All Forum Posts by: John Fierke

Our son and daughter in law live in a mobile home (don't own the land), decent credit score but average income. We want to give them a leg up by loaning them the money to get them into a house (in need of rehab) sooner rather than later. Then down the road (a few years maybe), once they're more established with careers and credit, and rates and property value are right, they could transition to a conventional lender.

House Details : 3 Bed, 3 Bath 1,720 sf. Original asking price $215k, 73 days on market, plan to offer $175k. House has been a rental for decades, neglected. Plan to spend $40k in rehab.

So those are our thoughts. When that day comes, how would we recoup the remainder of our loan?  We'd also like to write something up so that we can recoup as much of the rehab costs as possible if the house appraises adequately?

Thanks,  
John

Son has ZERO active Credit History!

Our son Travis is 28, finishing up his degree, living at home paying enough rent to have his skin in the game, and working part time.  We have been helping him understand the power and benefit of owning real estate and have been encouraging him to find a duplex.  A few have come up and we actually met with and agent and walked one.  The issue is he has ZERO active credit history.  He's had 2 cars (one got totaled years ago) and he paid off his current car last year.  I told him to get a credit card - they turned him down for no credit.  Does he have to go the secured card route?  Also, what else can he do?  I really want him to have the option of jumping on something if a great deal pops up.  We have investment money that we could use to help but would prefer to keep that minimal if possible.

We live in Columbia, MO and there are 3 college campuses here with several renowned graduate programs so we feel like the rental opportunities would be strong.

What can he do?

We are using this house as an STR and it's actually in northern Berkshire county but there's no Location selection for that area. I've attached a snippet of our survey. The right of way is for all practical purposes a driveway directly adjacent to our house - the northern edge of our property is in red, the rear (eastern) portion of the right of way belonging to "Kevin" is in green, the front (western) portion belonging to "Randy" in purple.

We have a carport that we want to expand to allow 2 cars but that would go into Kevin's land that is burdened by the right of way.  He has no problem whatsoever with us utilizing his portion of the right of way - but we do eventually need to take care of legalities - I fear the time will come that he wants to sell the property and by then it will be too late to work this to our advantage.  A new owner might not be as agreeable as Kevin's been.

Kevin's willing to sell me his portion of the Right of Way and he and I are the only parties involved.  The front portion of the driveway burdens Randy and he constantly insists on parking there because he claims his deed doesn't mention any right of way.  Both our lawyer and the seller's lawyer have presented him with letters stating the contrary (2020 and 2022). During winter months there's a street parking ban (for snow clearing) and Randy agreed fairly cordially in October to not impede my guests when they needed to pull their vehicle off the street (typically he pulls his vehicle to the very rear of his purple portion, leaving an opening available for our guests to pull in a car.  Then the guests have to get up in the morning and move their car to the street so as to not block him in.

The question is - is it possible and will I be better off if I buy the green land?  At that point should I have the expectation that nothing can impede access to and from the carport?

BTW, I (and Kevin) have exhausted all avenues we can think of to find middle ground with Randy.  And also of note, when I updated Randy of other dates we had guests coming he said I should compensate him for the inconvenience - that I should pay him to not block the right of way.

I don't want to be THAT neighbor but I also have to look out for my property and my business.

Thanks all,

John

Our son and daughter-in-law are currently living in a paid-for trailer in Ft. Worth, TX but they are getting eaten alive by land rental, taxes, utilities, etc. Their roof is in need of an expensive repair and I think they and we are ready to get the heck out and find something much more dependable and sound. They have an interested buyer so might take him up on it. I don't see any way they can pivot and use where they're living to their advantage - but I am a complete novice.

These two people are great and we see the huge potential that real estate investing holds and we're in a decent financial position to help (and we WANT to help we just need guidance in how). We live in Missouri now but lived in Dallas for 20 years so we're familiar with the areas and might have a connection or two - we're just not nearby now. Our son is currently working 6 days a week at a storage facility as general manager and has also worked as a customer service rep for a couple of years at chewy.com. His wife continues to be told that she's either not qualified or over-qualified for everything she's been applying for. I think either or both of them would do very well hiring on with a local (or remote) real estate investor, learning the ropes while doing leg work, making calls, etc.

What can we/they look into that would not rock their boat but allow them to move into something more stable, most likely being able to house hack. A duplex or triplex might be the right fit. The trick here is mostly financial. I have heard endlessly about getting creative, etc. but now that it involves me and my family my mind can't make sense of anything.

Thanks a ton in advance,

John

(For those familiar with the area they live near Hwy 30 & 820)

Thank you for all the input.  

Re: Repairs - I think we will most likely take the "get it rent-ready" approach but first launch a major offensive on what we can from the inspector's findings (it's an 80-year old house left somewhat neglected with a long-term renter).  In addition we'll work on cosmetic as well as functional items, like repair and paint the exterior and interior, do some work in the kitchen and bathroom, and take advantage of many of the MassSave initiatives like adding a heat pump and smart thermostats - for next to nothing.

Luckily we're still in somewhat of the off season so it's the best time to do this work.

We have discussed working on plans for upgrading then put that into motion this time next year then once completed, refinance with a much more valuable property.

Hello all new and established BPs. A conversation in January with a coworker (and BP fan) opened our eyes and here we are - we just closed on a cash-out refi of our primary residence (in Missouri) today @ 2.875% and we're going to use that as seed money for somewhat of a cottage (2B/1b SFH) built in the 1940s in southwestern MA. We're currently under contract and waiting for the inspection report. The plan so far is for us to set it up as a Short Term Rental to both grow equity and cash flow. Our next investment will be less shiny and hopefully more lucrative - this is just what we're comfortable doing right now.

We're really pleased so far with the team we've put together, all seem to check the real estate investment checkbox - CPA, Financial Advisor, Realtor, Lender, Lawyer.

Anyway, I have a few topics that I look forward to hearing input on:

1. LLC: Everything is pointing us to set up an LLC but can somebody help me understand in what state do we set it up - Missouri or Massachusetts? Our lender has provided us with both 25% and 20% down options for LLCs - each with its pros and cons.

2. Property management: The figures I've been seeing ranged from 8% to 12%. So far what we've found is MUCH more than anticipated (20%+) but they appear to be FULL SERVICE and we are nowhere near the property. We realize the number and frequency of property management services reduces from STR to MTR to LTR but currently we think our best bet is with short term.

3. Repairs vs Repairs & Improvements: We see this place as eventually being 3B/2b but we probably need to hold off, considering our initial outlay (down payment, repairs, furnishing, etc.) as well as current rates for construction.  Our realtor said we could either turn it around and start renting it out right away to get cash flowing or we could keep it off the market for a few months and have a really great property that could probably command a much higher nightly rate and improved occupancy (as well as overall improved value).

OK, welcome me to the fold with your best suggestions.

Thanks a ton,

John