All Forum Posts by: Trent Stone

Honestly....I'd probably negotiate down. Also, check your numbers and check them again....and then have 3 other people check them. You have to be very careful with turnkeys, a lot of times the cap rates are overstated and returns are low. What cap rate are they advertising and what cap rate will you actually be getting and what is the actual positive cashflow? A 4 cap and $100/month with the possibility that your tenants might lose their jobs and you might have to file for a mortgage forbearance wouldn't be worth it for me. I wouldn't say not to invest, I would just make sure you take the added risk into account when you are looking at what kind of return you are getting. I have the most amazing Realtor in Indiana, if you want to PM me your number I'll have him give you a call and he can look at the deal for you and he can give you his opinion. He's an investor too and I trust him wholeheartedly. 

Go to any meetup you can and continue to network here on BP. When I started I jumped out of the airplane and started building a parachute. I made mistakes but I learned fast. The key is to find great deals, so know your numbers VERY well. Houston is huge, so narrow your criteria. Pick SFR or MFR to start, but not both. What types of neighborhoods? What types of properties? What is your minimum criteria for profit and margins? ie. I look for flips, 2-3 beds with space to add another bed or bath in these 5 neighborhoods. I like my properties to have an ARV of around $200k because I know they will sell quickly in those areas. I look to be all-in a project under 70% ARV with a minimum profit of $35k. I make sure if I had to hold the property that I could keep it as a rental with a positive cashflow. etc. etc.

I use none of my own money in my deals. If you find a good enough deal, you will be able to find partners who are interested. Just pick a criteria and become an expert in that niche. You may have to adjust a little as you go, but you will definitely get going. Best of luck to you Tyler!!

That's awesome Jon. Really hope things get back to normal soon, but congratulations on nailing your numbers!

Hey, congratulations on the investment!! What is your monthly, net cash flow?

Honestly, I haven't found it to be too big of an advantage being licensed. But I also invest out of state. MLS acess really is the biggest advantage I have found in state. Tax deductions are pretty negligible I would say. It's a lot of hours to get licensed and you don't use nearly anything you learn for the test. It doesn't hurt, but if your just looking for deductions I'd say keep looking lol.

Technically, the terms of the FHA loan state that you "intend" to live in the property for a year, if something comes up and you have to go take care of your grandma in Florida they aren't going to make you sell your house or refi. The tax benefit is just if you itemize your deductions you can include your mortgage interest. You can obviously rent part of the house while you are living there. After the first house I would get my second house lined up and ready to close on month 11, pay the mortgage for month 12, get it rented, then bounce. Double check with an investor savvy mortgage professional, but I don't think you should run into any problems that way.

If your numbers check out I think it's a solid deal. I would raise your capex and repair budget probably closer to 10% each, the property looks a little older and stuff is bound to come up, especially if you aren't putting in any repairs up front. Also increase your vacancy rate to 10-12% and see if it's still a positive cashflow. Get the rent rolls and the P&L for the last 12-24 months. Look at the absolute worst month and see if it was still positive. and 11cap is pretty high unless you are in a war zone, I would double check all those numbers and all your expenses, but if they still pan out, I would pull the trigger. Good luck!!

Depends on what area you are looking to invest. We are doing all our investing in Indianapolis. Hard-money lenders will usually ask for 10-20% of the purchase price and will fund the entire rehab. ie. Buy a house for $100k with $50k in rehab that will sell for $220k. You would only need to put down $10k plus a couple points and fees, maybe call it $15k-$16k. Which still leaves enough in reserves for a contingency budget. 2-3 months later, sell it and do it again or wait for the seasoning period, refi and do it again. 

We are always looking for partners. We get a deal or two a day across our inbox, let me know if you have any interest. Best luck either way! :)

If I were in your shoes I would absolutely use a HELOC to invest. Use it as a downpayment on a cash-producing asset or use that money to get a hard money loan and flip something. The way the market is right now, I'm leaning heavily into flipping, just my 2-cents.

I assume you are asking about counting the rents towards your personal income? 

Let's say a lender wants your DTI(debt to income) to be under 50%, and you make $10,000/month. That means ALL your debt payments everywhere should be no higher than $5,000/month. Now let's say you want to buy a rental property that rents for $1,000/mo (not including expenses). For the sake of the lender they will count $700 of the gross rents towards your gross income. Now 50% of your net income for DTI will be factored using $10,700, instead of your original $10,000. Hope that cleared it up for you.