All Forum Posts by: David Zeek

Hello Matthew,

You mentioned using the VA loan, is this property for a primary residence? The VA loan requires the buyer to use the property as a primary residence for 12 months, or it can be considered mortgage fraud.

James,

I feel like your situation happens more than not. I recommend completing as many cosmetic repairs as you can before hiring a handyman or contractor. This may help you save a little. Did you pay cash for the home? Will the ARV be enough for the refinance to get your money back? If not, I would rent it out as soon as possible, and hopefully you cash flow well. After your mortgage is paid down, from the rental income, do the refi to get your cash out of it.

To make you feel a little better, I just closed on an investment property last week and the cosmetics are costing me more than expected too. I didn't buy it as a BRRRR tho, just a buy and hold for cash flow, but we are putting some money into it for better eye appeal.

Dave

Tyler,

Welp, there is a lot to ask within your question. It really depends on what you want to do. I'll explain below, but I'm not an expert, so don't use my advice for anything but for non-expert advice:)

First off, do not go straight off of zillow for prices of homes. Licensed appraisal companies will be the best resource to know the price for a home; however, you can look at past tax records (on county public sites), use the MLS that licensed real estate agents typically have access to, and other platforms similar to zillow to compare prices.

Next, make sure the homes you are comparing, that are 170k, are VERY similar or comparable (comps) to the 100k home you are referring to. For example, if the 100k home is a 3 bed, 2 bath, 1,200 sq ft, and the 170k homes are 3 bed, 2 bath, 1,800 sq ft, then the price will be different. Or if the bed/bath numbers are different, this can drastically change the price of homes in the surrounding area. 

Another consideration is how much in repair costs that the 100k home will need to be livable. So, if the comps are 170k and you buy the house for 100k (loan, 20% down, 20k in) put 20k in repairs to make it livable, it appraises for 170k, all money in is 40k, you refi and get your cash out, rent it out.....REPEAT! Haha, in other words, doing the BRRRR method, I think this would be a good deal.

So this is my two cents, and I am no expert, but just due your research before going off of what zillow states. Get a good real estate agent, they can help steer you in the right direction.

Dave

Kingsely,

Will you use the house as a primary residence? I'm pretty sure using an FHA will require you to be the primary resident. Also, FHA loans scrutinize the quality of the house during the inspection process. Unless the home is in good condition, they may not loan you the money due to the extensive repairs required.

I recommend not to pay cash for it because your capitol will be tied into this one deal. What if another deal comes along while you are rehabbing this one? If you have all of your cash in this house, then you can't use it for anything else. 

Leverage other people's money (banks). I hope this helps.

Dave

Cristian,

I am new to the game and I was wondering if you could answer a few questions. What is your cash flow breakdown? How much equity is in the condo now? If you have a lot of equity, will you consider doing a cash-out refinance to buy other investment properties? 

Dave

Robert,

Sorry to hear about your situation. I had one tenant, on the day she was moving out, back into my garage door. We used her car insurance to pay of the door. Your situation, insurance may not work, but it may be worth a call to your insurance company, who knows.

If the doors are not fixed, I think that the rent may be affected if it is an A/B neighborhood. C/D may not be affected as much. Some people just want a roof over their head, some want the roof and decent amenities. An operating garage door seems like a good amenity that most people would want. 

Dave

Hey David,

Welcome to BP. I think you should pay your normal payments and save the extra for the right investment. If the home appraises that well (140k), you can probably do a cash-out refinance 6-12 months after owning the property. 

Most forums that I have read on BP are all about leveraging other people's money, without using your own capitol. If you have a lot of equity in a home from using your own capitol, the cash is sitting and not working for you. In other words, you do not have the liquid cash to use for time-sensitive deals.

My two-cents, though I am very new to the game.

-Dave

Corbin,

Sorry to hear about the loss job, I hope you find one soon. If I was in your shoes, and you already stated it, would be to find a job so I can have an option of financing properties. It would be extremely hard to find a lender without an income, to include refinancing your current investment property. My other concern is how you calculate your investment property cash flow. Have you taken Cap Ex, Vacancy, PM, HOA (if any) fees into consideration? These factors may eat into your cash flow, if you're not placing them into your calculations already. As for your saved cash (15k), that amount would make me a little nervous, meaning I wouldn't want any less than that to cover any emergencies with your investment property or if any "life" things happen (car breaks down, medical, unexpected event). I used to live in Tacoma, and I know the market there is expensive, but I'm not too sure how Sammamish and Bellingham are; however, I recommend saving more capital to invest in that area.

So, after you find a job and save some more cash, I recommend doing a cash-out refinance of your investment property because you have a lot of equity just sitting there not working for you. I would use the money for a BRRRR option or buy and hold, whatever you are comfortable with. I hope this helps and welcome to the BP club. I am a newb too...I recommend searching the forums to find what other people have gone through. I bet there are very similar situations that someone already wrote about.

Dave

Alex,

Completely doable. I am active duty Army and will close on my third property next month, which is peanuts compared to most, but we all have to start somewhere. My best advice is to not go head first into a deal that you are not completely comfortable with. Make sure the numbers are right and you keep emotions out of it. It took me about 6 months of searching everyday on/off the MLS to find a good deal with working numbers. I also believe we (active duty military) can manage our own properties long distance. There are web-based landlording platforms that make it easy to list, manage, and maintain a property. Having the right handyman, electrician, plumber, and carpenter on speed dial is vital, which can help limit your need to be physically located near the investment property. Also, take advantage of the VA loan on multi-family homes to house-hack; meaning, living in one unit, while renting the others.

Lastly, read as many REI books and listen to all the podcasts as possible!!

Dave

@Jonathan Roach It was a direct deposit transaction, not a check, and it only took about 5 business days. I know the TSP website states longer, but it was roughly 5 days for me. I think there is an option for a direct deposit or check. Both times I used the loan and the CARES act withdrawal, I received the money thru a direct deposit.