All Forum Posts by: Jon H.

Hello,
I live in Birmingham Al. I just purchased a rental property and once i get done with the rehab it should be worth in the 60K-75K range. I was wondering if i could take a Heloc out on this property and what kinds of rates are people seeing? If so how long do i have to wait to do this?

Hello,
I had a quick question. I live in Birmingham Al. I was wondering if anyone from this area can tell me the consequences of not pulling permits for items like roofing, electrical, plumbing etc. I just bought a house built in 1945. I've put a new 30 year roof on it and am about to have the plumbing replaced with PEX. I also am getting Bids on the Electrical and Hvac. I'm going to keep it as a rental but eventually want to refinance the equity out of the house and buy more rentals. So far the only thing i've hired done is the roof. I'm in the process now of residing the house myself. Any advise would be greatly appreciated.

I work in the mortgage dept of a big bank. typically you need to show 2 years employment history. If you can find a job before you lose your current job that would be best. You don't need any breaks in your employment. Also most lenders will only lend you money up too 3 deals.
I would suggest networking to find private money lenders. These are everyday people in your area that want to make 7-12% on their money depending on what kind of deal you are looking to do. For flips you usually pay 12% with a guarantee of 6 months interest. for rentals/long term holds you can offer them as little as 6-7%. Thats way better than what a bank will pay them to hold their money.
Worst case scenario you could use a hard money lender but then your looking at 20% interest which won't work for a long term hold.
I would network your local Realestate Investors Club and start asking around about private lenders.

I know here in Alabama, i'm looking to be in a property after repairs at 60-65% of the ARV. However i also take into account how much i can get in rent and how long it will take me to payoff.
I just bought a rental house for $13,500. The Repairs are roughly 15K-18K. I should have about $30-32K in the property once i'm done. The house will rent for $750 a month. After taxes, HOI, and Property Management fees i should walk away with $450 per month. After paying for the money i should have this paid off in 8 years. But the house is worth 60-65K. So if i wanted to sell it i would double my money.
You need to find investors that don't want to have to do any repairs. There are several investors that would pay $50-60K for my rental once i get the repairs finished and get it rented out using a reputable Property Management Company.
I say this b/c when i'm finished with the house it will have a new roof, plumbing, electrical, siding, a/c (was new when i bought the house), paint, refinished hardwoods throughout, new tile in wet areas. ect.
I hope this helps, but every investor is different. Just make sure you buy right. Make sure you buy in decent areas too. Make sure your getting the houses at 50-60% of ARV and add your percentage. As long as your giving your seller(investor) 20-30% equity depending on repairs you should be good.

Thank you all so much. I think the lady is just looking for money as well. I will consult an attorney just to be safe.

Thank you all again for putting my mind at ease.

How would i find out if there was any fraud? I'm in the process of renovating the house. If there was would i be covered for the repairs?

I bought a HUD home in Birmingham Alabama about a month ago. The house needs everything done. I put a new roof on it already and have resided the front.
Today I had a lady call me saying her mother owned the house and that she died and she is the next of kin and the house was sold illegally. She asked who i bought the house from and i told her HUD. She said she was trying to figure all this out to give the information to her lawyer.
This is my first rental and I don't want to invest all this money into renovating the property i could possibly lose the property. I called the Title company and they said the 1 year statue of limitations has expired and that i was protected. I was just wondering if this lady has any ground to stand on?

Your responses are most appreciated.

Hey Antonio,
Heres my advise to you:
I assume you get 2 days off. You might not know the two days but i'm assuming you get two days off. If i were you heres what i would do:
1. Start your own business. I started a painting business in college and made tons of money. The Lawn business is a good idea too. Or since you are computer savy start a business selling things on Ebay. You buy items on ebay cheap and re-sell them. Or buy items at yard sales and re-sell them.
2. Get your resume together and look for another job that pays more or the same as Walmart with better hours.
3. Get with a recruiter. They will call you with side jobs and with full time employment opportunities.
4. I know a few people that work from home doing customer service for companies like Direct Tv or Cruise lines. Basically you answer the phone and help people with their issues. You can do this as a side job as well.
5. Use your 3K as a downpayment on a lease purchase. You put 5K down and pay $405principle and interest then you add on taxes and insurance. So your paying about $550 a month. Then rent the house out for $700-$750 a month. The renter pays your mortgage and in 10 years you own the house and you get all the money. You save the extra in case something breaks.

Overall though i think you aren't desperate. You aren't in such a Jamb that motivates you over fear of failure and laziness.

Google: Mr. Money Mustache. Its also a blog that basically is all about saving money and living on nothing while living a fulfilling life.
There is no way to make quick, fast money! You can invest thousands but your return won't happen overnight.
You will be supprised how much you can save doing little side jobs, selling things, etc. Cut your cost of living and work to make your life better. If you hate your job so much then search the city for a new job!
Managers that hire want to see applicants that are on fire for a job. They want to see someone motivated and willing to do anything it takes to succeed.
Noone can make you want this or do this. I took a job out of college that didn't pay much and worked my butt off for a year. Then i transferred to a new higher paying job. Now i want to be financially free. So i've invested in educating myself in real estate investing and i'm constantly looking for ways i can make money to go towards my goal.
Good luck in your future endeavors! Hopefully you will listen to what everyone is telling you. What everyone is saying is this: You CAN do anything you set out to do! CAN'T isn't an option. YOU make your own destiny! You have to work and make yourself better. No one cares more about you than YOU!

Sorry i didn't want to have such a long post but i wanted to answer some of your questions.
1st thing using a realtor is ok but you'll be able to find alot better deals through Wholesalers or by individually marketing to sellers who need to sale their houses.
Lets look at costs:
- make sure you have enough money saved so you have a cushion.
Lets look at this scenario
Costs of a single family 3/1 rental house $11000
- Rehab, you need to study what things cost. Once you get a general idea of what materials cost you can make a round about estimate. I would find a contractor and before you bid on a house have him go out there with you and let him give you an estimate. This way you can use this as a reference in your future deals as well.
- Property manager - I would call property managers and see if they will manage the property your thinking of purchasing. They can give you great information on what it will rent for and if thats even an area you want to be in.

Now when i look at a property heres what i do.
1. if i find it online i call and see if the property is available and if i can bid on it.
2. check crsdata and see what the property is worth and what has sold in the area.
3. check zillow to see what is currently renting in the area and what the rental prices are.
4. I'll do a quick calculation to see if the property is going to be worth going to look at using estimates for rehab.
Calculation:
Rental rate
minus
taxes: this will be on crsdata
Ins: I usually calculate $1000-1100 for the year
Misc: 10% of rental income
Property manager: 1/2 1st months rent plus 10% of the next 11 months usually comes out to 12%
Exp:
Rental income: $750
(property management: $100)
(Taxes estim $900/12: $75)
(Insurance: 1100/12: 91.66)This is variable it could be lower
(misc repairs in future: $75)
= $408.34 per month profit or $4900 a year
This is a great profit if you get a house rent ready under $20K.
Thats a 24.5% Cap rate.

Hey Tyler,
I also live in the Birmingham area. Heres my suggestions on how to get started.
1. Get a subscription to crsdata.com or realquest. it is an investors access to the MLS. I use Crsdata. You can pull the comps in the area and also generate mailing lists and a whole bunch of other stuff. This gives you an idea of what the property is worth.
2. Get you finances in order. How are you going to fund your properties? Get prequalified with a conventional lender (must have 20% to put down) Or start going to local AIA meetings. You will meet several Private money lenders here. Or if you have Cash (which is King) thats your best option.
Actually lets back up. Before you get started really think about and study what type of investing you want to do. Do you want to fix and flip? Buy and hold as a rental? Wholesale? Fix and Flip to landlords? Etc. When looking at any property you need to figure out what your game plan is. What is your exit strategy. Sounds like you want to get some rental income. If i were you i would look at single family houses. You can pick up a rental in Birmingham for under 10K put 5k-10k into it and rent it for $750 a month. You can plan on taking home about $450-$500 of that.