per year.  I'm closing in on 200 rentals and am financially free.  I thought I'd retire once I got to this point but I love it so much, I can't stop :)