All Forum Posts by: Eric Thomson

yeah, well, we have BBQ and you have gluten free seaweed quinoa wraps... Texas wins!

MJ, I am estimating based on a 8% interest rate for owner finance (which may be too low). That's about $1175 per month, plus your taxes and insurance makes that $1635 per month. 20% of rent to fill your vacancy/maintenance war chest. Total monthly expense around $2200. That will net you around $660 per month. That's actually about 60 months to break even at $40k investment assuming a full 10% in vacancy and repairs.

Hello MJ,

Welcome to BP and to real estate investing!

First off, I would recommend adding maintenance and vacancy reserves of around 10% of gross rent per month each to your expense estimates to be safe. Also, I would never cover utilities for tenants. It could be a big upfront expense to have them re-metered if necessary, but I would advise it and consider the upfront cost. If you can get 100% financing at a reasonable rate then I think the numbers look pretty good. At $40,000 down it could take you around 4 years to break even if you aren't paying utilities and never have any vacancies or repairs. Of course this all depends on the rate the seller is willing to give you on financing.

I just edited my last post because I was running the numbers as a duplex instead of a 3-plex...

Home Path will let you, as an investor, buy a home with 10% down (as opposed to 3.5%). You still have the advantage of no PMI, but you are not required to owner occupy. For the extra $4500 or so you could buy it as an investor and make an additional gross rent of $600/month. Most Home Path properties can be sold to investors, but they have a 10-15 day (I believe) "first look" period where investors cannot purchase so owner occupants get first option.

Hey Nicholas,

First off, is buying the home as an investor at 10% down not an option? I know most Home Path properties qualify, unless the home is in the first look period. It may be worth going this route and making another $600 per month.

The deal itself seems pretty good, depending on the route you take... Potentially $1800 in gross rents per month on roughly $500 per month note is tremendous, especially for your first deal. My biggest question is why are the renovation costs so high? Is $20,000 what it would take to be rent-ready or flip-ready? If you are pouring that much cash into it upfront then that is going to take you several years to break even. You might want to check to see if that home is eligible for renovation financing through Home Path...

Hey Thomas,

To address the IRA question, yes and no. You can invest your self directed IRA in real estate if your custodian allows it, but you cannot personally benefit from the investment. Only your IRA can. Meaning, you cannot invest your IRA money in a house and put the profit in your savings account. All profit has to go back into your IRA. You could invest your IRA money with a partner who is not related to you, but you cannot invest with family or combine personal funds with IRA funds to invest. It's a terrific strategy if you are looking to grow your retirement fund more than 1.5% or whatever it's getting, but not if you are trying to grow usable capital.

Rent vs. Flip depends on your preference. I want passive income, but I don't really want to be a landlord. I've done it and it's not terrible if you do it right, I'd just rather get to the point where I don't have to deal with it. I am flipping my way to having enough capital to buy a larger multi-family unit(s) that I will have managed. 

My first deal was a live-in flip that I bought for around $70,000 (which can buy a pretty decent house in my area). I flipped it (doing most of the renovations myself) over a 2 year period. Rinsed and repeated, now I'm on my third (with a couple of rentals thrown in there at one point). If you like flips, do flips. Maybe pickup a few rentals along the way so you can have steady income and a little insurance for when the market slows down.

It's interesting that they have a problem "paying" the listing agent costs but not the renovation costs... This is where you tell them this is a business for you and you have to factor all costs which is why you are only willing to pay $X for their home. They are no more paying the agent commissions than they are paying to have their nasty carpet replaced.

Hello John,

Welcome to BP and thank you for your service!

To answer your question, there are a lot of creative ways to buy for little to no money, but those deals are tough to find and are going to require a lot of digging. VA loans are one way. I don't deal with a lot of VA loans in my area so I am not familiar with what the restrictions are, but I imagine you won't be able to get many concurrent VA loans. I have several family members who are agents in the Norfolk/Hampton Roads area whose business is primarily VA. They could be a good resource if you are interested. You could consider flipping a few houses until you have the capital to buy some rentals. Look for owner financing or lease options. Look into buying homes "subject to" (sub2). I'm sure you can find a list of a 1,001 ways to buy for no money down. Don't try to master them all, just pick one that works for you.

Most agencies are going to be the polar opposite of what you are looking for, unfortunately (you'll be paying lots of monthly fees, desk fees, etc). I'm not aware of any brokers that pay for your course. If you are a good salesperson already you may be able to talk a leader of a real estate team to invest in you. As @Daniel Watrous mentioned, that may come with a time commitment, but if they are training you it could be a great trade off.

Hi Casey,

I am messaging you now.