All Forum Posts by: Chris Tarpey

Great to meet another NC investor, lets unpack this a bit.

1) This answer may bleed over into other questions, but you should be financing this property. Raleigh is an expensive market, comparatively to other parts of NC and most people done have $300k sitting in cash to purchase outright, and even if you did why put all your eggs in one basket? if you can leverage the bank, do so. Interest rates are extremely low and make it affordable to use a bank for 75-80% of purchase. Using a bank will allow you to get an appraisal, inspection and a due diligence period to get all of this done. I would also recommend finding a real estate agent to represent you, help you with the numbers to see how the house stacks in value/and rents to others in the neighborhood.

2) there is always a risk for any tenant not being able to pay, and sure COVID may increase that risk but in my opinion not to the point of it not being worth it to buy investment properties. Screen tenants who you know have a steady job (maybe dual income) so you can mitigate your risk. It is your house, you can choose the best tenant that fits your needs to produce the lowest risk of non-payment.

3) Im not all too familiar with Raleigh, but I know compared to Onslow County, it is more expensive. However, I will go on a limb here and say they also command higher rents. See what similar houses are renting for in the area, check Zillow, call property management companies, but ultimately get a real estate agent who can build and show you the reports.

4) Similar to answer (2) but MOST landlords are working with tenants to get through COVID. If for whatever reason you have a tenant impacted by COVID and cant pay rent, there are other things you can do such as payment plans. I wouldn't evict a tenant for not being able to pay, at the end of the day I have enough reserves to cover the mortgage if need be. Like I said earlier, you can do your best to mitigate this when screening for a tenant.

5) Answered in (1), depending on the condition of the house, and if you qualify for a mortgage, I would leverage the bank. You CAN pay cash, do repairs and then get a mortgage, possibly pulling out more capital then you put in. Personally I think you set yourself up for increased risk when you put that much capital into one house. If the home just needs some cosmetic repairs, I would purchase with a mortgage and then make the repairs, still leaving you with capital in reserves and maybe enough to snag another property.

Best of Luck!

@Alexander Burkard I think they both have there pros and cons, but if you are starting a partnership and looking to grow, it makes sense to build with the protection of an LLC. It may be more difficult to get a bank loan with an LLC depending who you work with, but using a PML and HML with an LLC should make things a bit simpler.

This is also important when you think about marketing, and building a business brand!

Some may think this is jumping the gun and that you don't need a LLC until you have a few properties, and to each their own. I always felt between putting the systems in place first and growing while also being protected.

I believe that a safe start is an owner occupied loan. If you already have a primary residence, purchase another home to live in and turn your first into a rental. This is a LESS stressful and cost efficient way to get your first rental and take advantage of the loan programs that are afforded to home owners.

Otherwise continue to read, listen to podcasts, study reports and numbers, but if it makes sense and all your ducks are in a row, take the plunge! the first one is the scariest, but you learn the most.

If the area you live at is well known to you and an area you are comfortable investing then sure! Either way the property will have to make sense when you run your numbers.

You can always relocate every year using an owner occupied loan, or work to save 20% to purchase an investment property. This excludes the obvious options like using private/hard money or JVing with a friend or another investor.

I generally like to have 6 months of expenses saved, that includes my mortgages in the case that I needed to cover them. This is usually factored in when you do the numbers on a property and factor in your vacancy and maintenance costs to cover you should something go wrong!

Better to be safe than sorry!

If she purchases the duplex and plans to live there, she can use an owner occupied loan. The terms still depend on her creditworthiness, DTI etc... BUT usually FHA can be 5-7% down, USDA can be as low as 0%, conventional owner occupied I believe can be 10%?!

So yes, options exist for loans less than 20% down, just google banks in your area and start calling! You can reach out to a few and compare the terms.

Some may have different views, but every partnership I have done, always was in the name of an LLC. Doing so, also answers questions 2 and 3 because it would be outlined in your operating agreement. An operating agreement has very specific details as to what each partner contributes/brings to the table, as well as what should happen should one partner become deceased/incapable of upholding the partnership responsibilities.

Setting up your LLC and keeping things out of your name provides some level of protection should something go wrong. If you are going to be purchasing multiple properties, in my opinion it is the way to go.

It also becomes important when you look at how you are going to fund the deals. For example, if you decide to use hard money lenders, most require you to have the property in an LLC.

You can use an FHA 203k loan to and wrap repairs into your loan!

Otherwise, buy using FHA/Conventional/ USDA or even VA again if you entitlement is sufficient and do repairs yourself or pay out of pocket over time.

While there are many ways to cut it, a very common method to get your first few properties is to house hack your way using owner occupied and low money down mortgage loans. This requires little out of pocket, and you can still purchase up to 4 unit properties using these loan products.

Buy a house hack, live in it for a year...move out and repeat! depending on your DTI and credit score you can work with a bank or multiple banks to secure multiples properties before having to resort to your "investment funds" which you could save up over the years while you house hack.

Awesome! Congrats sounds like a great investment!

I think this may help you:

https://store.biggerpockets.co...

Having read it, it highlights all the answers you are going to get in this post.

However, form my experience, starting with an owner occupied loan (FHA, USDA, VA etc.) will get you into a house for 0-10% down. Live in the house for a year, move out, rent it and repeat.

Eventually this will snowball and allow you to expand your portfolio.