All Forum Posts by: Heath Thomas Jr

Local and happy to discuss!

@Kyle S. Fannie/Freddie have renovation loan products that roll the renovation cost into the loan. The reno typically needs to be completed by a licensed contractor though (in case you were looking to do the work yourself).

@Marshall Hoffmaster I agree with Ned. That is how a lot of successful investors have started. 

To answer your question of what comes next... you can refi into a conventional mortgage after 12 months and do the same thing all over again with an FHA mortgage. Now, it is unlikely you will be able to take cash out when you refi, unless you bought at a great discount or did enough renovations to improve the value; however, if you have other units that are covering your mortgage and then some, you should have no issue saving up the 3.5% again.

The market is also softening a good deal, so focus on trying to get the max 6% seller concessions vs the lowest possible purchase price to minimize your cash out of pocket and set yourself up better for the next purchase.

Quote from @Greg R.:

Quote from @Dan H.:

I understand the value of using since market high versus YOY as the time since market high is a leading indicator.  YOY has increase followed by decrease.  In another 6 months, the current last 6 months will be the first 6 months of the YOY.  The YOY is likely to reflect this downturn very strongly in the next 6 months. 

My question is what is the source of the data? 

I also would prefer to see sold RE used.  I suspect sold data would be even worse (more decline) than list data.  In my market a large percentage of the sales are below the list price.  I was also a little surprised my market did not make the list as the sold price seems to be down more than some of that list (but YOY is still up over 13% according to core logic).  

As others indicated this could be an opportunity, but I am proceeding with caution.  

Good luck

Completely agree. If people want a real YOY comparison, let's do YOY in May of 2023. Market peaked May 2022, so all the people infatuated with YOY can wait until May to figure out what the rest of us already know - which is that prices are crashing/ correction (I really don't care which term is used).  

Agreed. Yes, I understand the purpose of looking YOY, but it is just as important to look at what is happening on a shorter timeframe. It doesn't matter if Austin is currently up huge still YOY when the market is headed towards a brick wall. Odds are the hiring freezes soon, and then what happens with all that development coming online and no one to buy?

First off, thanks for your service. Anecdotally, I have heard Georgetown has a good program and that would fit with your geography. But I would have to agree with @Taylor L. that you should be looking at it strictly from a networking perspective. If you are going to be involved in all the out of class events, etc. it could be a good idea to get your foot in the door for job opportunities. If you are just going to get a degree, you would be better served continuing to get the hands-on experience you're already working on.

@Vincent Russo there is no new rule that you need to put 25% down. The market volatility has caused pricing to get a lot worse, and putting 25% down would lower the points you will pay, but there is no requirement per say. 

PM me if you want to discuss further.

Nice deal! Is this in Crystal City?

Quote from @Helena Wu:

Quote from @Ian Hogan:

Hi @Helena Wu,

I'd say you would usually want a manager that services the area of your rental, since they will have to deal with maintenance, lease agreements, and misc. tasks. Either way they would have to have someone local. There is benefit of having your properties under one management group such as possible lowered costs and good management (assuming you have or find a good group).

You would have options to FHA, 203k (renovation loan), and conventional lending for home occupiers can be down 5% downpayment. Depending on the state they may also have some programs such as first time home buyers, but you can find that out by talking to a lender that services the area you intend to buy. FHA will have some restrictions depending on what your plan is, (e.g. usually you are unable to airbnb in an FHA property, at least for a year or so) However, you can rent out the rooms to tenants.

Some key figures would be to calculate your cash on cash return on investment (CoCROI) and your cashflow. To feed these values you will need the basics of potential rents in the area (can look into current listings, a tool like rentometer, HUD Fair Market Rents, or a local agent), taxes, debt payment for your mortgage, water/sewer, insurance, and assumptions for maintenance, capital expenditure, vacancy, and management fees. Many of these are public information or things you can find by talking to agents, property managers, and lenders.

Older houses are/were built high quality, just different in many cases. There are the exceptions of asbestos and lead paint but that depends on area and can all be addressed. If the visual appeal is the issue those are usually cheaper things to address with paint, molding, and cabinets. Many areas have cheap loans or free loans as options to address the issues of energy efficiency that many homes have like insulation, heating and cooling systems, electrical and paint. This all depends on area, a good agent can help make you aware and don't skip on your home inspection. There are issues with newer homes so I wouldn't necessarily just write off older homes.

Thanks very much Ian! That helps a lot; I'll just go with state B since that's where I'd like to live in the end anyway.

I have another question if you don't mind: I read about HomeReady from Fannie Mae and Home Possible from Freddie Mac. However, for both of these programs I can't for the life of me find if there's actually a page that has a button where you can apply and get pre-qualified through these loan programs. How do they work? Do I have to go to individual lenders still and ask about HomeReady/Home Possible? I had thought that there would be a centralized application system.

@Helena Wu yes you will need to go through a lender to get pre-qualified. The homeready/home possible programs are great as long as you are within the income limits. You can easily search these for the areas you are interested in, but you need to be under 80% of the area median to qualify.

@Charles Brucatocongrats on your first deal! The first step is usually the hardest. Since it sounds like youre living in the property now and intend to stay local, student rentals can be a very profitable asset class. It just takes some more hands on work than your typical rental. A good tip I have heard is make sure you are not at the property when the students and their parents move in, otherwise they will find something to complain about and have you right there saying you will deal with it.

I think your thought process of house hacking your second deal next year probably makes the most sense (and mayyybe your third deal), but if you really want to speed up the process, you should make your goal to have that third/fourth one be purchased outright as an investment property to get the snowball rolling. Do whatever it takes to get as much cash in the meantime. Try to get some roommates to help reduce your monthly expenses. Possibly by the time youre ready for your third deal, you will have enough equity from your first deal to pull some out for your down payment.

Continually house hacking to acquire rentals is certainly a viable strategy, but if you want to leverage quicker, debt will be your friend, unless you can convince some family/friends to invest with you going forward.

It depends if the broker will actually go in the house or just be able to do a drive-by. Did you get additional info on what the BPO would include?