All Forum Posts by: Jason Neff

Thanks. I just sold my first home with long term capital gains after fixing it up and renting it for a year or so. The proceeds minus taxes and expenses are 60k which won't get me very far with cash offers. I consider this a win, but there was a LOT of labor and broken bones that went into that.

For this next home, I'm interesting in a 4br/3ba listing in the NW suburbs that's severely undervalued with minimal updates. This would be a home where my financee and I live for 5+ years and begin to raise a child. It doesn't need to be a foreclosure, but lately I'm seeing more foreclosures that meet this criteria. 

For example, a 4br/3ba 2300 sq ft foreclosure in Maple Grove for 260k. I assume this goes to a cash buyer in less than a week and gets resold for 330k next year after minor updates. Nevertheless, I want to at least try my luck at offering on these listings in addition to anything else that meets my criteria. 

Thanks Bruce. I could deal with 1 out of 30 offers getting accepted. If it's more like 1 in 100, I may be better off looking at different options. My impression is that deals could also fall through after the appraisal, even if there aren't obvious issues. In the past, I used a 203k loan to get past an appraisal repair issue, but that wouldn't be the first choice here.

Were the homes you sold foreclosures/REOs?

Thanks Nick. That helps. 

Hi all,

Can anyone speak to their experience buying foreclosures in the Twin Cities with conventional or 203k loans? Or speak to the local environment for foreclosures generally?

I'm looking to purchase an SFH foreclosure with no major repairs in the outer skirts of the Twin Cities. A few lenders have said they can do conventional or 203k loans on foreclosures and close quickly, though I'm curious what the competition is like for buyers like myself and if local banks/sellers are willing to entertain non-cash offers. I want to believe my initial offer could be stronger than a cash offer, though it would depend more on the success of the appraisal.

Because I'm not in a hurry, I could make many offers until something works, but I'd also like to tip the odds in my favor. For example, it would be nice to have a contact at a bank who sells foreclosures. Or any lender/realtor who can help maneuver through this situation.

Thanks!

Jason

Thanks for sharing Nick. By searching BiggerPockets, I found out that PenFed will do a rental HELOC up to 80% LVT. Called and they seem like my best bet. They didn't have any gripes with my 695 credit score, though I didn't submit an actual app yet.

Thanks for your perspective Stephanie! Surprisingly, my least favorite Midwestern big bank offers a rental HELOC @ 60% LVT. That's not gonna help me, but it seems bigger banks are more risk tolerant to these types of loans.

Thanks, still looking into HELOCs. 

Thanks. The lenders I reached out to said HELOCs weren't available for rentals, but I can look around. 

Hey all,

Pretty new to this forum and RE investing. I'm currently weighing the pros and cons of a cashout refi on my single family rental. 

I bought this rental as a primary residence in '17 for 190k with a conventional mortgage around 3.75% interest. Mortgage, PMI, taxes, etc. amount to $1300 per month. Surprisingly, I was able to rent this out for $2000 with help from a rental mgmt company. After accounting for mgmt, vacancy, expenses, etc. this seems like a profitable rental. The calculated home value is also now close to 300k after minor improvements, though this price is supported by relatively few comps nearby. In a nutshell, this rental is awkward size for the area, and most similarly sized homes are in a nicer county, suburb, zip code, and school district a mile away.

My current dilemma is that I have credit card debt approaching 40k, of which I'm paying about 22% interest on half and 0% on the other half until Fall. I also have useless misc loan debt around 30k at an interest rate of 5%. This debt is partly the result of a couple moonshot investments, which could still pay off. But it's mostly due to renting in an overly expensive area for too long. Fortunately, my income allows me to easily make the monthly debt payments, though I'm unable to save much for future deals -- that is unless I completely ditch saving for retirement, or go into full on PB&J austerity mode.

So I recently started looking into cashout refi's. It seems possible to extract 40k @ a new 220k mortgage to pay off the credit cards. The downside is my refi interest rate would be closer to 5.9% Apparently, this rate was slightly higher due to my 695 credit score, but close to the "going rate" for a rental refi. Even with cancelled PMI, my monthly mortgage/tax payment goes up to $1650, eating most of my cash flow.

The rental would likely break even for the near future and preserve equity, barring a recession. But it becomes less attractive as a long term rental, and that interest will add up over time. The benefit is that I'd have the immediate ability to save more for a future deal, and largely reduce my useless debt. I'm currently paying $1200 on my non mort debt, which seems too high.

Another option is make every effort to sell the rental around 300k. Debt aside, there are a few red flags with the rental like its close proximity to high crime apartments and a recent garage break in. On the other hand, there's new construction going for 400k down the street and a pending sale comp across the block for 340k. The rental also has < mile proximity to nicer homes that approach 1million.

The cons against selling- It's quite possible I get far less than 300k whenever I do sell. I'd owe capital gains unless I due some kind of like exchange (?). Timing is less than ideal as my tenants have a lease through June. Selling the home rented also seems like a questionable deal to investors who are paying over 60% more than I did. I'm also giving up a potentially very good rental property, though better deals surely exist. 

I'm curious if anyone can share other options or add perspective on how to think about this. Obviously, my long term goals matter. I think my ideal next property whether I keep this is a multi family house hack FHA in a less transitional area. Over the next 10 years, I'd like to replicate my job income with as few high quality rentals as possible. In my area, triplexes and quadplex are rare though there are numerous duplexes.

Thanks!