All Forum Posts by: Edward Barnes

I honestly don't know. I'd imagine your hunch is correct though. Program's tailored to Johnny Homeowner. They don't really have investors in mind. Something you can ask HUD or your bank though.

I'd say go for it. I don't think you could get better start than a 203K fourplex. You'll have to live it in a year and then you'll want to refinance to a conventional loan to get rid of the mortgage insurance premium (MIP), so just buy right so it'll appraise at 80% LTV when you try to refinance after a year. Other than that, I would make sure to find a realtor, contractor, and a bank that are familiar with the 203K process. It'll make everything go a lot smoother. My primary residence is a 203K and my first home. I can just point out my biggest mistakes. My realtor kept referring to the HUD consultant, who walks the property and comes up with the budget for all the repairs, as the "inspector". He was doing an "inspection". So when she asked it if I wanted a home inspection, I declined because I assumed it was the same thing. Seemed redundant to me. Really dumb. Get a home inspection, it's entirely different than the HUD consultant walking around and coming up with the budget. Feel like the realtor should've nudged me in that direction but I think she just wanted to expedite the process at that point. Also, pick a good contractor familiar with 203Ks and vet them through referrals, etc. I got a referral from my bank. Still turned out to be a dud, but it's always hard to get a good contractor. Might be a good idea to have him on hand when your HUD consultant is going around and making the budget. You might clear it with the HUD consultant beforehand, not sure if it's taboo or not and he might not want the contractor on hand. I wouldn't think he'd have a problem with and you don't want some low ball budget where your contractor's gonna cut corners. I'd also make sure they've both seen the home inspection paperwork beforehand. If you have any questions, I can expand on any of this if you'd like or you have any general questions about the 203K, let me know.

There's a couple of plastic mesh gutter guards on the market. Comes in roll and bows up when placed in the gutter some require extra clips or girders. Usually like ~$6 for a 20' roll. It's definitely the cheapest way to go. Works fairly well. I'm not convinced there's a really good solution out there to gutters, even spending thousands of dollars.

I don't know if there's way to incorporate the equity into the 2% rule. I think you're getting a little bogged down in the formulas. As was said earlier, it's just a rule of thumb for quickly scanning properties, if you find what appears to be a deal, then dig deeper into the actual numbers for that specific property. In some areas the 2% rule isn't even achievable. It's a conservative rule to keep people (esp new ppl like myself) out of trouble. All that being said, buying smart is always advisable. It's good to have multiple exit strategies. If it doesn't work as a buy and hold you could always dump it if you bought well. Just be honest with yourself as to the comparables. Is the market value as-is right now $110K? If so, why's this other person selling for $70K? If you don't do anything to this house, what makes you think you could sell it for more then it's currently listed? If this is fresh on the market, maybe it's under priced and you got a deal, however if it's been on the market for awhile and has been through some price reductions then it's probably close to market value.

Hi Bryan, if you're on the peninsula there's PREIA. Info on the monthly meetings is at meetup.com. The only expense being the meal, little more informal and smaller. TRIG is on the south side, can't say I've ever attended, but from what I understand it's more established, a lot larger group, more formal, and there's usually a fee associated.

Sounds like theyre hosting some intense study sessions there and it's wearing ppl out... 

Sound like he's advocating for some mechanism for shorting real estate to create a more efficient market, but outside of stocks in what other assets do you have the ability to short? Almost seems like it's implied that all other asset classes have some shorting mechanism and therefore efficient markets with real estate being the exception. Somebody school me on some economics.

This thread is gold! Thanks for sharing @Eddy Dumire. I'll be following.

From what I understand, John's the managing member. He's found the deal, put it together, and done all the work. The other investors are strictly passive, so they're only providing equity to make the deal go, that's why their return is smaller. Outside of putting their money at risk, they haven't had to work the deal.

Congrats John!

I appreciate you sharing this with everyone and taking the time to answer everyone's questions, even those asked more than once or that were previously covered.