All Forum Posts by: Coty B Lunn

Hi Derek!

I would recommend Binghamton! I also am a licensed Realtor who did house hacking! I started with a Duplex using a 3% down, no closing costs deal. I then bought a second property using an FHA loan to get a triplex while keeping my first duplex! Our house prices are at a lower point than that of many other areas. You can get a duplex in relatively good condition around $100,000-$120,000.

Hello, 

I am a NY and PA licensed Realtor working primarily in the Binghamton area.  I also invest in a nearby town called Endicott, NY.  Binghamton is unlike other markets.  Our homes are typically lower priced and the cap rates can vary between 12-18% on average for multi-families as well as single family homes.  Our lower priced complete rehab properties start at approximately $30,000.  You can get a move-in ready single family for around $100,000-$120,000. You can get a multi-family with no repairs needed around the $100,000-$120,000 range as well.  Our average home sells around $140,000.   Feel free to connect with me to discuss strategies and what would best suit you!

It may be hard to find a rent to own property, but let me tell you some things to look out for:

1.  Rent-to-owns can work one of two ways.  Owner financing and land contracts.  Owner financing is where the buyer works out terms with the seller and then at "closing" the deed is transferred into the buyer's name.  The seller becomes the bank and first place lien holder.  If you were to default on the loan, the seller would then have to go through a foreclosure process to take the home back.  The difference with a land contract is that the home stays in the seller's name.  This is very risky!  The problem is, if you're even one day late on your payment, the seller could take back the property with the snap of their fingers.

2.  How rent-to-own can work.  You work out how much you're going to pay for the property, interest rates and how long the term will be for.  The catch that most people run into though is normally there is a balloon payment which is due after a certain number of years.  I hear often from the buy side "the seller screwed me over and foreclosed or took back the property" and they don't understand why.  This is because normally they will have verbiage that says something like "payment is due based off a 30 year mortgage, but full payment is due after 5 years."  This means, whatever the balance is after that 5 years, they plan to make you pay the remaining balance.

3.  Paying the remaining balance:  The seller is expecting for you to pay this is cash or financing before the deadline.  Essentially, you would have to get approved for a mortgage if you don't have the cash to pay it off. Will you be ready to get a mortgage in 5 years?  

4. Actual interest rate:  I have seen more often than not that the seller of a rent to own is going to charge a higher interest rate than an actual bank.  This is not always the case, but it does happen often!

These are all some things to consider when doing "rent-to-own" which is another term for either owner-financing or a land contract.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $98,000
Cash invested: $10,000

2-Family home. Both 3-bedroom units. 3rd investment property! Buy and hold strategy!

What made you interested in investing in this type of deal?

This home came up for sale up the street from where I live. When I saw it, I just had to have it as the location couldn't be more ideal!

How did you finance this deal?

Conventional 25% down loan. I brought in a business partner on this one to finance the deal 50/50. We plan to do more deals in the future soon!

How did you add value to the deal?

We put some money into the home, fixing it ourselves and with family help.

What was the outcome?

Success! We got it fixed up and rented out!

Lessons learned? Challenges?

Sometimes you run into more problems than you expect, so budget for a little more than you expect!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $94,000
Cash invested: $5,000

House hacking at its finest! This was my second investment property - a 3 family residence! This one features a single family home - in which I live and two apartments above an oversized, long 2 car garage. The two apartments are one-bedrooms each, but cover the mortgage, taxes and insurance. On top of that, they pay for my utilities each month in full with a small cash flow at the end! What is better than that?

What made you interested in investing in this type of deal?

I was looking for my second investment, but I wanted to live in this property - house hack if you will.

How did you find this deal and how did you negotiate it?

I used a local Realtor to send me properties and then chose the homes I wanted to see. I only had to look at 4 properties to figure out this was the one for me!

How did you finance this deal?

Since I used a conventional 3% down, no closing costs deal for my first deal, I chose to use my FHA loan for this one since I was moving into it!

How did you add value to the deal?

I made some small changes to the property heating system and other small cosmetic upgrades.

What was the outcome?

I was able to live in the property while having my mortgage, taxes, insurance and utilities paid every month!

Lessons learned? Challenges?

The lesson here is that it works. When I told people of my plans, everyone said I was crazy, was going to fail, get bad tenants who destroy everything, etc. It couldn't have been further from the truth! Plus, when I move out of here some day, I can rent out this home and I'll be profiting $2,015 each month even after mortgage, taxes and insurance!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $57,000
Cash invested: $20,000

2-Family residence fully rented. This properties rarely ever sees vacancies and is always filled fast when needed! This monthly cash flow takes into account mortgage, taxes and insurance payments.

What made you interested in investing in this type of deal?

This was the home that started it all! My first investment.

How did you find this deal and how did you negotiate it?

My parents first owned this home. This is the only investment property they have ever owned. When they decided they were going to get rid of it, I had to buy it!

How did you finance this deal?

I used a 3% down, no closing costs conventional loan for my first deal. Saving my FHA loan for my second investment property!

How did you add value to the deal?

I fixed up this home before renting it. This included a new roof and siding. Luckily my dad was able to assist me with the repairs!

What was the outcome?

I couldn't have asked for a better investment. Steady passive income was what I sought and that is exactly what I got!

Lessons learned? Challenges?

With it being my first investment property, I had to learn as much as I could from this one. I learned how to look for qualified renters and establish a process that I could use over and over again on other investments.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I didn't work with any Realtor when purchasing this home due to it being a family deal.