All Forum Posts by: Ed O.

Yikes.  I assume in your post your rate spikes when your financing goes permanent.  

In my opinion, if the bank won't lock the rate in for the full term (for me 5 years) I won't work with them. Plenty of banks will provide a fixed rate for 5 years, being 1 year for the build and 4 years trailing it. 

Next go round, find a bank that will do this, many do. My call with any banker ends when they tell me there's a rate for the build and it floats until completion. It's doing a massive disservice to their borrower and puttingthe borrower into a bad position.

Word of caution to a newb considering build to rents - beware of bad opportunities to purchase a cheap lot in a terrible neighborhood. Lots of people are drawn to cheap lots, but the surrounding neighborhoods are 99% of the time a very poor match for a new home. 

In other words - make sure the neighborhood is a good fit for a new house. Also, make sure the lot doesn't have costly defects you'll have to pay for to remedy. Good luck!

@Jim Miller

Wow Jim, looks like me and you are members of an exclusive club of users!

That's insane.

Anyone remember the massive Joplin tornado? 

Many people sold early - their lots / destroyed homes..... and got the most money by far. People that held for more got a lot less. 

Buying a fire damaged house from someone that does not wish to own it is "predatory" ? 

I've dealt with fires. In my own experience, if I had a buyer for the shell I had remaining,  I would have been grateful. I had to barter the house and got plumbing work and $1 for it. 

Do you have an example property for this, price, rents, address, etc. This is interesting, but laying 35% down makes scaling tough for most investors. 

Sell the land. 

Pocket 1,000,000. 

If you're out of cash, why take on the risk of building? It's a great way to make $500,000 instead of $1,000,000. 

If you haven't built before - sell and cash out. There's plenty of pitfalls in building and if you've never done it, you're best taking the bird in hand. Making a mistake on your 10 first builds 10x's the cost. That's not to say money can't be made. Given the two choices, take the easier path with reduced risk. 

I had an equity trust account. Working with them was an absolute nightmare. Their status as the king has crumbled over the years. 

I've had great experiences with IRA Innovations. They have their act together.

Early on, you've got an edge. 

Barter your plumbing skills for work from other trades. It will save you money in your early years. 

Good for you, looking to break the cycle. Welcome to the club!