All Forum Posts by: Cara Lonsdale

 It is not assumed that you will be required to show proof of funds, unless your contract stipulates such.  However, if the Seller (or their agent) is smart, they will ask for them in order to validate you as a Buyer able to perform.  If you have an end buyer identified and assigned, I don't see any reason why you couldn't use thier proof of funds letter.  Obviously it would not be used for YOU, but rather for their ultimate purchase of the property.

 Only 1 of you needs to be an agent.  However, there are clarifying questions for each property that you have to answer in order to qualify it as a passive RE investment as a Realtor.  I would check with your accountant or tax person, but I think if you have a PM, it would negate you from qualifying the properties for that classification because THEY are doing the work, and not you.

 Allied is good for an online learning environment!  I used them to obtain my CA license.  

In person is always best though.  You retain so much more, and you get the real life experience of the instructor who will go off book sometimes.  The experiences are what you want to learn, not just the test answers.

Rental rate caps should be easily found on the HUD website, so you can know what your raise goal can be to maximize rental rates. Usually the Tenant has a portion of their own to pay, but you mentioned that HUD pays 100% of the rent, so they must have some type of special voucher or something.

Good for you.  It sounds like you got a good one.

 Your taxes!

All of your properties and their incomes are listed on your taxes.  So, the lender will use that.  IF the property is new, and hasn't been added to your taxes yet, they can take a rate of 75% of rental comps to figure what kind of income that property will provide.  An executed lease will also be acceptable, but be prepared as the lender will only take 75% of that as well.

As long as your properties are cash flowing, and your repairs and expenses aren't tipping the scales into a negative cash flow for the year, they should cancel out their own debt and not show on your DTI.

Another idea is to consider a purchase with tenants already in place.  This way, the income is available for the initial purchas, and not afterwards.  Again, they will only be able to use up to 75% of the rental income, but that should help you too.

 I agree....and I hear your frustration, and can appreciate it.  I HOPE you are able to get some of it.  Keep us posted.

This may just end up being a very expensive lesson in holding the Buyer's side more accountable, more frequently.  As mentioned previously, if those checks and balances would've been in place all along, you wouldn't have gotten this far.  The deal would've collapsed earlier OR you woud've had a stronger case (more proven evidence) to keep the money.

The inspection period will be important to you.  Take a qualified inspector or contractor out there with you to go over the property with a fine tooth comb.

Old homes can provide a great pricing opportunity, especially if you are wanting to rehab it anyway.  However, they can also be VERY expensive if the maintenance has been deferred for too long.  So, just know what those costs will be.

Regarding the bathrooms, you will have to do your research to see if the Tenants in the area tolerate sharing bathrooms.  Something like that would never fly where I am, but it may be a more common practice where you are, so you have to check.  If it's not, then you will have to discuss with your contractor what it will take to add bathrooms (permits, construction, expense).

Keep in mind, when you start touching anything in these places, the city will most likely require you to upgrade other things too.  Once I wanted to add a non-load baring wall in a place, and the city inspector required me to update and add smoke detectors throughout the whole house.

You should be able to collect rent for a prorated December as well!  Check your contract.  It should provide for rents to be prorated and paid out accordingly at COE.

Where can you find a house for $7K?  Wow.  Sign me up.  You can't build a house for that.  Crazy.

One note on your raising the rents. Just make sure that HUD (I assume you are referring to the section 8 program) will allow for the higher rent. They usually have caps on how much you can charge the tenant participating in the program. There may be a TON of room to increase it, but you just have to check. THere will most likely be a process for doing this through HUD.

Congratulations!

@Fred N. No doubt, but what can you PROVE?  Bad faith is very hard to prove.  You will have to prove this to either the entity holding the funds (title co or attorney), or pay for arbitration and prove it to the arbitrator.

I agree that it doesn't hurt to ask for the compromised amount, and maybe they will agree to pay it in order to avoid the same process of arbitration.  However, if they contest, just be ready to lose.  From what you have provided, I don't see you getting the funds.

 This is sound advice.  I would tweak it only slightly.  First, when you start your new job, make sure to take full advantage of their 401K match program.  This is FREE money your employer is giving you to match your saved funds.  For example, they may match 50% of the first 6% of your annual income of $100K (just an example).  That's $6K saved from you throughout the year, and $3K from your employer that you didn't have to do anything for, other than save.  Over the course of many years, this will add up to significant savings that you can later borrow against for a project if you choose, or even withdraw from to purchase a primary residence.

Now, where your $30K comes in would be only IF, by participating in the full match of the 401K plan, your paycheck is dwindled below what you can live on, use your $30K to supplement those savings funds.

I hope that makes sense.