All Forum Posts by: Oliver Trojahn

I work full time also as an engineer and am closing on my 3rd rental house in the next three weeks. I only purchase REO's as they seem to be working quite well in my market for rentals. With that said I am on an automatic email from my realtor that only gives me properties I am interested in when they come up. Once I have a list I go look at anywhere from 1-10 properties on any saturday morning. She always brings contracts and I always bring checks for the earnest money. We then let the offers fly. After that one day of looking we typically have a house under contract by weeks end. Just get use to it and know its a job. That only happens once a years since I only use conventional financing and 20% down becomes a challenge to do more than once a year until I really get going.

^^^Jad I agree. IMO, to use leverage with very low risk you have to have additional income or a normal job just encase you have to swing the mortgage and it is imperative to buy at deep discounts in order to always have cash on hand. Cash is still king when using leverage.

In fact, conventional financing, with their reserve requirements and crazy insane rules actually help out the buyer because they are needed to provide lower risk to the buyer and lender when using leverage.

Moderation and patience are also huge. I only buy 1 or 2 rentals a year using conventional financing. This is a slow process but with rates as low as they are and the abundance of deals I would be dumb not use as much conventional as possible. I could get set up with one of my portfiolio lenders and really start buying a lot of properties but that would be too risky in my opinion as I would then be way over leveraged at high adjustable interest rates. I will wait to buy a property to get rates in the 3's. Sometimes I feel they are giving money away:)

In my market I use craigslist only. It works crazy good. Sometimes I don't even put a "for rent" sign in front of the place knowing craigslist will work 98% of the time. What a deal.

Jon Klaus showed a perfect example of leverage through the ages. I am 27 with a full time job. I own three SFR rentals that were purchased with 20% down using conventional financing. If I had 150k cash I wouldn't think twice and buy 5 financed rentals using conventional financing with only 20% down. However, qualifying would be tough for all of those at one time (so I would probably buy one every six months or so). Real estate is a leverage game but you have to be smart and buy great deals that this forum has taught me. Theoretically, the deals you purchase should cash flow great while leveraged at even at 80%.

My particular plan has me switching to commercial in my mid 30's-40's, however, I will still be using leverage as I am very comfortable with it.

Great topic

I am giving him a list of local portfolio lenders today to contact. My personal conventional lender feels he may be able to push this loan through even conventionally but there is always the fear he cannot (and we have to wait another 30 days). What option would be better for my situation if all else fails:

Contract for Deed or a lease with option to buy? Both terms will include at least a 20% down option fee/down payment. in a lease to own idea we would provide him a higher but way below actual market rent. He plans to rent this pace out as well so the rent would need to be similar to his failed conventional loan payment. However, this would still cover the PITI plus an additional $100 we have on the place.

I feel we have negotiation room. He is already in to this whole deal $1,700 with the non-refundable earnest money deposit, appraisal, and Fannie Mae waiver fee. Also, he lives in the unit next door so it is very convenient for him to manage this property.

I let you guys know how this shakes out.

We are selling a rental property (townhouse) for $68,500, we purchased the property with conventional financing two years ago for $38,500. We signed the sales contract over 30 days ago, the buyer was using conventional financing for the purchase. Everything was going as planned, appraisal came in at 72k, buyer was approved and the both our title company and the buyers lender scheduled the closing for today. Yesterday around 4pm the buyers lender cancelled the closing (we weren't happy). To my surprise it was thrown out due to the Fannie May rule that denies a loan if someone in the HOA condo development owns 10% or more of the properties in the area. Talk about a crazy hidden rule that i didnt even know about. just nuts.

So today, the buyer is still interested in closing in one way or another and so are we. We have a lot of plans with what we will do with the profit (we are rolling the 30k profit into two more financed rentals via 1031 exchange). In fact we already have an accepted offer on another property. The buyer has asked the lender to file a waiver on the 10% ownership rule and we will hear their decision early next week. Has anyone had any experience with the Fannie Mae waiver process and do they typically just deny those as well? I would imagine they would.

In order to not let this deal die I would love to hear some ideas from the bigger pockets world on how this guy can get financing. He is a very strong buyer. Before i decide to go a Contract for deed or Lease/Option route I would love to get some ideas on making this deal possible. I may also get him in contact with some portfolio lenders that could finance this property if it fails. If do go lease/option or contract for deed i believe he could provide 20% down on an owner finance type deal which may make it worth while.

All insight is appreciated. Thanks

Auto pay is a lease requirement for all my rentals. I pay the three dollar fee each month but it is worth it. No driving to pick up check, no driving to cash check (however, i can now deposit checks through my phone, ha ha). It just makes it simple. You can also accept a security deposit via direct deposit back to them via direct deposit. No account information is shared with this route. It is also easier for the tenants, no mail, stamps, or time required to pay.

Small local banks who carry the loans in their portfolio. Look for banks that have few branches. They will probably have a max amount of houses they will finance to diversify their risk so find one, two, or three of these to land 20 financed properties. They will also typically loan to an LLC. They have different underwriting criteria. Typically, they will look at the "big picture" instead of strict freddie fannir guidelines. However, you will still need to show strong ability to pay the loan.

I refinanced my primary home in 2009 with $0 closing costs and no principle added to my loan. To do this the broker provides a slightly higher rate. In my case instead of a 4.15% loan I received a 4.25% rate.

Something I did not want to get in the habit of. Surely, if something is truly amazing I would consider purchasing it. I have actually never paid for an app :) I transferred weather bug elite, tiger woods golf, some racing game etc from my brother's iPhone (for some reason apple allows this?? I was surprised). Also, I have found that the great apps, at least that i use, are typically free anyway. You can always find a free app to get the job done which is one thing that is also amazing.