All Forum Posts by: Rick Stein

I undersnd your reasoning on your personal home but why can't you tale a HELOC on the rental property?

It depends what your goal is. Fix and flips are fine but you will pay short term capital gains and then you must go to the next one. In other words, you have a job. Rentals give you long term income assuming you bought it correctly and have a positive cash flow and your tenant is paying down your mortgage every month. Rentals are the way to wealth. Why not do both? You can do flips to give you cash for rentals.

Good luck

You need vacant property insurance which some companies do not issue due to the added risk. Find one that does. It is significantly more expensive that regular insurance. You just have to figure it into the equation.

Hi, Elizabeth,

 No, it is not hard. I feel I am doing them a favor. I don't ask people  to lend me money. That has a negative connotation. Lending assumes risk and possible loss. I ask them if they would like to INVEST in a my project. Folks like to invest. It promotes a mental assumption of gain. Don't  be afraid to ask.The answer to every question you don't ask is "No!"  Asking with the correct words and intonation often results in "Yes".

I recently purchased a three family home in a gentrifying area of Trenton, NJ for $110KI. The price is OK but not great. The financing is the key. I purchased it with $10K down and owner financing at 2%. It will be paid off in 12.5 years. I got rid of two of the troublesome tenants and raised the rents to market rent. It cash flows at about $500/month. I try to involve the seller in the financing whenever possible. if that fails, I use private money. 

Hi, Tony,

  I don't know the price range in your area, but my favorite strategy is to try to find an seller who owns their property free and  clear (i.e. no mortgage). Use as little as possible from that $40K for a down payment  and have the seller hold the note at an interest rate that makes sense and allows you to have a positive cash flow.   OR, borrow private money at the same interest rate.

  I have one investor who has invested (loaned me $) on four of my properties to date. He is a retired police officer with his money in his credit union collecting maybe 1%. I offer him 5.5% interest only loans. I also delay the first payment for 4 or 5 months to give me time to rehab the property. It works well for both of us. He likes the arrangement so well he has told his friends about it. Don't be afraid to ask. You are doing the seller or private investor a favor.

Be creative. Can you get an unsecured line of credit. I have a line with my local credit union for $100K with 5.25% interest. Banks have their place , but I try to avoid them whenever possible. I would also suggest joining your local REAI (real estate investment association) For a very modest membership fee you get access to a wealth of education and networking.

Just some suggestions.

Good luck

Partnering on your first and/or second deal with a seasoned investor who is willing to mentor you is a great way to make some money and learn at the same time. For me, the deal always centers around the financing. Can you find an owner who has no or little mortgage, give him a small down payment and have him/her hold the balance on a note at say 5 or 6%? They are out there. You need to do a lot of marketing and make a lot of offers.  Using this strategy, you can use the money you do have to purchase multiple properties. 

Good luck,

Rick

Thanks, Erik,

recently I closed on a a triplex on Centre  St in Trenton. I paid $110,000 for it which is ok, but the financing is beautiful. I have owner financing with $10k down which is less than 10%.the balance at 2% fully amortized in12,5 years. It also have about a $600/mo cash flow per month

Do you belong to your local REIA. That's a great place to start

I would not ad it. It has no relevance to what you are trying to do. It may intimidate some folks who do not have your level of education.

Good luck "doc" (lol)