All Forum Posts by: Joel Allen

@Sharon Carlson

I use a ‘hybrid’ approach to self-manage a small portfolio of out-of-state properties…

I hire a leasing agent to manage all the items up until the point the tenant moves in (photographing the home, listing the home for rent on the MLS, coordinating showings, accepting applications, screening tenants, accepting security deposit, etc). On the tenant's move-in date, the leasing agent meets the tenant at the property, provides them with the keys and a welcome package that I provide, reviews the lease with the tenant, and conducts a walk-through inspection with the tenant.

As soon as that walk-through inspection is complete, the leasing agent officially hands over management to me and I am self-managing for the remainder of the tenant's occupancy.

This 'hybrid' approach allows us to have the necessary boots on the ground during initial tenant on-boarding & exit. We pay the leasing agent a one-time leasing fee once the tenant is placed, and it eliminates the ~10% monthly property management fee.

If I was ever to try to scale to a much larger portfolio, I would use a PM. But that’s not my goal, and I enjoy managing the properties.

@Jordan Moorhead

No connections at Frost Bank.  It sounds like they’re going to start the hiring process soon for its sales and ops teams.

According to the article, they’ll start with a pilot program to open up mortgages to employees in the next few months, and then roll it out to the remainder of customers in mid-2023.

Interesting story I saw in the San Antonio Business Journal today…

At a time when many banks are divesting or scaling back their mortgage offerings, San Antonio-based Frost Bank has announced its intent to re-open its residential mortgage operations after more than two decades out of the industry.  Frost Bank plans originate the mortgages and then intends to service those loans throughout their lifespan, rather than bundling and selling on the secondary market.

Frost is expected to begin offering these mortgages in mid-2023, and the move is anticipated to bring nearly 100 new employees to the bank to serve as originators, programmers, and compliance personnel.

Frost Bank has 155 branches throughout Texas.

Source:  San Antonio Business Journal (https://www.bizjournals.com/sa...)

@Louie Mikros

San Antonio is a solid market...it has the lowest price point of the four major metro areas in Texas.  While SA doesn't have the same volume of large corporate headquarters that Dallas or Houston has, SA has a relatively strong/stable renter pool thanks to strong economic growth, a large military footprint, and tourism.

You mentioned UTSA and the Medical Center areas, which would be good options for a STR or AirBnB. You could also consider a STR near Lackland Air Force Base, which hosts Air Force Basic Training graduations every Friday. Those graduations bring hundreds of family members from across the country to SA for short stays (typically 2-4 days), which drives a demand for STRs.

If you're having trouble finding multifamily inventory, San Antonio does have quite a few homes with 'casitas' on the property that could be an alternative to a true multifamily property.

I'm a lender right here in San Antonio; happy to help if you have any questions.

@Solomon Floyd

Thanks for the information and insight.  In reference to point #1 about interest rates, there is some sentiment in the lending community that interest rates will reduce a bit over the next 12-24 months.  Coupled with home sellers now being willing to entertain the possibility of providing some seller concessions, I'm seeing a renewed interest in temporary rate buydowns.  This provides temporary interest rate relief for the home-buyer, with the hope they'll be able to refinance to a lower rate in the next 1-2 years.

Example:  A 2-1 temporary rate buydown in which a seller concession is made to 'buy down' the buyer's interest rate for a two year period (2% reduction in year 1, and 1% reduction in year 2, with the note rate taking effect in year 3).  

@Keith Blakeney

You’re referring to the strategy that’s often called ‘house hacking’.  A person can purchase a 1-4 unit property utilizing owner-occupied, residential financing (which has advantageous down payment requirements and interest rates when compared to financing for investment properties).

Then, the person lives in one of the units as their primary residence and rents out the remaining units.  The generally-accepted required period of occupancy is 1 year before being able to move onto a new primary residence.  

When you talk to the lender, discuss your desire to ‘house hack’.  If the lender doesn’t understand what you’re trying to do, you’ll want to look elsewhere.

@Yasser Rodriguez

Yes, that's a strategy I'm a fan of. It won't create explosive scaling opportunities, but it's a slow and steady approach. After fulfilling your occupancy requirement, you can convert the home into a rental and retain the existing mortgage. In terms of the LLC, that's a hot topic here on BP and if you search the Forums you'll see a wide variety of opinions. An umbrella insurance policy may be sufficient (vs. the LLC).

You'll want to run your numbers and determine if your current home will perform well as rental.  Keep in mind as you run your numbers that some expenses change a bit when the home converts from a primary residence to a rental (examples:  may lose some property tax exemptions, homeowner's insurance policy vs. landlord insurance policy, etc).

@Solomon Morris

You and I have similarities…both active duty military trying to position ourselves for a successful transition to a real estate-centric career.

In my opinion, there’s no reason not to take advantage of your TA to get a Masters for no (or very low) cost.

I decided to go the route of an MBA with Real Estate specialization.  It allows me to have an MBA which opens up doors in some real estate-tangential fields (RE investment management, RE development manager, etc) while also incorporating a few real estate-specific courses.

@Tamera Muniz

Are you looking to assume someone else's VA loan, or someone else will be assuming yours?

The person assuming the loan must have available VA entitlement, as they essentially will be ‘swapping' whose VA entitlement is being utilized.

Also, the person assuming the VA loan will need to be prepared to pay the ‘seller' the equity amount in the home. For example, if the home is worth $300K but there is only $200K remaining on the VA loan, the ‘seller' will require $100K at the time of assumption to be made whole.

It’s more complex and nuanced than that (approval process, etc), but those are two typical sticking points.

@Brian McGuire

It's possible to have multiple VA loans simultaneously, depending on several factors (most importantly, your remaining VA loan entitlement). The VA loan must be used to purchase a home that you'll occupy as a primary residence for at least 12 months.

One option is for you to determine if you have remaining VA loan entitlement. If so, you may be able to purchase another 1-4 unit property (to serve as a new primary residence) using that remaining entitlement, and convert your existing home into a rental (as long as you've lived there for at least a year). That's going to be a slower growth strategy and you won't be able to scale in the same way as other financing options (DSCR, etc). But it's a steady way to kick-start your portfolio with no/low down payment.

Your VA Loan Certificate of Eligibility (COE) is the definitive way to determine if you have remaining VA loan entitlement. You can either have a lender pull your COE, or you can retrieve it yourself from the VA eBenefits portal.