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Re: leverage techniques
Old 01-05-2007, 11:24 PM   #21
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Re: leverage techniques

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Originally Posted by brewer12345
Pffft. I had virtually forgotten about this link, since it had been posted ... seems like a month ago. Thanks again brewer.

Humorous to see that Mr. Real Estate is still figuratively in a full dive and can't pull up. Landing gear is stuck and there's massive fits of grasping for the eject handle. No, wait, that would constitute intelligent effort.

Others such as 'raysk' and 'lets-retire' have posted valuable insight.

-CC
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Re: leverage techniques
Old 01-11-2007, 04:34 PM   #22
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Re: leverage techniques

Raysk
My homes are in the Toledo area.
I think a lot of rehabbers in the recent past got lucky. Appreciation made up for many mistakes.
Many people buy lots of things they call assets that cost them money. Cars boats computers. Like any business it may not always make you money . So yes you have costs. Isnt that sort of a given ? I rather throw some funds at a house that will have value than a lexus like my co workers.
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Re: leverage techniques
Old 01-12-2007, 10:04 PM   #23
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Re: leverage techniques

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Originally Posted by spideyrdpd
I rather throw some funds at a house that will have value than a lexus like my co workers.
Lots more comfortable to sleep in, too...
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Re: leverage techniques
Old 01-14-2007, 02:26 PM   #24
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Re: leverage techniques

Spidey
Flippers and rehabbers have been losing around here as homes have not appreciated all that well.
All my units are in the Lorain area which has lost close to 10,000 in population over the last few years.
Very little industry left,most applicants are burger flippers or bedpan changers.
One of my tenants kids torched a recently fixed up ranch duplex (last sunday).Both sides destroyed,no one hurt.
I had just rented the vacant side and the tenants were to move in last monday.That means I lose on lost rent from the insurance company on that side.Insurance is also trying to bone me on the full amount the house is insured for.They contend that Ohio is a fair value state and insurance will be based on what I paid for the duplex.It was one that I for the most part stole from an absentee landlord that lived in N.Carolina.To top things off it's the third fire in thirteen months,all tenant caused.
If I could sell them all they would be gone tomorrow.Problem is that there is no money in Lorain county at this time.
We lead the country in repops.
The last two years have been disastrous.It's just a good thing that I always carried a very large reserve and paid extra on the notes.
Everything will be paid off within two years.

On the bright side,I had an excellent year in the market so the rental loses will offset the capital gains.

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Re: leverage techniques
Old 01-14-2007, 06:24 PM   #25
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Re: leverage techniques

Dont you have replacement insurance. I had a fire on my personal residence. In hindsight I would of hired one of those companies that take 5% and manage things.
Rather than try to pay them all of you might be better to do the snow ball effect with the houses. You pay off one at a time and then take the extra cashflow and pay off the next. I would think it would work the same as credit cards. Just pick the house with the smallest amount of debt. Unless you have some sweet interest on it.
Personally I am a leverage guy. I rather have the tenant pay off the loans and invest the other money elsewhere. Although we have one property that we rehabbed that seems to suck up a good amount of the cashflow. When it came time to sell the market turned and we rented it for around what the mortgage is. Which doesnt include all expenses.
I also rehabbed a house on the toledo river. That we could sell at a nice profit but I think will have a good rate of appreciation. Its also got a piece of the riverfrontage.

I would imagine that many of those that lost money were newbies. I am sure the veterans still can find deals and make money.

Rob
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Re: leverage techniques
Old 01-15-2007, 07:42 AM   #26
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Re: leverage techniques

Even the old timers are starting to get fed up.Mondays at eviction court used to be maybe a dozen evictions a week,now it's up to 50 to 60 every week.
There are good deals that can be made.After the market crash of '01 many decided that they wanted to be landlords.They would bid up houses to the point of negative cash flow.Now they are loosing big time.
As for payoffs,I deal with a local bank that never sells paper.In doing that I don't have to worry about fannie may guidelines and the amount of mortgages that I can have.I also bundled a number of homes under a jumbo loan.I only have notes remaining on 14 of 53 units left.The amount left is quite small,if the market turns good again I may just pay off those early as well.
leverage is ok for younger folks just starting in the business and accumilating more units.At my age I would rather sell than buy.

The management companies around here want over 10%.I tried one a number of years ago and that cost me tenants.Repair service was terrible,they also imposed rediculous late fees that they kept and the screening they did was unacceptable.This was one of the better agencies around.
We do all of our own work,just two of us,my wife and I.Only thing I hire out for is roofs,or in this case a fire rehab.
Had to learn how to do most of it as in my younger days I never worked on houses.Fortunately all of my units are 1978 and up so there are no lead issues,no basements and all but one are individual baseboard heat.That makes it very easy.

Still waiting to hear again from the ins.company for more info.They want to base everything on not what I originally bought the home for plus appreciation.as I mentioned earlier,I literally stole this house.When I bought it the same homes in the area were going for 60k.I got two 2 bdrm ranches and a 3bdrm side by side for a total of 51k with the seller paying all closing costs and giving me 3.5k in cash to boot.He was still in them at 13% and was being ripped off by the management company handling the homes.Best deal I ever made :-))). I want to just demolish the property and donate the land to the city for a tax write-off,the ins.company wants to rebuild.

Lorain is going the way of Youngstown,rents are dropping like a rock.Even sect8 has lowered what they pay.But sect8 tenants are ever harder to come by as they are all moving to Avon,Oh into new state and fed government subsidized townhouses that are all decked out.
Just goes to show that the government rewards deadbeats and punishes tax producers.

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Re: leverage techniques
Old 01-15-2007, 10:15 AM   #27
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Re: leverage techniques

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Originally Posted by raysk
Still waiting to hear again from the ins.company for more info.They want to base everything on not what I originally bought the home for plus appreciation.as I mentioned earlier,I literally stole this house.When I bought it the same homes in the area were going for 60k.I got two 2 bdrm ranches and a 3bdrm side by side for a total of 51k with the seller paying all closing costs and giving me 3.5k in cash to boot.He was still in them at 13% and was being ripped off by the management company handling the homes.Best deal I ever made :-))). I want to just demolish the property and donate the land to the city for a tax write-off,the ins.company wants to rebuild.
I've always heard that the first thing you want to do after a fire is to hire your own claims adjustor to help you negotiate with your own insurance company. A professional advocate can keep you from being steamrolled. Frequently they'll give you a generous offer just to avoid having their resources tied up in estimates & negotiations.

Of course this tactic may make it difficult for you to continue any other policy business you have with them.
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Re: leverage techniques
Old 01-15-2007, 11:08 AM   #28
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Re: leverage techniques

Surprisingly the insurance company does use independent adjusters in the field.
When he checked out the property he talked a total loss before even stepping inside of the less damaged side.
Both he and my contractor agree that it is not worth trying to restore as both the trusses and roof have extensive damage.
This insurance company was very fair to me last year on two tenant caused kitchen fires.
They are just not happy about me wanting to have the building torn down and not replaced.
I should here more from them sometime this week.My contractor still has to get all the numbers figured out.
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Re: leverage techniques
Old 01-24-2007, 07:18 PM   #29
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Re: leverage techniques

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Originally Posted by Nords
I've always heard that the first thing you want to do after a fire is to hire your own claims adjustor
Thanks Nord thats the people I was talking about. I wasnt happy after all was said and done. I think that in hindsight I should of hired these guys. No matter who the insurance company has they are biased in some regards.

If your right about the area being that bad. You might be better off dumping what you have and 1031 into something .
Rushing to pay off the houses doesnt really do much for your cash flow until they are paid off. So again the best way to run the numbers is to pay any extra funds to one house and then move on to the next when paid off.

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