All Forum Posts by: Hunter Vigneault

It depends how bad it is, but generally I'd say no. I don't know your contractor's plan, but if you try to level the floor by jacking it up you'll cause a lot of issues above it. If the plan is to use leveling cement, and it needed a substantial amount of it, the added weight might cause it to get worse quickly without additional support.

If you're good with renting it slightly below the average in your market and most of the rental homes are a similar vintage, I wouldn't mess with it. Yours probably isn't the only one with that issue.

@Graciela Garcia I haven't had any personal (or client) experience with NACA, but it was my understanding it is a great program for lower income individuals that may not be able to otherwise qualify for a home purchase. It's interesting that they don't have an asset or income test for applicants.

I would also caution that paying points at the outset of a loan to buy down the rate sounds good, but most people - particularly those on this site - do not hold a 30 year loan (or even a 20 year loan) for the whole term. If you front 14k in points on a 200k loan to get a 1.375 rate and then decide to pay it off after 10 years (because you want to cash out some equity with a new loan or sell to buy a larger property, etc.) the effective rate would be 14.56%. Rates are still very low without buying them down and nobody knows what the future holds, so I usually don't recommend it. That said, if you are confident in your own strategy going forward and do the math with scenario planning it might be a good option.

@Patrick McGlinchey Don't get bogged down in the details. If you try to learn real estate law for 4 states before you get to a contract you will never buy anything. Asset protection is important, but you need to balance it against your assets and probable exposure - if you are wealthy and looking to purchase a 300 unit building, that is probably a more worthwhile discussion to have with an experienced attorney and your CPA. If you're just starting out and are buying a duplex, you can probably just buy an umbrella liability policy for a few hundred a year and feel ok about it.

I'm not a lawyer and this is not intended to be legal advice....but think about spending $2,500 on a lawyer to figure out which state's LLC will be optimal for you. If that seems like too much of your investable cash, then you probably don't need to be thinking this hard about it. Also, ongoing LLC/corporate reporting and certification can eat up a small property's free cash flow pretty quickly, so keep that in mind too.

The properties I have bought have largely been in my own name - not because it is the lowest risk way to do it, but because I felt ok with the risk/reward trade off.

You need to subtract out your loan payments, but sounds like a pretty good deal!

Personally, I prefer to use a property manager. I have self managed as a house hacker of a duplex and later as a more traditional landlord when I moved out of the property into another house. I've since moved out of that house (SFH) and switched to using a property manager. I will say that he has been good. If we are starting with the assumption that any property manager we are discussing is a bad one, then I suspect it would never make sense to hire one.

While I acknowledge that I am "leaving money on the table" by using a manager, I greatly prefer the emotional distance it allows me between the property/tenant and myself. Like anyone's answer here, it is a personal decision, but I like to have the distance to make a logical decision and have my property manager implement it. Again, you need to trust that they will do it competently. I likely win fewer deals because I need to get to my desired cash return while factoring in the PM fees.

I am a commercial real estate agent. Anyone can sell their own property, but one of the benefits I feel I offer an owner is being able to be the rational and locally informed go between in what can be an emotional transaction (yes, even in commercial transactions. I once made a multi-million dollar unsolicited offer on behalf of a client to a seller that said he would consider an offer, but didn't want to give any pricing guidance because he felt he would tip his hand. I got a screaming phone call from him because he felt we had insulted him. He is the kind of person that should probably use an agent.)

I'm not sure what you are in school for, but be sure to take an entry finance course and an entry level financial accounting course. Either through your current school program or a cheaper nights/weekends community college. Both will teach you the fundamentals you will need to succeed. You can learn on your own for free - or close to it - but these topics don't always come naturally to people just by reading a text book.

Once you've gotten those concepts down, I think everything else you read (on here or elsewhere) will begin to click for you that much faster.

@Justin Tamayo I don't know enough about your background or goals to say for sure. If you are like a typical new investor, I assume you don't have an especially strong income or deep pockets and that's ok. It is common advice on here (because it is pretty sound advice), but I would recommend looking into househacking a 2-4 unit. I bought a fixer upper duplex in a less desirable area of my hometown using an FHA 203k loan as my first home and investment property. It was "expensive" from a fees and points perspective, but since I was young and had very little cash on hand, the ability to put 3.5% down for both the purchase and rehab was critical to my eventual success.

Also beneficial for a new real estate owner, as part of the 203k process you are required to use a HUD consultant to help verify contractor bids and make sure work is progressing. They also sign off on contractor draw requests, so if you don't really know what you are doing they can help keep a contractor from taking advantage of your inexperience. Mine was good - I assume there is a range.

By taking that route, you can get into real estate with generally preferable terms and make sure you have a personality that fits the task. Even with the low down payment, I was able to gain enough equity through rehab (and a generally rising market - less of an immediate guarantee there right now) to refi out of the FHA within a couple of years and end the PMI.

I assume you are researching multiple markets because your area is higher priced, but I would really recommend trying to find a way to make your local market work for a first entry into real estate. I'm sure there are others who will have a different opinion.

Going back to the beginning of my post, if you do have a strong income and deep pockets you will likely have more flexibility to make mistakes without significant risk to your overall financial health...but I'd still recommend starting relatively small. That is just one person's opinion - there are plenty of forum members that will tell you that you need to take "massive action." Just know that going from zero properties to one is massive action. 

I'll let someone with market specific knowledge answer that, but I assume you are generally familiar and felt it to be reasonable for the area while still fitting your return expectations.

I'd much rather be a little too low and have my pick of well-qualified applicants than be a little too high and hope that the one person I found will work out. That's true for me regardless, but especially in an uncertain economic time. 

@Rob Norris You may still have a similar problem depending on your overall personal financials, but you can try to go for a commercial loan with a balance sheet lender.

You can DM me and I'd be happy to give you a name. No guarantees, but worth a try if you've just been trying for a standard conforming refi.

Put (or keep) the cash in a high yield savings account - personally, I use American Express online, which is still FDIC insured. Having additional buffer these days is not a bad thing.

Paying down debt is good in theory, but if you can't pay off your balance in full then you have expended your cash without improving your cash flow.