All Forum Posts by: Jerry D.

Would you buy a house without an inspection?

Forgot the roof was just a patch job that he said he was going to do. I even called insurance company and their has been no claim on the roof so that is good news.

Have seen this house for at least two years sit vacant and finally this weekend a sign is in the yard for sale by owner. Longstory short look at the house and everything is great but a small issue with roof that needs to be replaced and some carpet. The guy was asking 59k to buy or owner finance for 69k. I told him I was an investor and turns out so is he. Somehow he buys properties in bulk from banks and then unloads them. Some unseen. Not sure how he does this but I digress. The weird part is I looked at the house twice and we came up with a price of 45k if I don't do an inspection but 50k if I do. He says he doesn't want to tie up the house for a period of time incase another buyer wants it. At 45k it is a pretty good deal. At 50 it is still a decent deal. I even offered a 500 option fee so I could do the inspection and he said no. Those were his two prices so take it or leave it. I am sure he just wants to flip it but its weird that I can't do an inspection but for the other price. All foundation looks good only thing that would maybe be a problem is AC could not work though it looks fine. Roof was ok from inside I looked in Attic and I could turn the water on myself. Anyone ever dealt with anything like this. He basically said as is no inspection for 45k and 50k if I want an inspection. House is probably worth about 65-70k.

I am interested in joining a club but don't know where to start. I have heard of lifestyles and been to one event but 10k to join as elite memeber seems excessive. I was wondering if anyone has any more they know about maybe in the Northwest area of Houston?

Thanks Jon that is they way I was leaning. But how does this sound? The only property that is "seasoned" right now has a value of about 60k. The bank will refinance for 70%ltv which means I could probably get about 42k out of it. Closing cost is about 4k so now I would get back 38k. ( I hate that I have to pay 4k in closing cost to access my own money and it will only be about 40k which means the closing cost are costing 10% of the loan. So I was thinking that maybe for just this one property I would do a Heloc on it. Their are no closing cost with that.(rate 6% and yes I know it can go up. It goes up with prime I believe I am getting prime plus 2.5) That gives me some money to put a down payment on should I find another property. At which point I can then still use one of my (fanny/freddy bullets for traditional financing 30 year 5% rates)I would also have one left. In other words I wouldn't need to come up with any actuall cash Out of pocket for the 25% down payment. I also would't be paying a mortgage for money that I have right now for a property I haven't found yet. It could be six months before I find another deal I like. Right now cash is a little tight. (paying my property taxes due before the first of January.)
So the thinking is. If I find a property I use the Heloc for the down payment. (Temporarily-I would pay this back in less then a year.) I then get traditional financing for the rest of the loan. I could do this twice. At that point if I still want to buy another property. I could close the heloc(cost $500) if I close within three years of opening it and do the cashout of it then to get a full mortgage on that property. I would then use portfolio lenders for future purchases or work hard to get my wife qualified on her own so we can go back to using Fanny and Freddy financing.(she should be working next year) (I wonder if I could transfer one of the free and clear properties in her name to boost income?) And with her qualifying we could then buy 10 more properties at which point life would be good.

what a great post. Nice job.

Hey Jon sent you a message. Thanks wasn't sure if you saw it. Not trying hijack thread carry on.

I am in Houston also welcome. Most on here will say that just using principal , interest, taxes, and insurance don't account for stuff like fixing a roof, new ac, or vacancy. I would agree look up the 50% rule. I believe it is pretty close though I manage my own properties so I put it about 30 to 40 %. Some years it will be lower and others will be higher. Banks I have spoken to use .75 x rent -principal,interest ,insurance and taxes. Those that just use first formula that the clubs promote will find themselves hurt when an house needs a new roof. I strive to have about 5 k in an account for each house for emergencies. After that is there then I feel I can pay myself some cash flow.

I have done $25 off of Januarys rent therefore inorder to get the gift they have to pay the rest of the rent. Just a thought.

I think I decided to cash out refi figure I won't be able to get my money out any other way if I buy another house. If I do I can always use portfolio loan or my wife in a year or so.