All Forum Posts by: Edward B.

It is more important that the numbers work than being able to see your investment every day. Especially if you are just driving by to see where all your disposable income is disappearing to.

I own all of my properties at a distance. It is definitely doable but not without its challenges. You must do your due diligence and that is more difficult from afar. And you have to stay on top of your property managers. Also, more difficult from afar. Again, though, difficulties become opportunities when you figure out how to overcome them. If you can't find deals where the numbers work where you are, either look harder for a deal or look elswhere. I definitely wouldn't rule out owning at a distance. Especially if you can leverage your ability to travel easily to keep things on the up and up.

Happy wife = happy life.

I seriously would just find a different way to invest in real estate. There are plenty out there and any of them will be better with the support of your lifelong partner in crime. Even if you manage to convince her this is the right move there will be ZERO room for error. Anything and everything that goes even slightly askew will be because you made her move from her dream house (even if it isn't really her dream house, it will be when the attacks begin). The stress on your relationship is so not worth it and would likely undermine your investing anyway.

Pick and choose your battles. You could win this battle and lose the war if you aren't careful. I have always bought real estate as an investment, even the homes I lived in. My wife keeps talking about our "forever home", though, which makes absolutely no sense to me financially, but I guarantee you she will get it and I will make it happen. Even if it puts a damper on my investing.

Remember it is all about finding a solution where everyone wins and based on the reaction you described, there is no situation right now where she will consider moving from that house a win. Find a different solution, they are out there. Maybe not as ideal as house hacking, but still good, and all that much better when you come home to a happy, loving, supportive wife.

Ed

I would highly recommend using your Veteran's Benefits. You served your time, you should definitely reap the rewards, all of them.

You could theoratically gain 12 units by using this strategy and investing in quads before it really became a problem. Like I said though, it is not quite that simple, especially in 4 years, but it will certainly kick start things for you.

No, sorry. The funding fee only goes up once ofter your first loan.

What gets worse is your ability to qualify for a loan. Most banks do VA loans. Most don't do more than four mortgages and I am not aware of anyone that does over ten. I have been told that you can always get a loan on a primary residence but my experience has been different. I haven't found anyone able to close a loan after ten despite what they promise.

So if your strategy was to just keep refinancing and using your VA loan it would get worse (maybe impossible) after four loans and almost definitely impossible after ten.

You do not have to refinance if you move out of a property you bought with a VA loan and convert it into a rental. You are supposed to live in it for a year but if life has other plans for you they will not recall the loan. I know a lot of guys that got orders right after buying a house with a VA and had to rent it out. No problems.

You could move every year if you wanted, but in reality it is nearly impossible to make the numbers work. You may have gone from 0% equity to 20% equity in one year from 2003 to 2004 but not now, so refinancing would be impossible. And of course, after four times it gets worse.

The two that jump to mind are a VA loan and something that Navy Federal Credit Union (NFCU) offers. Both are 100% financing at very competitive rates. NFCU may only be open to Active Duty though but a veteran can always get a VA loan.

There are companies that specialize in VA loans but most brokers and big lenders do them. Basically just a loan guaranteed by the Veteran's Administration vice Fannie or Freddie or something. There is a funding fee of 1.5% I believe which is essentially prepaid PMI. You can only have one VA loan outstanding at a time, but you can sell or refinance into a conventional loan and reuse your VA benefit. The second time has a much higher funding fee (think points or origination fee) in the 3%+ range.There are ways to have two VAs outstanding but it greatly limits what you can buy because it is capped. Usually at around $417k but it is higher in some pricey locations. You can indeed use a VA for multi-family (1-4 units), but you have to promise to live in the property for at least a year. No investment properties. I believe the NFCU loan is the same way.

Those are the obvious ones that almost any institutional lender could fill you in on, the VA loan anyway. There is some other stuff out there such as small business loans and what not for veteran's but I am not as up to speed on those. VA loans can be a pain but 100% financing is 100% financing.

Ed

I think you get the picture.

Zestimates CAN be close if there are a lot of very comparable sales that have occured recently, but it is likely off by some degree because this is usually not the case. A Comparative Market Analysis (CMA) is better because someone, hopefully a knowledgeable someone, is putting a sanity check to the comparables that pop up in their search and making realistic adjustments for differences. A Broker's Price Opinion (BPO) should be better still because it is more formal and arguably a more knowledgeable person. In reality it is propbably the same person who did the CMA doing the BPO with a Broker putting their sanity check on that. An appraisal SHOULD be the best because it is much more in depth and what this person does for a living. Of course, all of these are only as good as the comparables and people performing them. I have seen bad CMAs, BPOs, and even appraisals. And of course Zillow isn't even a person so......

I use Zillow to get an idea of price because you can see what has sold and see what they are using for comps. If you have experience or know the market or area you can get a fairly good idea by doing your own "CMA" but your info will be dated compared to the MLS. This can be used to narrow down your list of possibles. Before you actually did a deal, though, I would definitely get something more concrete that you could trust.

Josiah,

Of the two, the appraisal is more likely to be correct. Tax assessments are typically done in bulk and at set times (i.e. once a year, once every two years, once every five years, etc.) Also, like you mentioned, often times they will be low to discourage people from challenging them but since they aren’t a true reflection of the market or situation that is not always the case. What you could do is challenge the assessment with the appraisal but if you aren’t looking to hold the property I doubt that you would care.

I would be concerned that the appraisal could affect a buyer’s ability to get financing. I believe there are situations where you have to disclose if an appraisal has already been performed. I am not really sure how it would work so I will let someone with more experience chime in, but if you have to use that appraisal then the banks will only lend on that amount. Thus, even if your agent can sell the property for $115k your buyer would have to bring a ton of money to the table since the lender will be looking at 80% of $85k. Again, I am just basing that off of wanting to go with another lender once because of a lowball appraisal and being told that it wouldn’t matter because the appraisal would follow me. May be different in your state or your situation, I honestly don’t know so look into that. Otherwise, the property is worth what someone else will pay for it not what it appraises for.

You can challenge the appraisal but that is easier said than done. I am currently working my way through some old podcasts and I believe Podcast #007 (http://www.biggerpockets.com/renewsblog/2013/02/28/ryan-lundquist-podcast-appraisals/) was with an appraiser and he talks a little bit about how you may go about that.

One other point, if the appraisal was “as is” instead of “as renovated” then I would think you should be fine. You should be able to get an “as renovated” appraisal but there may be issues with lender’s who want to see some seasoning before they will accept a new appraisal. A rehabber should have more experience with this, I am mostly a buy and hold guy. If the appraisal was “as is” though, and you bought it as a foreclosure, then foreclosures are the most comparable…right now.

Ed

James,

That was a bust. Might be a good estate attorney but knows little about real estate and even less about asset protection. His advice was to just get as much insurance as you can afford. Did that, I am looking for a little bit more. I will probably look into Mr. Nuen's recommendation above, otherwise, I reached out to Anderson Business Advisor's a while ago after reading Clint Coont's book on asset protection and may go back to them. I wanted to use someone local because the law is very state specific but noone that I have talked to around here has been able to beat their kowledge in AP and REI nor their price quote. They are based out of Washington state and Las Vegas but do business nationally. The book and their website is pretty general and broad, as it should be since most of this stuff is situation dependent, but good information. I'll let you know which way I go and would appreciate a shout out if you find something.

Ed

Amy,

I have a three year old so this should be easy.

I had a 1st mortgage at 70% LTV on a $300k property, so ~$210k mortgage.

A HELOC with an 80% LTV would only give me $30k to play with on the HELOC.

80% of $300k is $240k minus the first mortgage ($210k) equals thirty thousand.

Because it was only 80% LTV they were offering me an interest rate in the high threes or low fours, I can't remember (i.e. 3.75% or 4.25%).

OR they would give me a HELOC at 90% LTV with a rate of 5.75%.

90% of $300k is $270 minus the first mortgage ($210k) equals $60k to play with so $30k more than the 80% LTV loan. $60k - $30k = $30k.

So as long as I make more than 5.75% on that money, an investment or deal is worth it. 5.75% is kind of high to overcome without taking on some risk but those opportunities do exist so if you are smart in how you use it it makes sense. Could be a flip, could be a buddy who wants to dump his $15k Harley for $10k because his wife is making him get rid of it. Most people can’t come up with $15k on the spot let alone $50k or $60k for a property. So if you have the knowledge, i.e. know what the Harley is worth, and access to the cash, you can take advantage of the opportunity. The Harley example is fictional by the way, but you get the point.

Ed