All Forum Posts by: Brenden Mitchum

Hey @Christian Francois, welcome to the BP community!

There is already some fantastic advice here, but I want to unpack a point that @Vinnie Da silva touched on. This low-down conventional loan requires you to occupy the property for at least a year. There are exceptions to the rule, such as selling the property or moving to a new area for work. However, the strategy is ideal for anyone who has some housing flexibility. As long as the property is safe and there are no major systems defects, it will likely pass a conventional appraisal. This means that you could find a property that needs a cosmetic rehab, live in it while you fix it up, then sell. We call this a live-in flip. You do want to be very conservative with your numbers right now though. Material cost is up and labor is hard to find in Atlanta. Also, with the U.S. economy edging into a recession, you want to be extra conservative with your ARV calculations. Don't assume you will be able to sell the home for the same price as your comps.

Another option with this low-down loan is to house hack. This is my preferred investment and housing strategy. You want to find a home that you can both live in and rent out at the same time. Maybe you live in one bedroom and rent out the rest. Or, maybe you live in one unit or mother-in-law suite and rent out the main house/other unit. You can even do this with small multifamily (2-4 units) with a slightly different loan product called FHA (as low as 3.5% down). However small MF is hard to come by in ATL and FHA rates are not as good as conventional rates if your credit is solid. Also, many sellers right now are heavily favoring cash and conventional loans over FHA. My advice would be to stick with single-family homes that have extra bedrooms or even an extra living area, like a mother-in-law suite. Then, you can stick with that more favorable conventional loan product and you have a much larger supply of homes to choose from. Plus, you can actually get as low as 3% down on conventional, last I checked (remember another 2-3% for closing costs though).

There's always the option to do a combination house hack/live-in flip too. Get creative but above all, understand and respect the numbers.

First step would be to speak with some lenders. As a self-employed individual, traditional financing can be tricky. So, you want to make sure all your financing ducks are in a row first. 

And great advice above about cutting expenses but actually a penny saved is more like 1.2-1.5 pennies earned, depending on your tax bracket. 

Hope this helps a bit. Please, feel free to reach out anytime if you have other questions or just want to chat!

Hey @Trent Reeve, welcome to the BP community!

Analysis paralysis is a real issue that most new investors face. However, many new investors also buy terrible first deals. You want to be patient and educated enough to avoid the second but courageous enough to avoid the first. It's tough to know in the moment when you have enough education to avoid the first. However, if you simply make it all about the numbers, it becomes a lot simpler. Don't get a HELOC just because people say it's a good strategy to purchase rental property; do it because you believe you can find a deal with high enough CoC return that the HELOCs rate won't matter. Better yet, buy a deal that you feel confident you can add value to and refi to pay back that borrowed credit.

If you don't fully understand the numbers, you aren't ready to purchase a rental. You wouldn't buy a business without understanding the numbers, right?

Once you understand the numbers and have set your criteria for cash flow and CoC return, you're ready to purchase. Maybe consider a house hack for that first purchase? This will allow you to also rent out your current home. In one purchase you went from zero units to two or more (depending how many units the house hack is). Your $20k reserve is enough for downpayment and closing costs for an owner-occupied 3-3.5% down traditional loan of up to $300k purchase. The HELOC could then be your emergency fund for any surprises. Not to say there aren't other options, but that is probably how I would do it.

Hope this helps a bit. Please, feel free to reach out anytime if you have other questions or just want to chat!

Hey @Susan Thelen, I'm an agent in Atlanta that works with several cash buyers. Please, feel free to reach out and we can set up a time to chat!

Hey @Tonghong Chen, welcome to the BP community!

I would say it really depends on the agent and your conversation with them. If you come right out the gate asking for them to take a 33% pay cut when closing deals with you, 9/10 agents will say no. That 1/10 agent is not who you want to be working with. However, if you are truly doing as much work as you suggest, that's what I would start out with. If you can show them that their time is better spent with you than another client, they will be happy to work with you. 

However, from the information you have given me, I would honestly pass on working with you (and I work in Atlanta). 

In your last comment you say investors submit the offers and do the due diligence themselves yet on your list of expectations you clearly state this would be mostly the responsibility of the agent. In fact, your list of expectations tell me, as an agent, that I will be doing 90% of the work in this transaction. That is absolutely fine by me, but no way in a million years I'm going to do that for 2/3rds my typical rate. 

By the way, I have multiple repeat, investor clients. Would they complain if I handed them 1% of my commission? Probably not. Would they ever ask me to? No, because they value me as a vital member of their team. The moment a client starts talking about saving money by cutting my commission, they begin to lose my trust. Just as the same would be true if I asked you to take worse returns so that I could get more commission than is typically expected (regardless of my reasonings). 

Like most things in life, you get what you pay for. Pay your team members well and as you would want to be paid if you were in their shoes.  

Also, remember that BP is a fantastic tool to find those team members. With this post, you likely killed your shot at finding a great investor-friendly agent in Indy using these forums. 

Hey @Solomon McConnell, welcome to the BP community!

I'd be happy to help fill in any gaps you have on your team. Please, feel free to reach out any time and I'll shoot you some referrals. 

Hey @Jared Lundy, welcome to the BP Community!

Sounds like a ton of work but potentially also a great deal. Here are a few questions to make sure you ask, if you don't already have 'em.

1. Are the homes tenant-owned or park-owned? Probably tenant-owned since the total rent is so low but you never know. Regardless of the answer you will want to have an idea of the age and condition of each. You won't be able to enter them if they're tenant-owned but you very likely will end up with a few (or more) on your hands if you take over and raise rents. 

2. If they used to have 30 homes, why are there now only 9? Finding out if this is due to poor management or demand will be important. You can run a test add if you're not super familiar with the market. 

3. Are there hookups for all utilities at each vacant lot? Obviously, you'll want to verify during due diligence.

4. Public or private utilities and what are the sewer/water lines made of? Recent repairs?

5. Do they have an onsite manager?

We have several parks in MO so feel free to reach out anytime if you have additional questions. Good luck!

Thanks for the kind words, @Cassandra Alessio. Sorry to hear that one didn't work out for you! Getting a "we're not sure, you will just have to go through the process" is almost worse than a "No." Probably common in many cities/counties though. It's almost like they don't want any accountability..

Hey @Johannes Urpelainen, welcome to the BP Community!

That's quite a portfolio. Congrats on your success and best of luck on your current project!

I'm also currently focused on high cash flow strategies but more specifically in affordable housing. Please feel free to reach out anytime if you are interested in bouncing ideas off of each other! 

Hey @Ben Shippy, welcome to the BP community!

Before you spend too much time getting into the details of MHP development, you need to go have a chat with your local planning & development office. Most municipalities are actively working to get rid of MHP - the last thing they want is someone building a new one. You will have to get the property rezoned and this will only happen with approval from the city/county. 

That's your first step. The likelihood of getting past this first step is so low that there isn't much use discussing next steps. A quick call to Planning & Development to ask if they allow rezoning of land to mobile home park and developing a park will save you a lot of wasted time. 

Let us know what they say and we can help with next steps if you get good news!

Hey @Scot Evans

I assure you, there are still plenty of active investors here in Atlanta. How many of those are small, family-run operations, I don't know. If partnering is what you're looking for then networking will be everything. Do it here on BP, do it in-person at the dozens of events that happen every month around the MSA. However, keep in mind that it's a lot like dating. If you go into every date, thinking about marriage, that date is not likely to go well. 

I guarantee there are plenty of folks just like yourself that are missing a piece of the puzzle to make things happen here in Atlanta. You just gotta find the right person missing the piece that you already have. It'll take time and it'll get harder the more pressure you put on yourself. So, relax, go to a bunch of events and just meet & talk to people. Find out what others are doing and what their biggest struggles are. Can you help them overcome those struggles? 

Every partnership gets born a little differently than the next so don't sweat too much about exactly how to make it happen, just put yourself in the right situations where something could happen. If you sit at home, not talking to anyone in real estate, that's the one sure way it won't happen. 

And please, feel free to reach out anytime if you have other questions or just want to chat!