All Forum Posts by: Jacob Scholes

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $450,000
Cash invested: $5,000

Purchased this home to live in, then rented it and moved out just over a year later, this is my second deal like this, according to Zillow I owe about what Zillow says its worth but I got it at a good rate, although it was at the peak of real estate right before everything dropped and rates started increasing. I'd probably loose money if I had to sell, but I don't intend to and I'm not loosing money on it now. I wish I could edit it but it probably came out to 15,000 total cash invested to get the place in a good place to rent, 5,000 was just the initial amount we put towards the loan.

What made you interested in investing in this type of deal?

I like that new builds don't require a lot of maintenance (although we had to put in a yard which was more than I expected). I also like that these newer homes attract quality tenants, I may be lucky but haven't had any issues with any of my tenants in these types of homes (yet).

How did you find this deal and how did you negotiate it?

I worked through a real estate agent that I trust and we got a deal that worked out.

How did you finance this deal?

VA loan, very close to no money down, but we did pay a little out of pocket to cover

How did you add value to the deal?

being a new build we had to add some basics, like blinds and a yard (including a sprinkler system that I installed myself, I learned a lot there)

What was the outcome?

So far we are cash flowing and I am optimistic that the market is going in a good direction

Lessons learned? Challenges?

I learned that I like newer builds, they weren't overly hard to put tenants in, but i did learn that I need to budget more for landscaping up front if its a newly built home.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jacob Thurston from Shadow Mountain realty was great.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $342,000

We lived here for a year then did a refinance from my VA loan to a conventional loan so that I could use the VA loan to purchase another house to live in while we rent out the first house. We also tried hosting on AirBNB for a few months during the summer, while that worked out, I think we'd want one in more of a vacation destination to do it long term.

What made you interested in investing in this type of deal?

I wanted to buy a property that my wife and I could live in as I transitioned out of the military.

How did you find this deal and how did you negotiate it?

MLS, we were long distance before moving so we found an agent that would do video showings.

How did you finance this deal?

VA Loan

How did you add value to the deal?

we didn't, but the market gave us 25% equity after a year, so we were pretty lucky.

What was the outcome?

we are in the process of buying our send house and listing this one for rent.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jake Thurston seems pretty good at dealing with VA loans, he is our agent. David Allen is a good mortgage broker, he was good at working around any issues we ran into funding a deal.

Thanks for the reply @Bill Exeter ! I am also interested in @Daniel Dietz question. Also if my parents stayed on as part owners would they be hit with the tax bill or could they wait and do the 1031 exchange when I refinance and finish buying them out?

I'm looking into purchasing a duplex from my parents. I had been looking into buying it from them next year on VA loan, and they would do a 1031 exchange to buy a new property..

since we have an uncertain future with interest rates and the election i'd like to purchase sooner.

My parents mentioned we could look into owner financing by doing a cash out refinance and putting my name on the loan and paying them our downpayment separately. We would refinance in the future to get the loan in our name alone.

This would give them more time than allowed if they had to do a 1031 exchange because it has been hard to find deals in utah right now.

Would they have to pay any taxes on the equity they finance out of the deal?

Has anyone else done something similar or can offer any advice?

$480,000 off market

most recent sale in neighborhood $520,000(3 years ago)

sfr or convert to duplex

VA financing, live in 1 year

Hello everyone, I am looking at an off market deal in Santa Rosa California. A good friend of my father in laws has offered to sell his house to us at a discounted rate if he can avoid listing it and going through the hassle of dealing with a real estate agent.

Homes in this neighborhood do not sell often and have not sold for less than 520,000 and that was 3 years ago. (based on sold homes on Zillow)

He has offered it to us for 480,000 and is moving to retire in about 2 or 3 months.

it is a single family 3 bed 1 bad and has a carport that needs a garage door to enclose and become a garage.

The house is about 1000 sq ft and has just been remodeled. (new bathroom and kitchen) the only thing we'd possibly do is pull up the carpet and re finish the hardwood floors underneath.

I have experience remodeling homes( I worked as a framer and helped my dad remodel homes as a teenager as well).

the house is about 60-70 years old but in good condition.

I plan on financing with a VA loan but might consider traditional if my father in law has his property sell and go in with him as a partner.

My question is does this look like a good a good deal as a live in that we would be renting in about a year? (possibly a roommate before)

We are also considering converting the place into a duplex with and adding a bathroom for a 1/1 and a 2/1 or 3/1 and a studio(converting the garage).

If you were in my shoes would you think this is a good deal?

Houses in this neighborhood

Here is an article that I found on the Veteran's United website because I am trying to do the same thing:

https://www.veteransunited.com/valoans/va-rehab-loans/

The article states:

"Here's what you can do:

• Repair or add new windows, doors, or siding
• Repair or add new roof or gutters
• Install new HVAC systems or water heaters
• Improve insulation
• Weatherize
• Treat mold, lead paint, or mold
• Make updates to improve energy efficiency
• Repair or replace the flooring
• Repair or replace electrical or plumbing systems
• Accessibility updates

In general, the project has to improve the property's livability and value and must become a permanent part of the home."

If I understand it correctly it is primarily to bring the property up to date and to repair damaged parts of the home. Although maybe a loan officer would be able to answer this question on a more personal basis.

One thing I find ironic is that the Loan officer I am working with from Veteran's United told me that a VA renovation loan isn't something they currently offer.

Which brings me to a question:

Which lender are you using that offers VA Rehab/Renovation loans?

@Daniel Lehman How do you prove projected rents? is it with a tenant currently in place or can they use comparable market rents for the area if it is vacant? I am Active duty Coast guard and already preapproved for a VA loan.

Interesting, I will have to talk to my loan officer about this. We are currently in the San Francisco Bay looking to buy our first property. A fourplex would be awesome if we can pull it off!

Yeah, I actually reached out to my agent to slowly start a conversation about finding a new agent and she beat me to the punch. She said she was thinking about referring us to another agent that works closer to where we have been looking lately. We have been looking in Fairfield, CA. I told her to pass our information on but that we would be talking to a few different agents as well to find the right fit. It was a lot easier than I expected without any confrontation.

It appears I am for sure now in the market for a new agent. Any recommendations? 

I am basically looking for someone that has worked with investors and VA type loans.

My Wife and I are looking for a home to House Hack, but with a limited supply of Multi Unit Properties in the Area we have been mainly looking at Single Family homes.

One idea we've had is to convert a Garage into a second unit, my question in this regard is will it decrease the value of the home in the eyes of potential renters if there is no Garage?

If my math is right you could almost double a properties income potential by adding an Accessory dwelling unit which will probably cost less than 10-20% of the initial home purchase price.

Example:

SFH purchase: $400,000 renting at around $2,100-2,500 (after about $5,000 updating)

Garage Conversion: 25,000-100,000 (maybe less if I can find one with a bathroom next to the garage)

1 bedroom renting near Fairfield CA: $1500 month

A lot of these numbers are idealized but this could bring the Property near to the 1% rule.

400,000+25,000+5,000 = 430,000

(2500+1500)/430,000 = .93%

Now if we get this to work and we take it a step further and add a second ADU to the backyard for 100,000-200,000 we could add a 2 bedroom and add more income

total cost: 430,000 + 150,000 = 580,000

rent for 2 bedroom: 2,000

Total income: 6,000

6,000 / 580,000 = 1.03 %

Do these number look relatively reasonable to anyone that has more experience with adding adu's in California?

I am basing the rents on some properties I have analyzed in Fairfield, although the one that originally based it on was put under contract by another buyer before I could get my offer in.

I know some may say you can't just add units, but with the passing of SB-13 and a few new laws in California for 2020 this is now possible.

Am I overlooking something?

Thanks for any input that you provide!

Feel free to add constructive criticism or offer alternative solutions.

Thanks!