All Forum Posts by: Trevor Dominique

Trevor Dominique has started 19 posts and replied 43 times.

Some reasons I respectfully disagree with this logic:

1. Vegas example: Any market driven by tourism is obviously going to have bigger peaks and troughs when things go wrong. Just like an short term rental investor, you have to prepare for this is you are going to invest in a market like this. Additionally, the "booms" will be stronger than in a non-tourism driven market, which will partially compensate for the busts. Cash reserves more important here.

2. Your argument about a falling market is flawed. Obviously if we could all predict the future we would wait to buy until the market bottoms. Intelligent investors, whether stocks, real estate, or some other vehicle are fully aware that it is impossible to predict market behavior. Investing in assets that are PROVEN to increase in value over time will pay off greatly long term. Compound interest is always your friend.

3. You act like saying "You don't take a loss until you sell" is unsound logic. For those who pulled out of the market in 2009, how do you think they felt about their decision in 2014? Return on investment is a function of risk, and we all know this, so why not prepare for the down market rather than fear it?

4. Your Texas example is indeed a horror story, but it is also a good example on why diversification is so important. Just like I shouldn't invest my entire 401(k) in Amazon stock, I should not invest my entire real estate portfolio in one property. But once again, you are citing a 1 in a million example. If I cite an example about how someone became rich buying Bitcoin, is that an argument that Bitcoin is a sound investment? Absolutely not.

5. Your next argument implies that during the height of COVID an average investor is collecting around 70% of rents. If I apply this to myself, this would make my business turn from being cash flow positive to about flat. Once again, cash reserves become important to whether the downturns that happen EVERY 5-20 years.

Long story short, I am going to keep buying rental properties :)

Originally posted by @David Ginn:

@Trevor Dominique

I'm going to give you an answer that will be tough to hear and competently against what everyone has been telling you.

Renting homes or apartments is one of the highest risk investments you can get into and doing a cash-out refinance is even higher risk.

Let me explain. In Las Vegas, in 2006 a home could be purchased for $150,000.00. You could rent it for $1300.00 and after taxes and insurance, you would cash flow at over $150.00 per month. Then came the great recession. Prices on that home fell back to $50k. That home could be rented for $600 a month.

So let's look at the dynamics of a falling market. If I came to you and said, “I have a business that's worth $150,000.00. It will make you $150 a month. In two years the markets will fall and it will be worth $50,000.00.” Would you buy my business? You would say to me, “No! Do you think I’m crazy?”

You see in real estate for some reason we seem to think that we can deny all business fundamentals and that somehow, our situation is different. I have heard everything from, “You don't take a loss until you sell." to "It will rent during a down cycle." Most people who hear me say this still believe in defying the odds. They think of all types of arguments to try to prove my business sense is wrong.

Here is an actual example shared with me that happened at the start of the Covid-19 crisis. As you read this, keep in mind that this happened in one of the market segments that people would have said is the most recession-proof.

There was an investor in Texas that owned a 30 unit complex. COVID-19 hit and they stopped all foreclosures and evictions. All the tenants got together and decided to not pay rent. Now, whoever owned that building and had the loan on it just got trashed by his tenants. He and his family's financial lives have been turned upside down. He cannot even get to a judge until June, and then the courts will be so backed up, it could take months to get his tenants evicted.

Also, my local news reported that 1 in 5 market-rate apartments are missing rents right now, and nationally it's 1 in 3. The real issue is clear. You can buy and rent when a market is headed up a bit, just like a business or a stock that you sell before a market starts to fall.

Buy and hold investing is a term that does not make good business sense. There are much better strategies to do in real estate when a market could potentially fall or is falling.

2 Votes

I agree that I would never seek 5% if it were my cash, but essentially my investment here is just my time to find the borrowers I want to work with.

Originally posted by @Remington Lyman:

Originally posted by @Trevor Dominique:

Hi BP,

I am interested in learning more about getting into the hard money business. Let me explain my current situation and any comments or feedback would be much appreciated.

Currently I own 8 rental units in Northwest Ohio and in Greenville South Carolina. I feel I am really starting to build a good team around me and I want to start doing more flips & BRRRRs, and potentially hard money lending as I mentioned.

I have a family member who is a high net worth individual who made me an awesome business starting offer. Basically, through his financial advisor, he can set up a private $1.5 million line of credit at about 2% (LIBOR), and he said said we could set up a structure where I could have access to this credit line for a 5% markup interest rate. So if LIBOR stays at 2%, I would pay him 7% annually on the amount I have drawn. This seems like an awesome structure for flips and BRRRs since 7% is much more favorable (I think) then what I would get from a hard money lender myself.

So then that got me thinking: would this give me any potential to give hard money loans? If I could do it at 12% or higher, I would make the 5% spread plus the points. For example, if an investor needed $300k for 6 months for a project and I could finance that at 12%, I would essentially make 5% interest, or about $7,500 plus points for what would be pretty passive on my end.

I know if I were to entertain this I would have to spend some time sitting down with my attorney to set things up....so I am not asking for legal advice. Just looking for general advice on what I may be missing here. Thanks for anyone who would take the time to offer me some feedback. Always open to honestly if someone thinks this would not be a smart move.

You will have to make sure the properties you are lending on are solid options. A 5% return does not seem good enough to compensate for the risk you are taking

1 Vote

Hi BP,

I am interested in learning more about getting into the hard money business. Let me explain my current situation and any comments or feedback would be much appreciated.

3 Votes

Originally posted by @Sharon Gillespie:

I am a local agent investor. I just purchased a property in the Sans Souci area and see opportunities there. The Taylors and Mauldin areas also have good opportunities. I think that downtown will continue to appreciate, especially if you are looking to buy and hold.

Hi Sharon,

Thanks for the response. Just curious, could you elaborate on why you think downtown area will continue to appreciate? Any big projects coming around downtown in the next couple years that you have heard of?

0 Votes

@Hung Nguyen great info. What’s your opinion on places within about 2 miles of downtown? Still appreciating or has downtown Greenville area hit its peak?

1 Vote

Hi BP nation,

Just curious if we have many Greenville investors here. Would be curious to here some opinions on the current market there.

I am from Ohio and have been in Greenville for about a year. I own six units in Ohio and I am ready to start investing in Greenville, but prices are much higher here. What are some strategies to find cash flowing rentals here?

2 Votes

Originally posted by @Andre Taylor:

Hey Trevor! I am actually doing this right now.. I bought a duplex that was already converted to a single family last year back in July 2019. The property is about 2300 Sqft. What Was suppose to be a cosmetic upgrade but turned out there was black molded so had to gut the whole building out. Cost you will have to consider is architecture plans which could cost up to $10k; which my plans is costing about $10k. Then if you are moving walls to re-arrange the space you looking at structural engineering cost that could be $1-$4k. Both your structural and architecture will be communicated hand and hand and the end result they should hand you approved plans by the city. If you are hiring a GC they should be working with all the subs to pull permits. If you are planning to GC this yourself. Make sure all your subs provide you copies of their insurance and during the design phase with your architecture you sit down with your contractors to give them the scope of work so they can give you good detail bids but the cost of permits should be included in their bids. If your duplex is all brick; your masonry could be a big expense if the tuckpointing is not up to par. Other things like replacing roof, plumbing, electrcial, wont be bad because everything is open. You probably say money on framing if the existing framing is good. I have to redo all framing. Even the stair case which is not to code... building was built in 1910.

Thanks! Would you recommend working with a real estate attorney to help with the process? The good news about this property is that it is already zoned for SFH & small MFs, which I feel is a huge plus.

0 Votes

Hey BP,

Just wanted to reach out to BP nation and see who here has taken on a duplex to SFH conversion as a flip? I am a relatively young investor at 23 years old, and I have only done 2 flips while also owning 6 rental units. I have identified a duplex listed for $200k. I think I could likely buy this for around $180k, and the ARV as a SFH would likely be in the $380k-420k range. It needs a full gut remodel, but this seems very doable given that I would have around $120-140k to work with as a rehab budget (home is only 1600 sq ft).

This project would be a bigger scope than the two flips I have done, so I am wondering, what are some of the hidden costs and challenges to doing a conversion like this? Zoning, appraisals, pulling permits, etc.

Thanks!

Trevor

0 Votes

Hey BP,

I am a 23 year old investor from Ohio and I currently own seven rental units. I am seriously considering doing a four unit apartment as my next project. What are some good book recommendations to help me learn some more about building small multifamilies?

Look forward to hearing from you!

2 Votes

Originally posted by @Trey Burns:

His numbers sound right. Paying $3,000 for an almost complete rewiring job isn't a terrible place to be in. I would certainly withhold payment until city issues final inspection. If you're in upstate SC I can help with contractor recommendations.

I am in Anderson. Are you familiar? Reccomendations would be much appreciated>

0 Votes

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All Forum Posts by: Trevor Dominique

Trevor Dominique has started 19 posts and replied 43 times.

Post: Hard Money Lending - Newbie

Post: Hard Money Lending - Newbie

Post: Hard Money Lending - Newbie

Post: Greenville SC market

Post: Greenville SC market

Post: Greenville SC market

Post: Duplex to SFH Conversion

Post: Duplex to SFH Conversion

Post: Building a Small Multifamily

Post: Advice for Electrician/Contractor Horror Story - HELP NEEDED