All Forum Posts by: Ben Magee

@Brad Birky, thank you! We were really excited and feel fortunate for the community of folks who made that first win possible. 

Any opinions on when a new construction might be our best play for our next home we owner occupy and plan to rent? What's a good price per square foot to pay a builder in 2022? Folks in Raleigh, NC have been telling me they expect 6 months with experienced builders. 

 My wife and I plan to move each year and rent out our home for the next 4 years. Our options, We could buy a town home for 200K, we could buy a house for 300 K, or we could look at a new construction. And we wondered, what would be some possible benefits of going that new construction route and some trade offs? IF we did build, What should we try to build to maximize it as rental. 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $128,000
Cash invested: $35,000

Appraised at 238,000. Pulled out 80% (72K) in cash out refinance. Property management fee is accounted for in cash flow after expenses. Potential long term conversion of another 600 square feet of basement that has a full bathroom to increase livable square footage.

What made you interested in investing in this type of deal?

The homes around it were 1.75 or more than this home. This home was considerably larger, so much more opportunity to rent higher or house hack. There were bathrooms that didn't work, but three full bathrooms were a strong consideration.

How did you find this deal and how did you negotiate it?

We found this on the MLS. In Iowa, you can work with the seller's agent as a dual agent. We contacted the sellers agent within an hour of it coming on the market.

How did you finance this deal?

GreenState credit union gave us a 5% down, 2.75% 30 year mortgage. Bought it during the covid-19 lockdown.

How did you add value to the deal?

Put some sweat equity, and worked with 10 subcontractors. Full remodel (hardwood floors refinished, complete remodel of two baths, painting the entire outside and all the trim inside; new flooring in basement and kitchen; new cabinets ; added a/c to rooms).

Lessons learned? Challenges?

while the numbers reflect well, we invested significant amounts of time, to where because I earn a lot of money hourly, I lost money from that stand point. This is my first deal and it went really well all things considered, and it got me to interact with the local housing authority for permits, it got me to interact with financing and banking to understand HELOC vs cash out refinance, renovation sources of funding. It also got me to work with so many contractors and learn how to ask help.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Worked with lenders and other agents on how to do it. Pete Johnson from Greenstate is very helpful for local lending.

@Sam Fickel I checked out your youtube video, loved the professional style, and captions below. Some great stuff. From talking to people on here, I did meet with the local credit union, they said they would do 10% down and consider it a second home. That's an option but not one the senior citizen client was excited about. 

Seems like USDA would be good. Though, at $1400 / month income on social security, and $250 a month debt in his current home he wishes to keep. He'll have paid off his current home in 8 years. To stay that the 40 % debt to income ratio, my client can only afford a $300 monthly payment which probably isn't really possible unless he wants to go further out and pay 85,000 for a rural small home. 

So maybe if I can work with a broker to find 

a) a program that accepts non occupant cosigner 

b) some down payment assistance 

thanks for the help. 

@Kevin Romines , thanks for the tip about looking at those programs. If this is for western NC, and I'm just googling stuff to try and learn more about these programs, do you have any advice on how to find out more? 

@Jeff Shumway, thanks for the input.  What do you think is minimum down payment percentage if no money down didn't work? Alternatively, on your comment about Down payment assistance programs, if this is for Western NC, who would you recommend trying to reach out to to get more specifics? Or to see if they would want to buy in a USDA zone if there is one nearby enough?  

It is for the dad to owner occupy. The son would not occupy. Their thing is they would buy if they don't have to put up substantial cash for a down payment, so was trying to see if I can provide a way. 

@Nick Belsky, thanks for the tips, anyone you already know for mortgage broker who knows the guidelines? 

I have a client who's retired on social security with $1400 a month. He has a $250 mortgage payment on his current home. But not really any other debt, drives an old toyota, that type of guy. If they wanted to purchase a newer nicer home for say 200k, and they have a cosigner son who makes 70,000/year. Do you think there are options to do no money down loans for financing it? My client wants to keep his current home and rent it out after moving out.

I have a client who's retired on social security with $1400 a month. He has a $250 mortgage payment on his current home. But not really any other debt, drives an old toyota, that type of guy. If they wanted to purchase a newer nicer home for say 200k, and they have a cosigner son who makes 70,000/year. Do you think there are options to do no money down loans for financing it? My client wants to keep his current home and rent it out after moving out. 

@Jeffrey K., some great points on the 4 profit sectors. thanks for sharing.

@Alecia Loveless I agree, the margin sounds a lot better to me for possible bad times, I do like your $50-$250 idea for extra. good to know about the number being 10. 

@Jeff Shumway good points about potentially doing something more lucrative with the money instead of paying down the mortgage and the limitations there of pulling out your investment only to 75%.