All Forum Posts by: Dustin Tucker

Hello Kyle,

There are lots of things to consider, and there are lots of different types of Zoning for residential.

For example you could be zoned residential, but the minimum lot size could be 1 acre, and you are buying 1 acre, in that case you wouldn't need a developer, you would just need a builder.

For example, lets say you have 5 acres and a perfect rectangle property, that has an existing street that runs the long ways of the property so you won't have to put in any streets, you will simply need to get with a surveyor, figure out your minimum lot widths from zoning, and file with the municipality to get your property subdivided into lots.

Once you have subdivided lots, you can either sell the lots outright to a builder, the cleanest transaction.

Option 2, you could try to partner with a builder so you can split the profits, most builder's will want you to guarantee the loan, and still charge a build fee before profit splits.

Option3, you can hire the builder, obtain the financing, and keep all the profits.

Option 4, you could do any combination of 1,2, and 3.  I mean if you have 10 lots, you could sell 3 to recoup some cash, you could partner on 3 to get your credibility, and you could build the last 3 yourself.

If you can get me the following I can get you a better idea of what you are looking at, you can also email me if you don't want your info shared on the forum.

For your investment property loans, if they are done in an LLC, most of them don't report to your personal FICO Score, however you can ask the lender before you get a loan to verify. If you go through a bank or traditional lender, they will report your mortgage, but at this point the DSCR rates are as good or better than the traditional mortgage rates, and the LTV are the same. If I were you I would want to wait, 3-6 months to refinance my primary, as its a given that the interest rates will be lower in 6 months.

Depending on your interest rates from your 1st mortgage and 2nd heloc, you can turn your Heloc into an amortizing loan by making payments on it every month.  I don't know if you have a yearly renewal, or if your Heloc is for several years. You might add the weighted interest you are currently paying, to see if you actually save money by refinancing your primary.

For your 1st investment property, if you want to do a cash out Refinance on a DSCR type loan, you will need to get a minimum loan of $70,000, at 6.6%, you would need to have the property rented for a minimum of $900/mo, assuming taxes are about $2k/year, and Insurance is $750/yr. If the property is not rented you can get a fix and hold or a bridge loan to complete the repairs, these loans are DTI sensitive.

A couple things to do.

1. Make sure you have an LLC set up to put your investment property into the LLC.

2. Only have members on your LLC with good credit 680 and above, you can use a will to plan for unexpected circumstances.

Hello Fiyaz,

I would look into doing a rehab project on a duplex, triplex, or quadplex. Those are easy to finance, and the financing is solely based on the properties income using a DSCR ratio for qualification.

I would look for a property like this one, https://www.zillow.com/homedetails/5810-21st-Ave-Kenosha-WI-...

Lets say you could buy it for $100k, and its $50k in rehab, and ARV will be worth, $200k.

When you do the rehab, make sure all the mechanical systems are brand new, then you will have relative few repairs for the next 3-5 years.

I can get you a loan for $90k purchase, and $50k, rehab, once its finished you can refinance into a 30 year fixed rate loan between 6.5-6.8%, and cash flow.  The Refinace loan should get you most of your money back and you can go do it again.

Zillow.com is 80% of the market, you can list with byowner.com, Their MLS package will get your listing syndicated to all the other sites, redfin, trulia, apartments.com, homes.com, realtor.com. Bottom line is you need the best product at the best price.

 Hello Armando,

A couple of things.

1. If you plan on buying 1-2 properties a year at $200k, is a commission between $3-6k.

2. If you have ever heard the saying you have to be in the game to win the game, I have found that you have to look for properties constantly to find the deal you want, but along the way you find a lot of other properties, that if you had your real estate license you could have made money on.  Also, I don't know what profession you are in, but if you are good realtor, you should easily average over $100k/year.

3. Equity in properties is a roller coaster, you gradually increase your equity, before it is lost in a recession.  As long as you have positive cash flow on a rental property, there shouldn't be any fear in pulling out equity.  I am convinced that we are a headed for a major recession and temporary decrease in property values, but you have to have money to take advantage of the buying opportunities.

Hope this helps.

Hello Jeff,

1st run and hide when you hear the word Reit's, those are flaming dumpster fire's, and are going up in smoke.

When you are buying land either at auction or at a private sale you need to understand what you can do with the land currently, and what can be done in the future.

Basic land questions:

1. Current Zoning if any

2. Can the land use be changed?

3. What is the process to change the land use?

4. Holding Costs, what are taxes, are there agriculture exemptions.

5. What is the going rate for farm and ranch leases to get an ag exemption? In texas we are seeing $10-$50/acre/year for Ag Leases.

6. Environment issues, are there any Wetlands on my property, you can look up the national wetland interactive map https://www.fws.gov/program/national-wetlands-inventory/wetl...

7. For farm rural property loans, will be harder to come by if you want to get money out of your property, a good rule is to plan on keeping a land property for at least 10 years.

If you goal is more cash flow related, you might want to look at buying single family, duplex, triplex or quadplex properties, these are the easiest properties to finance, and there are hundreds if not thousands of lenders in this space. I think that there are lot of properties where the purchase and rehab costs will be less than 70% of the after repaired value. When you can buy properties like this, you can get almost 100% of your money out of the property, convert the property into a long term rental loan, with a DSCR Loan (Debt Service Coverage Ratio) where we as the lender look at the property and if it cash flows, and that is expressed as a ratio, for instance if your Total Loan payment including Principal, Interest, Taxes and Insurance was $1000/mo, then you would need a rent of $1200/mo and you would have a 1.2 DSCR Ratio.
Here is an example of a cheap duplex https://www.zillow.com/homedetails/732-Broad-St-Menasha-WI-5...

1. Why don't you go on zillow and look for rental properties for lease in the area, and call the agents or management companies.

2. If the management companies don' t answer your call, they probably won't answer your new tenant's call either.

3. Repeat the process for Zillow for For Sale Properties, and find a real estate agent who lives local who can go look at your property.

4. Send the existing tenant a letter, with a copy of the deed and ask them to reach out so you can renew their lease, or move on.

5. You might also try whitepages.com reverse address lookup, sometimes they have the current resident info.

Thanks,

Dustin

Hello Armando,

I would evaluate my equity position and see if there was additional equity I could pull out of one of my rental properties.

I would shoot for the Fix to Rent Strategy, I feel like it doesn't take a lot of effort to find a 70% or less property in the current market.  Also rental rates are dropping, and we are already seeing rental loan rates in the 5% range, I would expect to see rental rates under 5% by January.

If you are going to be a real estate investor for the long term, why don't have your Real Estate License? You are losing up to 3% on each investment property purchase, also, you get a lot of great tools for evaluating properties, market research, etc.

Hello, You should really talk to an accountant about how to set it up for your best practices, that said we ran into an issue this week when we were working on an SBA loan for a client, and because he owns all his properties in his personal name, we couldn't use his rental income to get the SBA loan. I would recommend setting up an LLC, and putting your investment properties inside your LLC.

1. I understand its good idea to have a separate bank acc for rental income. Can it be a personal acc? I called WF and they said for business account I need a registered business like LLC etc which I do not have.

I would go a step further and set up 1 Bank account for each property, this way at the end of the year you can go through each properties bank accounts to see what the income and expenses were.  try not to purchase items on credit cards for multiple properties, at 1x, make 2 receipts, and write a reimbursement check from the property account.

2. We will add a addendum to the lease to remove my rental property manager and add owner. Is there any other thing i need to do?

You are the owner, The tenant just needs to know where to send the money each month, and who to make the check out to.

3. Do people just wait for tenants to give them checks/transfer rent or do we need to send a invoice every month to tenant for rent payment?

For rent collection, sending an invoice on the 20th greatly helps with getting paid on the 1st.  There is rental software out there that can automate this for your, you can also set up auto emails to go out to your tenants.

4. Should I use some SW for all this accounting? Please recommend a free one, as I have only one rental property so not sure i need too many features.

I would just set up 1 dedicated bank account for your rental property, you are going to have very few transactions.

Thanks,

Dustin

Hello Charles, are you building a house for yourself or to sell?

I would do a HELOC, because if you don't want to take the money out you don't have to pay the interest, on a home equity Loan, the full amount is going to be advanced when the loan funds, and you will pay finance charges on the whole amount.

We do investment loans on new construction, Typically we can do 60% of the land costs, and up to 100% of the vertical construction, not to exceed 85% of the Costs.

Thanks,

Dustin