Episode 79: How Many Mortgages is Too Many?

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How Many Mortgages is Too Many?

It this episode I am talking about how many mortgages is too many.  Specifically, how many mortgages is to many.  This is a listener question.  Typically, investors are limited to 10 (bank) mortgages.  The first three mortgages are typically fairly easy to get, but the closer you get to 10 mortgages the more difficult bank financing becomes.

Getting Multiple Mortgages

If you have 10 bank mortgages, you’d better have good income from the properties and good personal income as well.  Investors like to use the BRRR (buy, rehab, rent and refinance) method to preserve cash on hand.

Alternate to Bank Mortgages

By using private financing (hard money, investor money or seller finance) you could potentially have more than 10 mortgages.

What is Your Comfort Level?

The short answer to this question depends on your personal comfort with risk.  Debt equals risk.  Many investors that lost a lot of money in 2008, will tell you not of over-leverage yourself.

For more Information Check out:

BP Forum Post

Credit.com

Invest for More

Episode 78: Secrets of the 1031 Exchange

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Secrets of the 1031 Exchange

My guest David Foster from ERG1031 gives us the details about Dave fosterhow to use this section of the tax code to defer tax liability.

  • What is a 1031 Exchange?
    • A 1031 exchange refers to the section of the tax code that allows you to sell a property and roll up the profits into a “like-kind” exchange and defer the tax liability until a further date.
  • What’s the benefit of a 1031?
    • You can literally save millions of dollars in taxes over a real estate investing career.
  • How do you start a 1031?
  • Perameters
    • Starts with the sale of a property
    • Intermediary has to be in place
    • Client must produce a list of potential replacement properties with in 45 days.
    • 6 month time to close on the next property
  • What is a “like-kind” property
    • investment property for nearly any kind of investment property.  NOT PRIMARY RESIDENCE.  You can exchange a single family or several for a commercial or multi-family property.
  • You MUST purchase as much real estate as you sell COST wise.. Does not matter if you change one property for thee or more.  The import part is the dollar value amount.

This system only works for buy and hold investors.  You should hold for at least a year before you try to do a 1031 exchange.  This method has been used buy rehabbers when they rent the property for a period of time after the rehab, then after a period of time they do an exchange.

Now if you can use this method if you hold the properties for you life span, when the properties are inherited by your heirs they will not have to pay the deferred taxes.

You can have as many 1031 exchanges as you like.  You must “intend’ to hold the property for “productive use” as an investment, but there is no set time period when you can do a 1031 exchange.

Here is Dave’s contact info

Dave Foster || Phone 850.889.1031 || fax 303.496.1031

Corporate Office 303.789.1031 || dave@erg1031.com

Exchange Resource Group || www.erg1031.com

 

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Episode 77: Trailer Park Secrets with Kevin Bupp

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Trailer Park Secrets with Kevin Bupp

My guest this week is an amazing investor and a great guy.  He is Kevin Bupp from www.kevinbupp.com  and Real Estate Investing for Cash Flow Podcast.

Kevin share with how he was a single family home investor prior to 2008 and what happened to his portfolio.  He also talks about some of his multifamily properties.

Kevin talk about why he didn’t like single family homes because of the cash flow and how he transitioned into multifamily properties and how he was unable to find these properties.

Kevin had a lunch with a manufacture home investor and they peaked his interest and why he has moved into this type of asset class.  Kevin attended a boot camp from www.mobilehomeparkuniversity.com.

Kevin talks about his criteria and his partnerships with investors and how they have shifted over the years into trailer parks.

Kevin talks about different types of parks and ownership types varying from leasing the lots to actually owning the trailers and combinations of the two.

Kevin talks about a trailer park in Atlanta that he bought that was very distressed and how he has turned the park around.  Kevin was able to take a trailer park that the mayor wanted to shut down to a place that the community was proud of.  Kevin gives the details about how he bought it, renovated it and revived the property and turned it from a slum into place that people want to live.

Kevin talks about a current trailer park that he has under contract and what his plan is to turn this trailer park around.  This park has been maintained but has other issues.  Kevin talks about the problems with this trailer park, the management and how this is going to increase the value of the property.

Kevin is looking for 15% to 16% cash on cash return and push this property to over a 20% cash on cash return in the first year.  He is looking for stable markets with good school districts.

Kevin gives his prediction for the future of the real estate market.

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How to Make Over 4 Million Dollars on One Trailer Park

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How to Make Over 4 Million Dollars on One Trailer Park

Here is the link to the article

These are the steps Frank Rolfe Used to turn this  trailer park around.

  1.  Bought the part at a good price.  (about a 9% cap rate)
  2. Raised the rent.  This park was under valued.
  3. Filled the vacant lots.  The park had 100 vacant lots with they bought it and the significantly reduced the vacancy rates.
  4. Instituted Professional Management  We set guidelines and enforced them.  Including a “no pay no stay” policy.
  5. Chose a growing market with increasing population.
  6. Found a buyer who appreciated the property and wanted to take it to the next level.

Now the guy who did this is an EXPERT and has years of experience with investing in trailer parks.  Here is Frank’s bio.

Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 6th largest community owner in the United States, with more than 17,000 lots in 20 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com

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Episode 74: Real Estate Investing Using Other People’s Money with Jim Ingersoll

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Real Estate Investing Using Other People’s Money with Jim Ingersoll

Jim Ingersoll is from www.investingnownetwork.com.  Also Jim is hosting a real estate boot camp February 25, 26th and 27th in Richmond Virgina.  Get more information here.

Jim and I are talking about investing using seller financing.

Do you know the craigslist secret?  Jim tells us to go to craigslist on Thursdays and search for “Moving Sale”.  Then send the people that are having moving sale an email or text asking if they are selling their home.  Jim says it does not always work but occasionally it does help you find deals.

His Sources of Deals

  1. Referrals.  Get referrals from agents and bird dogs and direct from sellers.
  2. Criagslist.  Write to the ‘Moving Sale’ listings.
  3. Inheritance List.  Jim gets leads from inheritance properties.

Three Things You Want to Use

  1.  OPM – Other People’s Money
  2. OPA – Other People’s Assest.  Structure seller financing using the sellers equity in the property to help you.
  3. OPI – Other People’s Investments – Mostly IRAs and Retirement Funds

Ways to Structure Seller Finance Deals.

  1.   Cash Offer – This is usually a very low number.
  2.   50/50 Deal – Give the seller 50% up front then the remain 50% in 6 years.  This is basically a zero interest loan.
  3.  Finance – Divide the purchase price by the term of the loan and see  if they will give you a ‘zero’ interest loan.
  4. No Payment Until – Offer a deposit then no payments until a later date.
  5. Use other people’s IRA accounts.

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The place where the deals are revealed.

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