All Forum Posts by: Tim Delp

If they've been smoking in it for years this might not work but I mixed a solution of vinegar and warm water and wiped down about every square inch of walls and windows in a rental where it smelled very bad of smoke. My understanding is the vinegar will absord the nicotine and then gradually disipate over time. Whereas the nicotine will just stay in the walls etc and not disipate over time. I didn't have to paint everything after but my unit had been smoked in for a little over 1 year, maybe not as bad as the place you are referencing.

If you could clarify in the closing costs. Many times I see borrowers confuse prepaids (property taxes and insurance) as a closing cost. When doing your evaluation of the comparison between your current mortgage you need to make sure you are only including closing costs and not including the prepaids when determining your breakeven analysis.
Then once you have that figure I would compare your monthly cash flow savings as well as your monthly principal reduction on each mortgage. Many times with the lowering of interest rates you are making a lower payment but still having the same amount going towards principal each month, sometimes more and sometimes less.
I would calculate that figure and use in my comparison as well. That should allow you to do a purely financial decision based upon numbers and then you can add in your personal needs and desires for cash flow or if you can afford to keep the property and subsidize it for repairs and such then that might be your preference.

Ned Carey I agree with your disagreement with me. I think the problem that investors run in to is that the investor that is typically sitting in cds making next to know money values the preservation of capital and lack of rish inherent in fdic insured cds. Certainly they are losing purchasing power due to inflation. I agree that investors will look at their return on capital invested and analyze the perceived risk in whether they should invest. I'm not sure what kind of return's the poster is able to deliver but just as you wouldn't do it because you can do it yourself each investor is going to have their own level of risk they are willing to assume and i don't think too many cd investor are going to begin to speculate on buy and flip or buy and hold real estate. When I was saying I don't think 50/50 split was fair I'm thinking in terms of investors willing to speculate on real estate deals, but you are correct it would depend upon the expected return and perceived risk.

Any suggestions on best sources for developing your lists? I've been recommended to realquest.com

I was wondering what anyone is using to put together abesentee owners, homes with equity, short sale potential etc?

50/50 split seems a little steep to me. When you look at a typical hedge fund it is an 80/20 split. With those that put up the money gettting 80%.

Why not do a deal like that and get paid for property management at 10% before thet 80/20 split?

Also if you are planning on getting mortgages not sure if you are thinking fnma mortgages where it would need to be in the investor's personal name.

Just seemed to me that 50/50 split wouldn't be all that appealing. What kind of return are able to deliver for an investor?
What does a typical acquisition cost vs value and rental income vs expenses look like.

I think in today's rental environment getting a 24 month lease is not too difficult. You pitch the advantage of no rent increases after 12 months and if they pay on time for the first 12 months you will have the carpets cleaned and a professional cleaner clean the entire house, sounds like this is house you want to move back in at some point so this would make sure you help to keep the condition in good shape.

The way I typically see an u/w look at this income is as follows:

$5,000 in monthly salary
$500 car payment
$1,000 house payment
Business that loses $6,000/year

$5,000 * 12 = $60,000 - $6,000 loss for $54,000 in annual income or $4,500/month

$1,500/$4,500 33% dti

Doing the other way you would end up with

$5,000/month income
$2,000/month liabilities

$2,000/$5,000 = 40% dti

Hope that helps. This is generally how I have seen it done but it could be at the underwriter's discretion and they are going to take into account the overall strength of the customer.

Generally they take the loss and subtract it from the income, which is more favorable from a debt to income calculation than counting it as another monthly debt.

It used to be if you were w-2 and you had a side business many times lenders wouldn't know or consider the side business that might be producing a slight loss, but now they want tax returns on most borrowers and thus the side business comes in to play.

Welcome to BP. I'm here in Jax and looking to buy more cash flowing rentals so feel free to connect with me as you get up and going with some good deals.

It seems like many of the responses have been more in line with the way you should set it up as either sdira or solo 401k etc and I took the question more to mean how have we been investing our sdira funds. I think it is somewhat of a personal question based upon goals for your sdira and the capital available. I personally have been doing private lending out of my ira. I've personally worked with company buying distressed properties, renovating them, renting them and then they sell them. I've started off with companies that pay a decent interst rate but not the highest but have a long track record and as I'm getting my feet wet considering other options and meeting more individuals.

I have never done any flips but I could see where if done properly to maintain the arms length transaction it would be nice to have the gains in a sdira.

I personally only hold rentals so I prefer to own those outside my ira for the tax benefits.