All Forum Posts by: Allen Fletcher

@Rob Ringlehan

I am with @Brent Coombs on this one, you will not have enough equity in the new property to cash out refinance and continue. Also, if your current home is on a VA loan the VA typically does not allow you to have two VA loans so you will have to refinance your current property or use a different type of loan to purchase this second property. I do not see this situation as being very profitable for a real estate investor, however, if the home you currently own has a lot of equity (say greater than 30%) you may have an opportunity. You could refinance and cash out the equity in your current residence pulling out 10% of the equity (giving you 80/20 LTV) and use that cash to purchase your neighbor's home (or another property).

Have you run the numbers on this type of scenario to see if you will make a profit?

Regards,

Allen Fletcher

@Rod Joseph

Your post states "Mortgage Expense" is that supposed to mean that monthly debt service is $2,600 or is that Mortgage + Insurance + Cap ex + Management + Repairs? If the debt service alone is $2,600 without taking into account the rest of the expenses I listed above, this property is going to be negative cash flow for you.

Hope this helps,

Allen Fletcher

@Brian Eastman

Thanks for clearing that up. I remember reading something on the legalities of selling assets in an IRA to yourself or family members I must have misinterpreted what I read. Thanks for clearing that up.

Allen Fletcher

@Stephen Sawrie

First thing you should do is sit down and research all of the rules that apply to SD IRAs and either print them or save them so you have the rules in hand as you investigate how you are going to derive income from your IRA. After you have done that here are a couple of ideas to run past your CPA or tax professional:

1) Sell the properties held in the SD IRA to yourself outside of the IRA. This will allow you to put cash into your IRA and keep the properties so you can still get income from them.

2) Sell the properties in the SD IRA to someone else. This will allow you to get cash into the IRA and you can dispose of the properties.

3) Start taking the income generated from the investments as monthly or quarterly distributions from the SD IRA.

The thing to remember about an IRA is that cash held therein needs to come out as allowed by law if you do not want to pay penalties. Assets that are purchased by that cash can move back and forth as needed as long as the cash value stays the same.

WARNING! Before you try any of these suggestions sit down and talk with CPA or tax professional so that you complete the transactions in the correct way. I have not looked to deeply into SD IRA rules, just IRA rules as they apply to market securities (i.e. stocks, bonds, notes, etc.)

I hope this gives you some ideas,

Allen Fletcher 

@Brian Pleshek

Start interviewing and vetting possible stand-ins for you while you are on vacation. Or you could also find another investor in the area and offer a vacation swap. You offer to care for their properties while they are on vacation if they will do the same thing for you. If you start looking now you may find a new partner or at least another member on your team that you can use in the future.

Allen Fletcher

@Nicholas Misch

Remember that fixed rate mortgages are more steady for the long term. If you are buying a property as a long term investment there is nothing better than locking in that low rate for an extended period of time. ARMs may be good if you are planning on holding the property for a short period, like when you are flipping the property. From my experience ARMs typically adjust annually or semiannually so you get a fixed rate (often lower than 15 or 30 fixed) for that period of time. If you buy a property and sell it 5 months later you just got cheaper money. The key is to look at the fees and terms of both loans for every deal you do, sometimes one will be better than the other.

Allen Fletcher

@Matthew Carducci

VA loans are typically only available to owner-occupants and that means that it is probably not an option for you. I am sure there are other means to refinance your property you just need to think outside the box. Try looking at loan sources outside of banks, this may not provide you with the best rate or terms, but you will find other sources that may be used for future deals and expand your knowledge of where money may be found.

Hope this helps,

Allen Fletcher

@Jacob Benninger

Some answers to your questions:

1) There is no limit to what property you can buy as long as you are trying to use the correct type of financing. For example, VA and FHA loans typically will not approve a home purchase that requires a lot of work; whereas a conventional mortgage will allow you to buy a true fixer-upper.

2) Talk to a realtor and lay out for them what you want and they will find a whole slew of properties for you. Look into estate sales. Look on the MLS, Zillow, talk to other investors in your area, there is no one answer for this question. In your situation, I would look for a property that you can live in on day 1 and repair bit by bit as you live in it.

3) Of course! You should still apply the same rules that you would for a fix and flip though (i.e. set a schedule, set a budget, prepare a statement of work, plan what finishes you are going to use etc.). If you follow that plan you may be able to move out and sell the property for a handsome paycheck and start the process over again.

4) Create your own method of investing that works for you. There are no set methods to use, look at things like fix and flip, wholeselling, buy and hold, house hacking, etc. not as defined methods, but as generalizations. If you talk to two investors that invest in the same genre you will find, once you dig deep enough, that they invest very differently from each other and according to what works for them.

5) Your last question can be answered by this simple statement: "Read a lot while all the while doing a lot" or in other words. Be absorbing every bit of information you can as you are actually buying, rehabbing, and selling real estate.

Good Luck,

Allen Fletcher 

@Tracy Sharpe

What steps have you taken to find lenders?

Have you tried looking at local banks and portfolio lenders?

What is the limit that a bank will lend to you?

Do you have documentation proving that these properties have cash flowed for the last 7 to 8 years?

I ask these question because I think you have a good position to get a refinance or even find other ways to reduce your mortgage rate with some outside the box thinking. I think you are less stuck than you think you are.

Allen Fletcher

@Mitch Larrivee

I write my own loan agreements and have not had a lawyer look over them (all of my loans have been with my 1st circle i.e. family). If I decide to take on investors outside the first circle I will have a lawyer proof the loan contract before I use it. If you keep your loan agreements more or less the same, sitting down with a lawyer should be a one-time thing. As for proof of funds, ask what the seller/agent considers sufficient. They may accept a copy of the promissory notes or at worst they would want the funds held in escrow, you can be flexible to meet those requirements as long as you work the details out with your lenders and sellers ahead of time.

Allen Fletcher