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  • RE: Investment Strategy - I’m at a crossroads

    Greg Morris, in addition to all of the great comments already posted here by the others, I just wanted to suggest something additional for you to consider, along the lines of paying off your student loans.

    You mentioned you'd been hesitant to do that, because you liked having the capital on hand to support land flipping. Have you considered opening a HELOC on your current home? As an example, if you opened a line of credit at 80% Combined Loan to Value, based on your $120k current home value and apparent $50k outstanding balance on your mortgage ($70k equity), you could presumably get at least a $46k line of credit at pretty good terms, as long as your debt-to-income can support it. There are institutions that will go to 90% CLTV, typically with a bit higher interest rate.

    With that in place, you could pay off your 4% (constant) student loan debt with your cash on hand, or after another small windfall or two from land deals like others suggested, and then when other good land flips arise moving forward, draw against the HELOC temporarily for working capital. That way, you're taking a constant 4% debt, and turning it into short term / temporary working capital debt, only as needed.

    I opened a HELOC on my primary residence a few months ago for the same reason (readiness to fund larger land deals), and it looks like I'm about to tap it for the first time; although not for land. I haven't been actively pursuing any more rentals, but last week I saw a FSBO 1br condo in my area hit Zillow. It should cashflow like crazy, and I just had my all-cash offer accepted by the owner today. I plan to use the HELOC to support a quick cash closing, and then refi into a30 yr fixed as soon as I can. I might not have gone for it, or had my offer accepted if I did, if I didn't have the HELOC already in place.

    I remembered Dave Van Horn (note investor) saying on Bigger Pockets how it's a good idea to secure HELOCs on your properties when money is cheap and values are high. Provided we use the money responsibly, it seems like good advice.

    posted in Off-Topic and Miscellaneous
  • RE: Have you ever regretted buying a house?

    Amy Breen, when everyone seems to be doing something (e.g. buying increasingly expensive houses), it's definitely a good idea to question whether it's the right move, and then proceed thoughtfully.

    My short answer is that I'd encourage your friends not to buy a house unless they meet at least 2 of the following factors: 1) they're fully prepared to live in it for at least 10 years, no matter what; 2) it would cashflow as a rental and they're mentally prepared to be landlords if they needed to; 3) they can afford to put at least 20% down, and are okay with losing that money, if the local market turned south and they had to sell.

    Longer answer / my story: I bought a condo in 2005 in one of the top 3 fastest appreciating markets in the country, at a time that real estate was exploding across the whole country, and a lot of very intelligent people in my area were saying things like, "If you don't buy now, you could be priced out of this market forever."

    Only a few months later I moved out of state when a much better job opportunity arose, unexpectedly. At that point, on paper, the condo had already appreciated about 20% in only a few months, so we decided to hold it a bit longer and rent it to a former co-worker.

    After just a few more months, with RE still booming nationally and feeling rich on paper, personally, due to the condo's appreciation, I signed a contract to have a SFH built, new construction. I pulled together 10% down mostly from 0% credit card checks with preferable terms, which they were giving away like candy on Halloween back then, but my actual intention was to sell the condo well before the new house was finished and ready for closing. Things in the condo's market had been selling so fast just 6 months before (same stories as today: multiple offers within 24 hours of being on MLS), so this felt like a very safe bet.

    Somewhere around Jan 2006, with the former co-worker turned deadbeat tenant having stopped paying rent months before, I listed the condo for sale in line with the asking prices of directly comparable units in the same complex, about 40% above what we paid for it...and nothing happened. No offers, no showings, nothing. We waited a month or so and then started dropping the asking price...along with everyone else selling identical units in the complex, and comparable properties in the entire state of FL.

    Six months later, we managed to close in the same week on the sale of our FL condo at a price about 6% above what we paid for it (so we broke even after realtor commission, not factoring in holding costs), and on the purchase of our newly built house. My intended down payment money from the condo, which only ever existed on paper, had completely evaporated. Rates for all credit scenarios had gone up significantly, relative to where they had been when I signed the purchase contract for construction months before; plus, with my now lower down payment (and credit card balance from having "temporarily" borrowed the down payment), I no longer qualified for the best rates available.

    Instead of what was originally projected to be a $2,000 monthly mortgage payment, I ended up with a $3,000 per month payment from the builder's "preferred lender" who I'd agreed to work with exclusively in exchange for builder's upgrades. If I had anyone knowledgeable advising me, they would have certainly told me to at least shop around for lenders regardless of the supposed exclusivity agreement I had with the builder, and most likely would have told me not to move forward with the purchase at all, just forfeit the down payment and hope the builder didn't sue me to enforce the contract (which they had the right to do). But instead I closed on the purchase, and then immediately started looking for refinance options.

    I was able to get the mortgage payments down to $2,400 on a refi in late 2006, and within a year after that the value of that house, along with most of the real estate in the country, dropped significantly, to the point that I owed more than it was worth. I still own the house today and rent it out with positive cashflow. It didn't appreciate back to my purchase cost until about 2 years ago -- roughly 13 years after I purchase it.

    Rarely anymore, but out of curiosity I occasionally check the value of the FL condo from time to to time. During the trough of the Great Recession and foreclosure tsunami, identical units were listed at 10% of the price I bought mine for -- a 90% loss of value. Today, they've recovered back to the price that I sold my unit for in 2006, but haven't re-appreciated above that, yet, so there could very well be some owners who purchased in late 2005 / early 2006 who are underwater to this day, relative to their purchase price.

    posted in Residential Buy and Hold
  • RE: What's the best mail service for sending blind offers!?

    For me, it boils down to two options:

    1. Rocket Print & Mail

    2. Pebble

    Each path provides a unique set of pros and cons.

    Rocket Print & Mail is very much the extrovert's dream direct mail company!

    They're super friendly, and love to talk on the phone, answer questions and tailor their service to your unique situation and try to give you a very personalized experience.

    They also have incredible prices!

    Pebble on the other hand is more designed to be self-serviced.

    Now to be clear, the support team is world-class, and they'll definitely step in and get you whatever you need, but the process by design doesn't require communicating with anyone.

    You simply sign up, select / design your letter template, upload your list and send out your mail.

    Pebble is also a full-force lead tracking CRM made by land investors for land investors, so as you grow there is a lot they have to offer.

    So if you'd prefer not to talk to people or "build a relationship" with a direct mail rep - Pebble is probably the route I would go.

    If you'd prefer the opposite, Rocket Print and Mail is probably your best bet.

    posted in Marketing Strategies (To Buy Properties)
  • RE: Have you ever regretted buying a house?

    Amy Breen,

    When I first moved from California to Indianapolis, I had inherited a little chunk of money and used it as a 20% down payment on a single family residence.

    This is probably one of the biggest regrets of my life (though I learned a lot from it, so there is definitely a silver lining).

    At the time I didn't really know the power of low (or no) money down options like the FHA loan.

    I also didn't really understand how powerful house-hacking is.

    If I would have played my cards right I could have gotten a great 2-4 unit, that minimized my monthly mortgage payment... or possibly even got to live their essentially mortgage free (with the rents covering everything).

    I actually made a couple of Youtube videos explaining some of this stuff:

    The long and the short of it is, I'll probably always house hack my primary residence in some form or fashion because it's the smartest thing to do with your primary residence... at least from a financial perspective.

    The triplex I'm living in now is my favorite property I've ever lived in so far!

    posted in Residential Buy and Hold
  • RE: Need advice for potential home purchase

    Jason Wollbrink love it!

    posted in Off-Topic and Miscellaneous
  • RE: Alternative call system to FreedomVoice

    If it's helpful at all, I've been compiling a list for a potential blog post I might write in the future:

    1. RingCentral (REtipster affiliate link)
    2. Phone.com (REtipster affiliate link)
    3. Grasshopper (REtipster affiliate link)
    4. Dialpad
    5. Line2
    6. OpenPhone
    7. Nextiva (REtipster affiliate link)
    8. CallRail
    9. CallHippo.com
    10. JustCall.io
    11. Nimbata

    So far, the ones that are standing out to me are:

    1. OpenPhone
    2. Nextiva

    But there is a lot to compare and contrast so the jury is still out on which one I think is best.

    posted in Reviews and Recommendations
  • RE: Assessed Value or Appraised Total Value?

    Hi Jimmy Tsiampouras,

    I don't know where your pulling your data from (as in what website or software) but normally the word assessed is referring to the tax assessed value, or the the value the county tax collector / assessors office places on the subject property to determine how much to charge in annual property taxes.

    Often the tax assessed value is not an accurate representation of market value but it depends on the state.

    Appraised total value is probably (I'm guessing here) the software's or website's attempt at estimating the market value of the subject property based on an algorithm they put in place.

    These are rarely accurate for land, so I wouldn't put much stock in them.

    Hope that helps!

    posted in Marketing Strategies (To Buy Properties)