All Forum Posts by: Alexander Zurn

@Tom Smith the buyer's agent works for the buyer. They are obligated to give their best efforts in representing your best interests - which yes could be a lower purchase price. Now, that can be taken many ways. For example, I had a situation where I wanted to counter at a low price and my agent insisted that they would not accept the offer and we would be out of discussions. While he claimed to have my best interests in mind he was not working for me here, he was catering to how he felt the seller would react to my counter.

The agent is incentivized because they want your future business! The agent can lend advice, guidance, etc. but it is your decision on how to negotiate and they will be the intermediary between you and seller/seller's agent. If you are pleased with the services you received, you're more likely to use that agent again.

This can be tough in a young REI career so I'd recommend getting an older agent, someone with a lot of experience and then you should also continue to ask questions on here to get multiple perspectives. It's all part of the experience though, you're not alone in questioning this.

Good luck!

@Naina Tara welcome to the community!

CA is a tough state right now so if you're seeing a lot of hesitancy on here, it's likely warranted.

With that amount of capital, I would continue to rent for now. While this continues though, I would learn more and more about other "up and coming" markets.  Research these markets (i.e. why these are up and coming) and then apply those city characteristics to different cities that you and your significant other are more familiar with. Where did you grow up? How is that city doing? How are surrounding cities doing? Certainly, you can invest in what others are calling the best housing markets but acquiring the knowledge first to do so is vital.

Once you feel you have a city (market) in mind, that is either already growing or you feel will grow soon - start investing there! You will get more bang for your buck and potentially beat us all to the next big city. That's how I would play it, that is! Learn the industry, study markets, analyze deals, invest wisely, repeat.

@Nicholas Reyes I am in the lending industry and can help you answer a few questions.

Essentially, up front you want to know what you can afford. What you can afford is based on your current DTI (Debt-to-Income), your reserves (what savings you have eligible for a downpayment), your credit score, and then of course, what your future goals are (i.e. how you want to appropriately leverage yourself for future acquisitions).

PM if you'd like to know a little more info. Good luck!

@Mark Lange welcome to the community! Well, just like learning anything new you want to start with what is already available. Right now, the BP Rental Property calculator is an excellent tool that will help you immensely in learning to analyze deals.

Review the template a few times and run some calculations on different properties. This will give you a criteria to look for with each deal you want to analyze. What #'s you'll need, what % of savings to consider, etc. After running a few calculations, you'll be able to look at a listing and imagine the BP calc in your head as you calculate the different #'s. This will also begin your research on the market you wish to invest in. Not only will you be running the #'s and getting better at analyzing, but you'll be seeing what homes are going for in your market, what the rents are for 1, 2, 3 bedrooms homes, what supply & demand is like in the area, etc. This will help you greatly get multiple facets of your REI career going.

As badly as you want to learn to do it without the BP calc, this tool will get you out on your own faster than not using it.

Good luck!

@Ian Livaich definitely a case of analysis paralysis! That is ok though! We have all gone through it.

While running the numbers is crucial, perhaps the most crucial piece to buying a rental property, you cannot ignore variables of this kind. For instance, yes run the numbers including the price of a PM because you want to be safe. However, if you're current situation allows for you to not have this PM cost as you will be self managing - review both calculations (with PM vs. without PM). At some point, you will want to break away from self managing and it's vital to know where those numbers are. On the other hand, you also need to be prepared for the exact situation you could come into - which would be without paying a PM.

This holds true for other items as well (tax & insurance increases, repairs evaluations, etc.). Prepare for the worst (i.e. highest payments) and once you're prepared see where you have room to adjust anything. If its a good deal including a PM payment, it will be a better deal without it.

This is a big step to get over and I can tell you first hand that you won't until you actually buy a property. BUT since you've done your research, talked with fellow investors, & run the numbers (countless times I'm sure) - you'll notice it's actually not THAT big of an investment because you are prepared for the managing of it, financially, professionally, & personally.

Good luck! You'll get a good one.

Give this site a shot. HUD Fair Market Rents. Pretty self explanatory once you get in there, you have to click your state, then county. But once in, it breaks down the criteria of how they determined the FMR for this area. Pretty cool and it is definitely up to date because 2018 #'s are showing. When I used it last year, had 2017.

@Mary Gold sounds like a good position to be in!

Ok, first I would more accurately define both of those options.

1 - Cash Out Refi: explore the rate you would be getting right now. How much higher is it? What would that do to your monthly payment? Will the rent cover all of that and more? Will you have to adjust any numbers to contribute the same amount of cash flow & savings to monthly reserves on the property? I have a feeling once you really see the monthly net effect on your income/savings, that will give you a better idea of where you want to go.

2 - 1031 Exchange: these I do not have much experience in so I suggest consulting with an expert in the field. The whole "like-kind" criteria surrounding the exchanges may make going from an Investment rental property to a Primary residence property difficult. I have not found a definitive answer to that but perhaps you can in a consultation. Another consideration for the 1031 is actually finding the property you want in the given time frame you need to meet the exchanges requirements (45 days after closing on sale of property, you must ID up to 3 potential properties to use for exchange. Then another 180 days after the close on sale of your property, you must close on the exchanged property you ID). While that sounds like a lot of time, inventory is low and demand is high so keep that in mind when scheduling your time frame for everything.

Certainly you're aware of the tax advantages/disadvantages at this point but I think it is important to really see the amount of money you'll save/spend/lose in each option first. Best of luck!

@Miguel Ramos welcome to the community!

From my own experience, the best thing you can do is study. You want as much "experience" under your belt and while you don't have the personal experience, many MANY people have shared their personal experiences in these forums, in books, & other blogs online. You should equate knowledge to experience at this point in your investing career. Read books, ask questions here in the BP forums, & begin to watch the market you currently live in. Are you renting? Watch where rent prices are compared to home sale prices. See the differences in prices (rent & home sales) in the "good" and "bad" parts of your market. Consider why that differenece (if any) exists.

Make your way to the BP marketplace and find a few books in there that BP has published. The first I would suggest is Brandon Turner's Book on Rental Property Investing and second, I would read his Book on Investing with No or Little Money Down - this will cater directly to your need but first you want the foundation of his 1st book and a little more knowledge (experience) in the REI community.

Whatever you do, don't give up - you're on the right path.

@Adam Ferro I financed my first property with a First Time Homebuyer program the state of Rhode Island, which has similar home prices to most of CO (my 1st was $270k), offers. RI Housing offers a Downpayment Assistance and Closing Cost assistance program - allowing me to finance the DP & CC. These programs are subject to different states, I am not sure if CO offers one.

There are pro's & con's to this and, as you've seen, are entirely subjective to you, the investor. I elected for it considering I wanted to use my savings on renovations to get the property up to speed with 2018 & the potential rents I saw would cover the 1st mortgage and DPA/CCA mortgages. Yes, I now owe 101% CLTV still (after 8 months of payments) but my strategy for long term buy & hold is working as the rents are far and away covering the mortgage - most of the cash flow is going to cap ex, repairs, vacancy etc. - but it is allowing me to save for my next one.

Important items to consider: your investing strategy, how you plan to finance your next property, & your exit strategy.

@Michelle Romano while I do not have a room ready right now, I do have a 1 bedroom apartment coming on the market in the coming days in downtown Newport. Perhaps ready for 11/15 move in. If your son would be interested in this please reach out! In regards to a room for the weekend, have you or he reached out to the U.S.C.G. for help? I'm sure this happens often so maybe they'd have some input. Feel free to PM me as well, I have a buddy in the Coast Guard stationed here and can reach out if you'd like.