All Forum Posts by: John Ford

@Robert Taylor I have not brought the property up with my agent. This is a house I found on my own and was asking here whether I should even bother taking it to my agent to possibly write an offer or let this one go and wait until I get further along with the financing. That's in the first post.

And it's a hot deal for me but I have no idea whether anyone else thinks it's a hot deal. It might go under contract tomorrow or sit for months like the house right next to it, which has been sitting for 212 days and just dropped the price $10k. I don't think so, but I don't know.

@Shaun Weekes I didn't realize banks did pre-approval letters for Lines of Credit, but I'll ask. That would certainly simplify things. Thanks!

Heh, I think they're pretty bright. They worked with me to purchase a different property so we already have a good working relationship. We have not signed paperwork for my current search because I told them I'm going to begin looking in earnest in Q1 of the new year, which is also when I'd planned to have the HELOC stuff sorted, etc... But they still send me market info and info on auctions and such. Then this potential deal fell out of the sky so I wanted to see if it's worth trying to accelerate my plans to see if I can pull this thing together. So if the consensus had been "hell yeah, make an offer then figure it out!" I'd call them up and say, "hey, what can we do here?!" But that doesn't seem to be the case. Oh well. Back to Plan-A.

As with most posts, there's actually a ton of ancillary info that I chose not to put into the original post because I wanted to keep things relevant to the specific topic I'm not clear on at the moment. But I'm pretty clear on my agent's capabilities, thanks.

@Russell Brazil, sorry, I think there's a very good chance I'd be able to close. Otherwise I wouldn't waste my time. But things aren't as cut & dried as having a pre-approval letter for a conventional 30yr mortgage, either. But even then, there's a chance the financing could fall through for any number of reasons. And one thing the golden-child investors say often on the BP podcast is things long the lines of "make the offer, then worry about how you're going to close", which I'd never go that loosey-goosey. But I am wondering how far along that spectrum of uncertainty is considered acceptable. It seems to me as long as I'm upfront with the seller in my contract, I should be fine, legally. But again, I only want to submit an offer if I think it has some chance of being accepted.

@Account Closed said, they'd throw it in the trash.

I'm definitely calling the bank about the HELOC tomorrow. I've been putting it off while I focus on a lot of other things with my rental house, day-job career, etc... but I need to get that ball rolling. I definitely wish I'd done it 2 months ago now. :/

OK, so a deal came on the market within the last 24hrs that I think I may want to make my first as-an-investor offer on. But...I have no liquid funds. Can I make an offer with financing up in the air? Isn't it customary to put the type of financing I expect to use to close the deal in the contract? What if my financing plans are "take out a HELOC which could take 60 days to close and I very well could ultimately be denied for, blowing up the deal." Is it still worth it to submit an offer?

I am working with an investor-friendly agent but I wanted to ask here before I ask them and look like a fool and have them think "this guy has no clue what he's doing" and kicks me to the curb.

Do you know where you made the mistake(s) that caused you to lose money?

Do those monthly expenses include vacancy, capex, maintenance, etc...?

What is your all-in cash acquisition cost and does it include rehab and make-ready costs?

If so, I'd say it's looking like a decent deal to me. If it was a house I liked with those numbers, I'd probably do that deal.

Well, the Beltline is huge. It's now a household name among people who live intown. Well, it is to those who live along the sections that have been completed. Many who live along the unfinished/unstarted sections still have no idea about it or how major it's going to be (which is a great thing, as an investor!) but it's easily the most transformative project in the city in decades. 
It's being completed in phases. Some phases are already completed (paved, parks built, no transit yet) The phase that's being worked on (graded and paved) right now is the Southwest area. 
The first phase completed was subarea 6, which runs through Old Fourth Ward, as well as several A/B neighborhoods. A couple of decades ago, O4W was solidly a D-class war zone. By the time the Beltline got started in earnest, it was a C neighborhood. Now, it's a solid A and one of the hottest neighborhoods in the city, most of it being driven by the development along the Beltline. I own a house in O4W and rode that wave with great success.
Now I own a house is Westview. I'm cautiously optimistic. I don't think the Beltline will be as dramatically transformative but I still think it will be huge for the area. O4W benefitted by being bordered by Midtown, Poncey Highlands, and Inman Park, three already hot neighborhoods. So when developers started building in O4W, it was natural for people to migrate across the invisible borders and O4W became just another part of that class A cluster.
There are already huge redevelopments planned on the south/southwest Beltline. The Murphy Crossing development near Adair park might not be as splashy as Ponce City Market, but I think it'll be close. Monday Night Brewing has already announced a new brewery and beer garden adjacent the Beltline in a warehouse district redevelopment in the West End. These projects are pivotal because they will give people destinations on the Beltline to travel to. Heck, I'm already looking forward to hopping on my bike and riding over for a beer and hardly having to touch a city street.
Once there are destinations, and more and more people begin to use the Beltline, if it's anything like what happened in are 6, it will take on a life of its own. 
The housing stock on the west side is also fantastic. Many of the historic homes rival the homes found in historic class A neighborhoods like Virginia Highlands (just without the meticulous maintenance and upkeep, but they're mostly repairable). Ultimately, I think the West/Southwest neighborhoods will see an influx of young families similar to what's happened in neighborhoods like Oakhurst and East Lake, which have done fantastic and are now out of the price range of many young families who want to live in-town. And the Southwest/West Beltline neighborhoods are far more convenient to get into and out of by car than those neighborhoods, most being connected to either I-20 or I-75/85. All in all, I'm bullish on the whole are. The big appreciation might be 10 or more years out (it took me 11 years to see any real appreciation in O4W, then it all just exploded over about 18 months) but it's just a matter of time. I'm super bullish on properties that will cashflow now and can also be mined for major appreciation capture over the next decade or so.
Ha, anyway, that's my Beltline primer. I could be wrong, but I'm putting my money where my mouth is.

@Scott Jones Thanks for the advice. I definitely like to hear all the various ideas people have for playing this game then pick and choose the ideas that I think will work best for me at the moment. It definitely would have been much better if I'd gotten a HELOC when I still lived in the house. But by the time I decided I was time to give REI a real go, I was already planning to move out so doingan OO heloc would have been fraudulent since at closing, you have to certify that you intend to continue to occupy the home. I wish I'd thought of pulling the equity out a year earlier but it is what it is. Also, the area turned so rapidly (from a C area to an A with the completion of a few major projects and then a spring and summer of crazy renovations and infill building) that there actually wasn't that much equity in the house a little over a year ago. And unfortunately, my new personal house doesn't have much equity since I bought it with a 0% down VA loan.

I did just refi the rental property, no cash-out, at 3.5% amortized over 30 years. But I'm curious about your advice to pull out cash and sock it away. Let's say I'd done a cash-out refi at 4% and socked $100k away. at 100% liquidity in my checking account at .45%, I'm looking at carrying costs of 3.5% on my own money basically. Even if I ladder CD's at about 1%, I'm still looking at paying at least 3% just to hold my own money with limited liquidity. 

I'm a software developer and my time available to do REI is limited. So let's assume a 50% duty cycle on the money where it's being used 50% of the time and the other 50% of the time just sitting there , literally costing me money. Not monopoly money "opportunity cost" but real, cold, hard cash. Plus the hit to my DTI ratios, that I can mitigate with a HELOC, which might make refinancing a BRRRR house more difficult.
So I'm not saying there's no value in your advice, there's tons! And even with what I just wrote, I think I'd probably come out about $1000/yr better doing the cash-out refi. But that premium is worth it to me, for now at least, for the added flexibility and comfort of working with an institution I already know and only paying for the money when it's being put to use.

If you're at all interested in possible appreciation as well as cashflow, check out the Southwest and West Beltline neighborhoods. The neighborhoods of subareas 2 and 10, in particular.

http://beltline.org/about/the-atlanta-beltline-pro...