All Forum Posts by: Daniel Stratton

Thank you very much to the both of you! That's what I needed to hear. The real reason I was thinking about it was because of a friend, he thought I should go ahead and take the profit, but I was thinking the same things you all were to myself whenever I had thought about it before, so I think you are right. I think I'm going to wait and see how the business fairs. The money I'd get from the house wouldn't get me any closer to getting a lawyer, it would really only be used to pay off debts incurred during the first year I was fighting for my relationship with my children, before I completely ran out of money.

Since I have my home right now, and it is a home, I probably should risk losing something so many people in my position would love to have. I need to count my blessings more so, not to mention, it always seems to be about half of what you'd expect when you start thinking about the profitability of a deal... i.e. all of the additional costs associated with closing on a house.

Thanks again, I appreciate your input VERY much!

Respectfully,

Daniel Stratton

Hello,

I'm in a pickle... I am a divorced father who hasn't seen his twin four year old boys for a year after their mother took them to live with her parents in Pennsylvania. That's a whole other story, so I'll spare you the details, but in short, I am starting my own business in order to get the money to pay a lawyer to fight for the right of me and my babies to be with each other. I still own the home I purchased when I was married, and let me tell you, it is PERFECT! It is one block from one of the most historically iconic main streets in Texas, Grapevine. It is also in the "Historical District." I am waiting on it's historical plaque from the city, and it is a reconstruction.

The city has undergone a resurgence, basically, people are knocking down all those OLD homes, historical homes, and rebuilding them within the regulations such that are still considered "historical homes," and are eligible for their own historical plaques. What this means is that the exterior and interiors are redone such that they have certain aspects that are modern, i.e. the tile, new wood floors, new cabinets, etc. However, they are all in the style of the 1920's and 40's. This is happening for most all homes in the neighborhood. Not to mention, it is in a PRIME location in DFW, and the city is known for festivals, wineries, parks, and a massive lake we live about 1 mile from.

I LOVE THIS HOME, and I bought it for my babies, but they are no longer with me, and I have some debt, but expect to pay it all off once my business gets going. Moreover, the home has rough valuations from the city and Zillow/Trulia at around $225,000 to $240,000! I bought the home for $185,000! With 4.00% APR, under 4 interest rate, like 3.85%. It is a VA loan, thus I didn't have to put a down payment down which is why I could afford it.

My question is, since the market in that neighborhood is so HOT right now, to the point just about all the homes have been redone and some are new constructions fit into lots within the neighborhood, should I sell the home and take the equity, or should I get a home equity loan? I HAVE NO IDEA what to do? Please, any advice would be greatly appreciated. Also, there are some issues with the settling bc the area is set on soil that is rather loose. The whole neighborhood has it, and I'm sure my home owners insurance would cover it when I go to fix it, which I'll end up doing whether or not I sell the home...

Thanks in advance!

Respectfully,

Daniel Stratton

Fred, Wade, and Adam,

Thank you all for your input, this is exactly what was looking for before I made a decision. Fred, no there is not a balloon payment, and to go along with Adam's point, to get the duplex on a discount would be ideal, i.e. offering around $80,000; however, it seems that a deal like that is bordering on too good to be true? I'll give it a shot either way.

Wade, thank you very much for your suggestion regarding the revenue/expense records, I didn't even think to ask for the numbers on that, I hope this will help other people too in my situation. Because this is all very good stuff that I wasn't thinking about. Thanks for all the food for thought. I'll keep you posted on how this shakes out. I haven't heard anything back yet on the questions I asked him on Monday, but I hope to soon.

Derick and Adam, thank you for your thoughts! Derick, I appreciate the consideration you gave to the point about the Section at reimbursement, I had heard conficting stories, but what you are saying makes more sense. That would be WAYYY too much of a liability for the government to be responsible for their treatment of the property. However, I heard that being in contact with their case worker is a good way to prevent needless damage, for they loose their voucher if the case worker revokes it but that's at the case worker's disgretion.

Adam, thank you for your advice! Yes, I am a retirement actuary. Are you still working as an actuary, or are you soley doing RE? That would be my dream because I have spent so much of my life working for every single dollar, it would be nice to start having my dollars work for me. With respect to your Mortgage calculation. I'm sorry if I wasn't clear at first, but the mortgage came out to about $475. The extra $300 is what the seller is claiming the expenses are, so I just summed those to get the $775. If I were to add an additional $387.5 I would have a cash flow of +$212.5, correct? Not as great as $600, but if the seller really did do the roof and foundation, that should decrease my expected expenses some correct? This is great food for thought. I really appreciate everyone's help to much. Adam, you are my hero if you were able to leverage your analytical skills to the point you didn't have to slave over billable hours and those most awful SOA/CAS exams that Milton Freedman(Sp?) couldn't even pass... It's is depressing.

Bill, thank you so much for your reply. In response to your question pertaining to the expenses, I don't believe the gentleman is including vacancies, it may or may not include repairs. I think because this is a Section 8 property, he is assuming vacancies will be minimal, and I the lost income of a sinlge vacancy is neglegible (relatively). My research has suggested that the pool of available tenants is much larger and basically at your fingertips with Section 8. I was not as worried about repairs, other than the occasional, but Section 8 is supposed to reimburse damages. This will be something I need to address with the seller though. Thank you very much for bringing it to my attention.

When you say 5% of my money, are you referring to the difference in the estimated value of the home and the loan amount? Also, I don't believe the Zillow estimate is taking into account the additional equity due to the seller's repairs. I.e. the foundation, new roof, updated bathrooms/kitchens, and new appliances. Does this add to my equity, allowing me to assume market price is a tad higher than the neighborhood comps.?

With respect to the term, this would be a 30-year note. 360 payments, no balloon payment, at least not one materially different than the monthly payments. Maybe the last payment a few dollars up or down to balance the loan.

Thank You again for your advice.
Daniel

I am a disabled veteran, I got another degree in actuarial science. I now work at Towers Watson as an actuarial analyst. I have my own home, mortgaged with a VA loan. I have a great deal of equity. My dream is to become financially independent, and I found a great Owner Financed property in Arlington, TX. I am looking for some advice as to whether this is a good or not?

It is a Duplex in Arlington, a DFW suburb. The owner is a Doctor and has moved to Costa Rica and is looking to unload his Dalls properties, which makes sense. However, Zillow estimates the value around $85,000. The owner bought it for $107,000 and is listing it at $100,000 OBO, I know he will take $95,000. I am planning on offering $80,000-$85,000; I assume he will counter with $85-90k. He offered terms of no money down, 5% APR, with a Mortgage PMT of around $475 in addition to $300 for taxes and expenses. With a total payment of $775/month. He says he has two tenants, HUD guaranteed rent at $1375 for both, net $600(approx.). Assume the renters have about a year left on the lease, and that they have been excellent Section 8 tenants, is this a good deal?

The gentleman claims to have updated the bathrooms and kitchens, including new appliances. In addition, a new roof 5 years ago, new piers and beams for the foundation with lifetime warranties, and a sprinkler system. The exterior looks nice, and it in a duplex neighborhood and he says he has had NO problems. I am taking a look at it tomorrow or the next. Assume the inside is updated as he claims and it looks to be kept up nicely, again, is this a good starter property? It's not a lot of extra cash flow compared to my salary, but I figured it is a start. Am I missing anything?

Thank you for your help, from a disabled veteran looking for true financial security and the ability to attain my dream of one day being able to afford my South Texas hunting ranch that I have sadly come to realize will never happen unless I take some risk.