All Forum Posts by: Jonathan G.

I would probably not recommend investing any further then an hour away from where you live for your first deal.  There is a lot to learn on your first time around and it would be very risky.

@Pratik P. I am sure there may be some creative finance that you may be able to figure out how to get into it with less then 20%-25% down, but I am not so familiar with that. I know that if you wanted to live in one of the units you probably could do an FHA and then you would not have to put as much down. But I will let someone else speak to that.

You could find a private investor and ask him for the 25% to put down.  He would have to have his name on the note but if you worked out an interest only loan for about a year at somewhere between 7%-10% on 85k and then refinanced him back out at the end of the year maybe.  

There is a great on BP that may be helpful as well.  The Book on Investing in Real Estate With no (and low) Money Down By Brandon Turner.  Hope that helps.  

Again you will get a ton of advice on here but i thought I would give a crack at it for you.

I am sure you will get a ton of answers on this. I am relatively new and I am using separate bank accounts for all my transactions. I currently own one SFH and am getting ready to rent out my current home. Another system you may want to look into would be rentmanager.com. I have not begun to use it but it looks like it would be an awesome management system.

Here is a cool link that allows you to play around with your mortgage rate.  The 5/1 arm is on a 30 year term by the way.  You can add your rate that you have now and see where your principal balance is at 60 months vs where your principal balance would be with the 1.9%.  You can also add extra payments and such.  I use it to play around with for different scenarios.  Hope this helps.  https://www.dropbox.com/s/alvj8dwkh12rnd0/Sample%20Mortgage%20Calculator.xls?dl=0

@Lauren Daly Hey, there! I am from Tyler as well. I live in Knollwood off of Old Jacksonville rd in South Tyler. My wife and I are currently building a house across from where we currently live. It will be finished before Mid June. We also had PMI on our current house and when we move into our new house we will be renting out our current house. I made a great connection with a credit union in tyler, called Teachers Credit Union. They are offering an amazing 5/1 arm for 1.9%. We are closing in a few days. We did that so we would cash flow more when we rent out our current house.

 The qualifications at the credit union for a refi was if you had credit score of 680 or better you would only need 10% equity in your house.  If you have lower then a 680 you would need 20% equity in the house.  

I know not a lot of people like 5/1 arm's but this interest rate was so low and when you see how much of your payment is going to your principal during the 5 years it will amaze you.  So we decided to take advantage of the banks low interest rate for 5 years while we rent it out.  At the end of the 5 years we will have paid down so much principal.  At the end of the 5 years we can either modify and avoid closing cost all together or refinance back into a 30 year fixed.  If we decide to sell at the end of the 5 years we will most likely do a 1031 exchange into another property so we will not have to pay any capital gains tax.  That will allow us to keep all the profit and buy into something bigger.

Our house was worth about $187,000 and we owed $147,000 on it.  Closing costs was about $3500 which we wrapped back into the loan.  

I have a great contact that there that I can pass on to your if you are interested or if you have any other questions about it.  Send me a message, I would love to help anyway I can!

@Steve Dye, Thank you so much!  That has been my concern.  I think I have a good relationship and I think with the other investment that we did with our non profit organization, just made more sense to him because our Non profit put $200,000 down and he had first position, plus it was in one of the best area's in our city, and I think I made a convincing and honest argument for his money ;-).  I also was able to establish a very good relationship with him and his money during those two years while we worked with his $575k.  

I have heard that most of his deals with people who are trying to get into a house, but are unable get financing, he usually wants them to have at least 50% down and charges them 10% interest.  So the deal he did above I felt was a huge win and was very grateful for it!

Now this is a little different because of what you pointed out.  I will try and give you the best breakdown of the deal and maybe you can give me some options to maybe sweeten it or not lose it but at the same time of course I want to make as much as I can.  But I really want it to be a win win.  Obviously he would have the lien on the whole deal as collateral.

If comps are correct and we feel pretty good they are, houses in the area we are looking at are selling between $145 sq ft and $150 sq ft for new construction.  That being said, the land is $96k, we also have an opportunity to hold 4 or 5 more lots and have first option to buy for $6,000.

We figure on building a house between 3,500 sq ft to 4,000 sq ft.  The builder I am working with feels he can build it for $100 sq ft.  So the amount of money for the build will be $350k to $400k plus the cost of the lot and option on the other lots $102k.  So total from the investor would be anywhere between $452k - $502k.  

Profit in the deal before interest paid out to investor would be between $73k-$98k.  The builder believes he can finish the build and the final draw request on or before month 6.  So if we borrowed $452k at 5% interest only, at month 6 we would of paid the investor $6,779.  We are hoping to sell before month 8.  If we do then we will have paid the investor $10,545 but if we don't and we go all the way to month 12 and then refinance out of the deal, we will have paid the investor $18,077.   

Possible Profit

6 month - 73k - 10.5k (Intrest) = $62.5k

12 month - 73k - 18k (Intrest) = $55k

I have talked briefly with the builder about a 50/50 split.  So $27k-$31k would be my profit.

Again, I am open to any feed back and maybe another way at looking at this.  I really appreciate any input.  This will be my first deal.  

I obviously want to get the best deal I can but I also know that I need to make sure it is worth this investor's time.    

@Steve Jones, Thank you for your input.  I would not be putting any money into the deal.  What I would be bringing to him would be the opportunity of 5% and a quick return on his money.  Of course he would have first position on the deal.  I asked him if he would buy the land and he said he would but he would have to have first position and he told me that no bank would give the loan for the construction unless they had first position.  That is when he said, why don't you come back to me with an offer and I would be willing to be the bank for you for the whole project.  So I am trying to figure out the best way to approach.  Any advice would help.  I have not spoken with him as of yet.  I feel I have one shot at it.

@Charlie Fitzgerald thank you!  That is kind of what I did with him when the non profit organization I work for needed a private money loan on our new construction.  I spoke with him for about an hour and he loaned us $575,000 for 7.5% interest only while construction and then after we finished the build it would amortize out for 30 years with a 5 year ballon.  Of course we had about $200,000 already into the deal and he had first position on the whole deal.  But we have worked with him for about a year on this with the draws and it has been a wonderful relationship.  During that time he saw how we handled the transaction and I feel that has opened doors for me to reproach him regarding our personal venture we would like to do.  I just want to make sure I don't come off sounding like an idiot lol.  But then again when I met with him the first time I just asked him and he said no problem so I think your advice would be correct to just ask him again!  Thank you!

Need some advice on how to pitch a deal to a large investor!  I have a history with the guy, and he has already given me a private loan for a construction deal I worked out for my job.  He is more of a pen and paper kind of a guy, and when I talked generally with him he is willing to hear me out on possibly investing $400-700k to act as a bank for my builder/partner and I on a deal.  

My parter and I are looking at purchasing a lot for $102k and then building the house on that lot for $350k so we would be looking to borrow about $452k from him (we have run the numbers below based on a padded $475k).  My partner can build the house in 6 months and we have drawn out a tentative draw schedule and the corresponding monthly interest payments based on our proposed 5% interest rate.  The proposal to the investor would be that we would use his money for up to 12 months and pay him the 5%.  If we hold it for the whole 12 months his total interest paid would be about $18k.  We are thinking based on my partner's extensive experience and our understanding of the market we are building in that it is realistic to think that we would sell the home by month 8 of the project giving the investor approximately $10k.  

I need help figuring out how to communicate this to my investor.  

Hi all!  I have a quick question to throw out.  We are just closing on our first rental property this coming Friday!  I have been through the Forums, and it seems like Quickbooks is what is recommended for keeping up with the accounting side of your business.  I use the Online version for work so I am familiar with it.  What I am not sure of is whether we should do the SimpleStart version for $12.99/mo or the Essentials version for $26.99/mo.  I am thinking it would be Essentials because then you can pay bills online, but if your bank has that feature and you can just have all your bank entries downloaded, I am not sure if that is necessary.  Anyway, what do y'all use? :) 

Thank you!