All Forum Posts by: James H.

Looks like a solid deal even if you do have to replace the roof and the heaters in time. Let that rent pile up, what is actually left after paying for real time expenses, and you will be in a good position to replace those systems as they fail.

FWIW, if you can self manage and take care of maintenance, you really save a lot of money. I have a drippy faucet that I am going to repair nest weekend. For me to do it, $30 and time I would have probably spend relaxing (3-4 hours max including drive time and farting around). For a plumber, $150 and for the PM to call the plumber, $50.

In Texas, foundation lifetime warranties typically imply lifetime of the structure and if the seller is advertising it, most likely it will transfer to a new owner. Of course you should verify, but that is typical. These warranties came into existence a long time ago because 90% of these repairs require future adjustments. How do you know if you need an adjustment? You doors start sticking and your sheetrock starts cracking. The warranties will not typically cover damage that occurs to other items than the foundation, such as but not limited to sheetrock and plumbing, that occur due to future movements. The warranty covers the cost to re-level the foundation and then you fix everything else. Soil movements are extremely common in Texas, but even so, I am not very turned on by these properties. You can find houses that don't have issues.

The downside is that they will not be willing to pay as much because they will need to make a profit when they sell to the next guy. "We buy houses" folks are usually just wholesalers. Although I have met some that buy and hold. Many are buy and rehab as well.

We don't have enough info. For instance, you say you have 60K equity in your home. Is that because you have added value, it has appreciated, or because you have been paying on it for a while? If the answer is the latter, you could refi for a lower payment and not incur extra debt. That ould help your dti. Any smaller, shorter term loans like credit cards and car loans should be paid off if they are interfering with your DTI level.

If you buy rentals for cash, you WILL have to wait a couple years for the banks to consider those incomes for traditional mortgages. I would look toward this strategy maybe in combination with paying off any consumer debt you may have. RE is a slow ramp up for most people that get involved and if you purcahsed only one or two properties in your first two years, that would be on par with most in real life if not on this forum.

Unless you can find comparable rates to traditional 30 year financing, I would keep creative financing in your back pocket until you have exhausted your traditional financing means. I would sacrifice cash to get a 4 percent, 30 year mortgage over keeping cash and getting a 7-8 percent portfolio loan with a shorter amortization without a second thought about it. You should be able to get 4 conventional/FHA/VA type loans pretty easily and 6 more with a bit more of a fight. There is nothing wrong with creative financing, necessarily, but anything other than traditional bank financing usually has you paying higher rates, higher downs, lower returns, less control or some combination thereof. The disadvantage to traditional financing is that you need to have more skin in the game in most places.

I would not spend all your cash if you can help it. Whatever you did to accumulate that cash, I would keep on doing that as well.

If you are eligible for a VA loan, you can get your DTI up there in the mid 50's if you have enough "residual" income.

You can compare at 28 yrs vs 28 yrs or you can compare the 2 rates both at 30 yrs - either way is fine.

I also look for what gets you the lowest APR. As you pay more points, your APR does not drop proportionally to your interest rate. I agree that the closer your APR is to your interest rate, you tend to be getting closer to the sweet spot.

Actually, your job is your biggest asset in terms of ability to acquire loans. Yes, you will have to work harder to find better deals and start on a smaller scale than your cousin simply because you are not working with as much capital up front. Also, you will have to be more careful as you won't have as much W2 income to heal financial wounds from mistakes. It might take you more time to ramp up. If you double your money every time you make an investment, you make a lot more when you start with 100 dollars vs 10 dollars. But it is great to start at any leverl - even 1 dollar.

However, anybody making 30K a year or more is in a great position to get started in RE. In fact, RE is one of the safests routes to wealth you can take. The success rate in RE investing is much higher than success rates for startup businesses.

Holy crap. Mind all this kind of minutia and never accomplish anything in your life.

The difference between 4.0 and 4.25 may be neglible.

I look at it as a cash on cash return analysis. If you spend 2500, for example, to lower the payment buy 15/month, that would be a "COC" return of 15*12/2500*100 = 7.2 percent.

When I bought my personal home my inspector didn't even blink an eye at "open ground" in the 3 prong outlets that are hooked up to two wire cable.

Just pull the plugs that have reverse polarity and change what side of the plug the wires are hooked up to. (black goes to gold, white goes to silver) You don't need an electrician to do this. Just turn the breakers off before you start. If you want, you could switch to 2 prong outlets, but I wouldn't spend the money on GFCI's.

This buyer clearly needs to be educated that any house of the vintage in Texas which he is shopping will have these types of circuits without a dedicated ground.

I own two 1950's houses and am under contract on a third and they are all wired without a dedicated ground.

It will vary, but I would expect around 3 to 5 thousand.If you have an FHA loan, you could do a streamline much cheaper.