All Forum Posts by: Ian Plocky

Hi there!
I’m looking to buy a single family investment property in my personal name. I was just quoted 7.6%, which I think feels a little high (cited Fannie Freddie new rules from earlier in the year). Can someone point me in the direction of a trusted lender that is offering competitive rates? 

750+ FICO score, 80% LTV, $250k purchase price in GA

@Dallas Sauer, please DM me :) 

@Kaylee Walterbach

Started a Real Estate Private Equity Fund with my partner and turned 2 doors into 15!

@Sid Sriram - great to see another San Diegan!

The truth is... San Diego is freaking EXPENSIVE! And although you want to take advantage of an FHA loan, things to consider:

1. If you want to 'House Hack', you'll obviously need at least two units (or a large Single Family House). These will run you at least 600k in basically all areas of San Diego. And that number is more realistically to be $1mm

2. Even so, you probably won't cash flow! You can utilize the 203k loan and do a rehab with low money down, but a turnkey rental that cashflows in San Diego thats under, say, $2mm is very rare.

3. Even if you found one that was in your price range, and DOES cash flow... you still need to qualify. Having the down payment for these expensive properties is one thing.. but qualifying for the mortgage is another. You'll need to have a pretty high income and no debt in order to do this.

4. Given all of this... I think your 3.5% (before closing costs) on a million dollar home ($35,000) may be better elsewhere. Thats almost $250,000 for a 15% loan on single family home investment property out of state. That would cash flow MUCH better than San Diego!

I love San Diego, I would love to buy here one day. It depends on your goals: are you looking to just not pay rent? Or are you looking to work towards financial freedom via cash flow?

Hope this helps. Reach out anytime!

@Richard Poist - congrats on starting your RE journey!

I think the thing that I was least prepared for was accurately predicting cash-flow from a spreadsheet. What they say is true - if you find a smoking hot cash-flowing 4-plex in a cash-flowing market (say, C are)... you're going to have vacancies! And possibly, a lot of them. Youre going to have bad tenants, and possibly - many times! 

I live in Southern California... while its a pretty tenant-friendly state, the "Class" and income level is so high - I rarely see REALLY bad tenants and don't know any friends or family that has needed to deal with an eviction. 

However, in other markets... that's just not the case. Be EXTRA conservative with your numbers. And at the same time, the only mistake you can make in Real Estate is not starting earlier. 

Hope this helps. Reach out anytime!

@Blake Morton, my vote is always to keep. 

In the longrun, you will never regret keeping Real Estate. In addition, your 30k cash-out is not taxable - but your sale profits are (even if tax-deferred through 1031). 

I agree with @Timothy Boyd that your DTI shouldn't be too high. You can even play with some numbers on DTI calculators and ballpark estimate where you will be after your Refi.

Cheers!

Hey @Jonathan Buelow, 

I guess my immediate response is: What is your degree in? Is it something you like? Is it a scalable job?
I think you can get up to 60-75k by taking a job you may not even need a degree in: sales, real estate agent, etc.

If you believe you can make ~100k from your job in 2 years, that may be the route to go. But if you worked for the next two years, tried to score near 75k, and then could qualify for a VA owner-occupied ... that may be the best route.

Hope this helps. Reach out anytime.

@Corey Pascuzzi, 

Is this the first time? Are the tenants long-term?

My thought is always: how can I expect the best tenants, if I myself am not the best landlord? 

If the answer to the two questions above are both "Yes", then I would pay to fix it and then go get them a couple drain-cleaning sticks (linked below) so that they can hopefully do it themselves next time. 

https://www.amazon.com/Flexibl...

Hope this helps!

Hi @Jalen Ping, 

Congratulations on getting started in Real Estate! How impressive that you are starting so young. 

See some additional thoughts below:

1) Yes, like others said - you can find a partner or co-signer. I may approach a family member or other close friend who you believe brings the "qualification" peice to the table and offer them a % of the cash-flow as a partner in the deal. "Hey, I have the money down but can't qualify. You can qualify like crazy, but have no money down - would you be interested in going into this deal with me". One thought I do have is that its often hard to form these kinds of partnerships using the FHA loan. They typically will only let one of the partners owner occupy if the other partner is an immediate relative. Something to check and consider before you reach out to partners. Maybe you have enough down for a conventional loan otherwise, so that wouldn't matter.

2) Another option would be to form an LLC. You won't be able to purchase an owner-occupied house, but you would be able to start to look at other kinds of properties. For instance, if you can find a cash-flowing 5-unit building - as long as your credit score is good, and the property meets the banks due diligence processes (via a DSCR; debt service coverage ratio) - then they will lend on the deal. At least this way, you could due a little loophole around the empolyment stuff. Most self-employed real estate investors that actually may have a hard time qualifying for a primary residence in their name because of their self-employment take this route via the LLC and commercial buildings.

3) Another option is to look into syndications and/or real estate funds. Sure - you won't get the hands on experience of owning your own duplex, but a lot of these synidcations/funds can provide great returns, via monthly or quartlery distributions, and require a small investment to obtain shares of a diversified portfolio. Feel free to reach out if you want to explore this option further, as I can help walk you through the various kinds of funds (core vs value-add, private vs crowdfunded, etc). 

Hope this helps. Reach out anytime.

Hey @Andy Acosta, 

Congrats on taking the next step in your RE journey! You mentioned the due-on-sale clause. The due-on-sale clause is from your original mortgage. However, if you decided to refinance, then you are technically getting an new mortgage under new terms ( and possibly, a new due-on-sale clause/terms)

So for example, let's say you have an FHA loan in which you have to owner occupy for a year - correct. If after 8 months, you decided to refinance with another lender in order to get an investment loan in which you don't need to owner occupy, then the NEW lender will pay off the old lender. So sure... the next four months you may not live in that house (and meet your year requirement from your previous mortgage), but thats an irrelevant point because that loan was paid off. 

Hope this helps. Reach out anytime.