All Forum Posts by: Account Closed

Good morning! Would it be a good idea to pay for the downpayment on a house that’s less than $100,000 and let my lender cover all the other expenses since I paid for the downpayment and I don’t have to pay them back, but I still have to pay the cost of the house and rehab, etc.?

While it may seem like a good idea to pay for the downpayment on a house and let your lender cover the rest of the expenses, there are potential drawbacks to consider. By taking on the responsibility of paying for the downpayments yourself, you may be limiting your ability to negotiate for better terms or find more competitive financing options. Additionally, you will still be responsible for paying the cost of the house and any associated renovation expenses, which may be a significant financial burden. it is important to carefully weigh the benefits and drawbacks before making a decision.

0 Votes

Quote from @Chad McGibbon:

Scenario:

Client owns 4 rental properties. 2 SFH and 2 duplexes. One of the duplexes is actually a lease option with a 30 year note. Total owed on all properties is around 350k or 300k without the lease option duplex. Total value of all properties is right around $1m so a good amount of equity.

Prop 1 SFH: mortgage amount around $950, rented at $2175

Prop 2 SFH: mortgage amount around $900, rented at $1725

Prop 3 Duplex: mortgage amount around $1000, rented at $1400($700/side)

Prop 4 L/O Duplex: mortgage around $800, rented at $1850($925/side)

What would you do here?

one option is to continue renting out all four properties to cover mortgage payments and generate passive income. This can build equity and potentially increase rental income through property appreciation.

Another option is to sell one or more properties to free up equity and reduce mortgage debt, which can be useful for reinvesting or diversifying investments.

refinancing one or more properties to lower monthly mortgage payments and increase cash flow could also be beneficial, especially if interest rates have decreased.

the best course of action depends on the clients financial goals and risk tolerance

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Orlando, Florida

Quote from @Jackie Mcmorrow:

Hi BiggerPockets Family,

I’m trying to start my real estate investment journey through the purchase of my primary residence, with the intention of selling it in less than 5 years. I was open to condos and co-ops but after more research am stuck.
Are co-ops even technically an investment (considering you don’t own the actual space)? Should only look at condos if I really want a taste for the investment world? (Late this year/ early next I want to start building a portfolio of out of state, long term rental properties). Can anyone share their thoughts?

(Where I live/ work, I can only afford an apartment so don’t have the opportunity to house hack with a multi family)

Thanks in advance!
Jackie

In general, condos are often seen as a better investment option compared to co-ops because with a condo, you own your specific unit and can have more control over its value and potential for appreciation. Co-ops, on the other hand, involve owning shares in a corporation that owns the building and can come with more restrictions and limitations on how you can use or rent out your unit.

If your goal is to dip your toes into real estate investing as a primary residence before building a portfolio of out-of-state rental properties, it may be a better idea to consider a condo over a co-op. This way, you can potentially build equity over time and have more flexibility in renting out your unit in the future.

Ultimately, it's important to do thorough research and consider your long-term investment goals before making a decision on whether to choose a condo or a co-op for your primary residence.

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Westchester County, New York

It may still be worth considering investing in properties with lower returns in the current market, as building equity, taking advantage of tax benefits, and potentially refinancing later could offset the lower cash on cash return. Additionally, purchasing at a lower price due to high interest rates could also be a strategic move in the long run. It ultimately depends on your individual investment goals and risk tolerance.

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Seattle, Washington

SHARE YOUR PROPERTY LINK HERE SO WE CAN TAKE A LOOK AT IT TO GIVE AN APROPRIATE ANSWER.

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Phoenix, Arizona

When considering potential tenants, it is important to have a clear and consistent policy in place regarding credit scores and other factors. In this case, it ultimately depends on the specific policies of the apartment complex or landlord.

Some landlords may consider the overall average credit score of both applicants, while others may require each individual applicant to meet the minimum credit score requirement on their own. It is important to clarify this policy beforehand to ensure consistency and fairness in the application process.

In addition to credit scores, other factors to consider when evaluating potential tenants include their income level, employment stability, rental history, criminal background (such as the DUI), and any other relevant information provided in the application.

In this particular scenario, the fact that one of the applicants has a credit score below the minimum requirement, as well as a DUI on their record, may raise red flags for some landlords. However, it is also important to consider the applicant's income level, employment stability, and any other positive attributes they may bring to the table.

Ultimately, the decision to accept or reject the couple as tenants will depend on the landlord's specific policies and risk tolerance. It is recommended to carefully review all relevant information and weigh the pros and cons before making a decision.

1 Vote

Quote from @Annalie Cao:

Hi all,

I have this property located in Huntington Beach, CA and the owner is willing to do seller finance of 1.2 mil with a 2 years balloon payment. He still have a mortgage of 800k, and his equity is 400k. He wanted 200k down payment which is 17%, and no interest. How can I structure this deal better to use as vacation home. It's currently making roughly $77,300 in gross income for 2023 number with an uncompleted dirt backyard, if I add a nicer backyard with jacuzzi and more backyard activities

It could potentially increase the rental income.

One way to structure this deal better for use as a vacation home is to negotiate a longer balloon payment period with the owner. Instead of a 2-year balloon payment, you could try to negotiate a longer term, such as 5 or 10 years, to give yourself more time to generate income from the property before needing to pay off the remaining balance.

Additionally, you could also propose a lower down payment amount to the owner. If you can negotiate a lower down payment, it would free up more cash for you to invest in improving the property, such as adding a nicer backyard with a jacuzzi and more backyard activities.

Another option could be to negotiate a lower purchase price for the property in exchange for a higher monthly payment to the owner. This could help reduce your initial investment and give you more flexibility in making improvements to the property.

Overall, the key is to negotiate a deal that works best for both you and the owner, allowing you to use the property as a vacation home while maximizing its income potential. Additionally, you may want to consult with a real estate attorney or financial advisor to ensure the deal is structured in a way that is advantageous for you.

0 Votes

Orange County, California

Quote from @Candi Kham:

Hi everyone,

I'm seeking guidance on navigating the world of real estate investing, particularly in the context of tax optimization. Currently, I find myself in the 37% tax bracket due to W2 income and I'm eager to explore avenues to shelter taxes through real estate investments. I'm specifically interested in acquiring a rental property within the $800k to $1.2M price range in Washington state.

However, upon evaluating rental properties in the current market, I've noticed a concerning trend of negative cash flow. This raises the question: what type of property should I be targeting? Should I consider house hacking to mitigate the negative cash flow, or opt for an older home in a sought-after neighborhood, even if it means breaching cash reserves every month?

I welcome any insights, suggestions, and tax strategies from experienced investors in this forum. Your expertise and advice would be immensely valuable as I embark on this journey into real estate investing. Thank you in advance for your assistance!

Consider targeting properties that have the potential for appreciation in value, as well as options for utilizing tax-saving strategies such as cost segregation and 1031 exchanges. House hacking can also be a viable option to offset negative cash flow. It's essential to work with a knowledgeable real estate agent and tax advisor to ensure you are making informed and strategic investment decisions.

0 Votes

Seattle, Washington

Quote from @Account Closed:

I recently own approximately 1.5 acres of commercial real estate zoned R-3 moderate density multi family in Green Bay WI.
I talked to a developer who estimates site fully developed could fit approximately 3 buildings of 12 unit apartments. Phase 1 - demo of a greenhouse sitting on part of the land - site utilities and 12-unit building turkey construction budget $2,043,100.00 -- $2,177,500.00
The estimated rents would be approximately $1k per unit on average for mix 1 2 & 3 bedrooms- I feel like construction is so expensive and the market doesn’t support higher rents from what I’ve researched
Should I : 1) try to partner with the local government for affordable housing loans and grants? (this is an option I’m looking into) 2) pursue partnering with another investor? a syndication? 3) the back of the property leads to a cul de sac which could potentially be another entrance - option would possibly be building a duplex or fourplex which would be less costly - then sell it and make another and use the profit towards the apartment building and just build 1 because who has that kind of money. Even a duplex construction is expensive so I even considered if modular homes could be an possibility. There’s really so many options it’s hard to know what is the most beneficial. Taking out debt for 2M is not something I can take lightly.
are there any other possible options that I’m overlooking?

Thanks in advance for any feedback!

1.Explore tax incentives or financing programs: Look into potential tax incentives or financing programs offered by the local or state government for affordable housing developments. This could help offset some of the high construction costs and enable you to offer lower rents to tenants.

2.Consider mixed-use development: Instead of solely building apartment buildings, you could also consider incorporating commercial spaces such as retail stores or offices into the development. This could help generate additional income and attract a broader range of tenants.

3.Partner with a nonprofit organization: Some nonprofit organizations specialize in affordable housing development and may be interested in partnering with you on this project. This could help secure funding and expertise in building and managing affordable housing.

4.Explore alternative construction methods: As you mentioned, modular homes could be a cost-effective option for building additional units on the property. You could also consider other alternative construction methods such as prefabricated buildings or tiny homes.

Ultimately, the best option for you will depend on your financial situation, goals for the property, and level of risk you are comfortable with. It may be beneficial to consult with a real estate development expert or financial advisor to help weigh the pros and cons of each option and make an informed decision.

1 Vote

Quote from @Nicole Lockwood:

Hi,

I am very interested in investing and I would like to invest into short term vacation rental in Florida, preferably Kissimmee or Davenport. specifically in the community resorts.

I live in NYC and i was wondering if investing out of state is feasible?

how much realistically would i need to travel to Florida?

where should i go to look for STR investment properties?

can i invest in a property with a down payment? should i secure a mortgage? or a loan?

is there like a step by step guide on investing in short term vacation home in Florida?

any answers will be greatly appreciated

Investing in short-term vacation rentals in Florida from out of state is feasible. Travel costs will vary, but flights from NYC to Florida are typically affordable. You can find STR investment properties through real estate websites or working with a real estate agent. You can invest with a down payment and secure a mortgage or loan. It's recommended to research and understand the market before investing, and consider consulting with a financial advisor or real estate investment professional for guidance.

1 Vote

Orlando, Florida

All Forum Posts by: Account Closed

Account Closed has started 0 posts and replied 42 times.

Post: Should I pay for the downpayment?

Post: Advice on maximizing equity in investment properties

Post: Is a co-op technically an investment or not?

Post: Should I accept lower Cash Flow?

Post: How to choose the best property manager in my area - Mesa AZ

Post: Tenant screening requirements question

Post: Seller Finance and Subject2

Post: Seeking Advice on Tax Strategies and Pr

Post: Would really appreciate if you shared any insights and experience

Post: short term rental investing step by step