All Forum Posts by: David Dachtera

@Chris Kendrick,

Yes - red flags.

On the other hand, they didn't ask for money up front, just your personal info.

An established business would be better. That said, I got my 3rd job ever (installing car stereo and alarms) when I asked the boss how does one get experience if no one will hire you. Everyone's gotta start somewhere. 

My $0.02 ...

Ask your attorney if misrepresentations on the application would be grounds for eviction.

What I would do ...

Take care of the roof first.

If the HVAC and hot water are still working, bump them down on the priority list.

Address the water intrusion (almost tied with the roof for the #1 position).

Can you still exercise your inspection contingency rights or has that expired?

I see this is a duplex; i.e., a residential property.

That's only from the lender's perspective. For an investor, the usual rules for income property still apply. That means, you need to see the income and expense numbers for the units so you can verify that the NOI provides sufficient Debt Service Coverage. The ratio of the NOI to debt service should still meet or exceed the 1.2 to 1 benchmark (Debt Service Coverage Ratio).

Of course, that's just one way to look at it. What I would do is run those numbers and verify that the projected cash flow should be positive. That will help you determine the validity of the asking price.

A new loan product out there called a DSCR Loan (Debt Service Coverage Ratio Loan). It goes by the property's ability to provide sufficient income to meet the lender's criteria, often bypassing your personal income as a criterion. It illustrates the importance of meeting the debt service coverage criteria.

My $0.02 ...

Speak to a CPA who is also a real estate attorney, if you can.

That said, my local colleagues are finding that as long as the payments are coming in reliably it's cheaper - and more profitable - for the lender to forego due on sale than to take the hit on income and foreclosure expense.

Their preferred form of "seller financing" is lease option to reduce the seller's tax liability due to depreciation recovery.

My $0.02 ...

Hhhmmm... Now, I'm wondering ... can a 203K be used to acquire a property to house-hack ?

Got me some research to do ... 

Lenders can be one source of funding, but should not be your only source. 

An entrepreneur's most important activity is fundraising - finding others willing to invest in your ventures. That means networking and preparing conversations and presentations to show your ideas to others.

Together, we are stronger than any individual can be.

My $0.02 ...

Leverage is how the business world works, and corporations are making money hand over fist.

Equity is not useful until you convert it to cash flow. That's where leverage comes in. Net worth looks good on paper ... just try spending it.

My credit mentor says, "Your credit score is a tool, not a trophy" and "Credit scores get you declined, not accepted. Ultimately, your credit report gets you accepted."

For what it's worth ...

... and, of course, avoid HOAs where ever possible. No one but the owner should assert control over a property.

My $0.02 ...

Sounds like you need to amortize those costs rather than try to recover them selling the first build. Some places (like here in Northern Illinois) call that an SSA - Special Services Assessment. It raises (sometimes almost doubles) the property taxes for the first X years rather than pricing home buyers out of the market.

True, it raises the PITI numbers. However, folks with suitable incomes can still qualify for financing with their existing down payment reserves.

My $0.02 ...