All Forum Posts by: Deandre P.

Hard money will not likely work in this scenario. From the sound of it the property seems to be in fair condition and stabilized, also the sales prices seems to be at market. For hard money to work you will need to be able to exit the loan within 12 to 18 months, depending on the lender. The only way to exit is to either sale or refinance. As you mentioned the property does not need much of a rehab, so refinancing out of the hard money loan will not work. The highest I have seen a lender go on a rate/term refi on an investment property is 80% LTV. So at a loan amount of $350,000, the value of the property would need to reach ~$437,000. Unless you can get the property for roughly 20% below market and put some equity in I don't see the deal meeting lender requirements. You could see if the seller has any interest in seller financing.

Lots of good points made already.  I would say look at getting licensed.  While it is not generally necessary it does help build a good foundation on the knowledge front.  Also, can be a gateway to additional income after you graduate, at the very least you can represent yourself on any market deals and earn a commission.  Best of luck.

Congrats. A 15% ROI is great in my book, especially compared to your alternatives at the current state of the market, not to many places you can park your money and get a 15% return. As far as being proactive I would suggest comparing comps and ensure your are at market with rents. Also, educate yourself on the guidelines of Section 8, as there are procedures to increase rents if you are not at market. As far as upgrading the units, I would say if the units don't require it why not just keep that money and save for your next property. Long term tenants with guaranteed rent payments seems like a win to me.

Based on the figures you provided, the deals seems to make sense overall.  Despite the negative cash flow in the beginning, over a 5 to 10 year hold, the property would likely perform. I am basing that on the general upward trend in rents over time and appreciation.  In addition, if you plan to increase rents and lower expenses come to true, then you're in an even better position.  One thing you should consider is your rental estimates and be sure you can confidently obtain those amounts.  If you are having the tenant pay utilities, then that is effectively a ~25% increase in the tenant housing cost on top of that the one unit in which you are planning to raise rents from $800,to $1,000 is a ~25% increase on top of another ~25% increase for utilities, resulting in a overall ~50% increase in tenant housing cost.  Those are large increases so I would advise to really look at your comps and make sure the market supports such increases.

Was property 1 purchased with FHA? FHA seasoning requirements state you have to live in the home as your primary residence for at least 12 months. So if you plan to live in the duplex/triplex for at least a year, you may be able to qualify, assuming Property 1 was not purchased via FHA. If it was, you can still possibly qualify, however the guidelines are more stringent. Unless you are moving to a new area or significantly increase family size, you may not get approved to have two FHA loans.

Consider adding a few rentals in your portfolio.  This will generate some cash flow, while you continue your flipping business.  I think in this market diversification is the key.  

Determine your buying criteria (purchase price range, preferred rate of returns, etc.) and discuss with investor friendly realtors to help find properties.  Realtors could also assist with referrals for contractors, property managers, etc.  Having realtors in varying markets send you potential deals will help narrow down your search for which market you want to be in based on your buying criteria.  As far as market suggestions, TX is a strong market.  I assist investors here in various markets throughout TX and with the growth we are seeing from people relocating here, rents are continually increasing.  

I would like at house hacking if possible. Look into purchasing a duplex, tri-plex or four plex. FHA allows for the purchase of 1-4 residential. This way you can stay in one of the unit, and collect rent from the others. Also, will give you a good start on your real estate investing journey.

I know with the increase in rates it may not be the best time, but you could refinance and put the property and loan under your LLC.

You could account for it within the vacancy or add as an expense line item.  Since you are using a rental calculator, adding to the vacancy would probably be the easiest.  This would be an additional approximate 8.3% (1/12), added to your 5% vacancy.  Note if you are looking over a 5 to 10 year holding period, you would need to determine if it is likely you will have to pay that fee every year or if there would be strong possibility of renewals and if it's appropriate to factor a lower vacancy due to renewals.