All Forum Posts by: Joseph Cacciapaglia

I'm not sure I completely understand what you're asking, but VA loans have a streamline refinance process that makes taking equity out in the future pretty easy and affordable. However, you can't buy a fixer upper with a VA loan, so I'm not sure about the BRRR strategy. You also can't refinance with the VA loan once you've moved out. I bought a few of my past investment properties with VA loans. I lived in them initially, and then used them as rentals once I moved out. If you do build up equity over a short period of time, I would rate and term refinance into a conventional loan, and then move and use the VA loan again. You do have to move into them and live there for some minimum timeframe.

I know quite a few people pushed back against @Sharon Steenbergen 's suggestion to get a professional property manager, but I completely agree with her. My first investment was a duplex that I lived in. I didn't hire a manager until my second year, but I wish I had. Living next door is a great way to find out how well your property manager is doing. I am not a hands-on investor. I like to have everything done for me, and I just work on making deals. If a deal can't support a 3rd party manager, then it's not a good deal imho. 

Some people like to be a lot more involved in the management, so for them it makes sense to start with one that they live in. That just didn't work for me. There are a lot of ways to be successful in this industry, and you need to assess your strengths and just focus on those. You can hire for all your weaknesses, just be sure you vet your vendors and get good reporting. I've worked with investors with hundreds of units that have used 3rd party managers from day one, and probably couldn't change a light bulb by themselves. You have to figure out what is gong to work for you.

@Account Closed in that case, it may make sense to mention to him that you would be interested at this point, but don't really give him the hard sell until that external pressure kicks in. Lot's of people facing delinquency can maintain amazing denial until the very end. Of course, I would still be wary of all those other issues.

Whenever someone says they'd rather sell to their friend than me, I like to ask why they haven't done so already. This is often pretty telling. I also like to ask them what it would do to their friendship if that person didn't perform on the deal. People often don't think about that ahead of time. Is it worth the risk to their friendship?

It's great that you're also figuring out the exchange information up front. If you come across as the knowledgeable professional, that can often make people feel much safer than going with their friend. 

There will be a big difference with the financing available depending on the property type you're looking at and the price range. If your loan amount is going to be below $1MM, you should primarily seek out banks that are local to wherever you are investing. There are some national small balance lenders that will loan those amounts, but I've found local banks are more interested in these "small" deals. If you are looking for over $1MM in loan amount, I would check out Plum and Axos. They both have a small balance programs, and from my experience are happy to educate new borrowers.

What states are you looking into?

Depending on how bad he is, you could run into real problems getting him to move out prior to closing. I've run into sellers that were relatively motivated to sell, but couldn't get their stuff packed up to move. The volume of stuff is too great to pack in any reasonable period of time. If he has a real disorder, he probably isn't just going to throw everything out. People that get an attachment to things are also likely to overvalue their personal residence. It's their largest possession after all. So, I'm not sure you're more likely to get a good deal from him than anyone else. However, once he has moved on, if it remains full of stuff, then there might be some real possibilities.

Also, if he really has a disorder, he may not have the ability to negotiate with you. You would need to be sure that there isn't someone else that handles his finances. I was involved in a deal where the supposed seller didn't actually have the capacity to sell, because they had been deemed incompetent. That was a mess. Now if I even suspect there is some real impairment, I look into that issue first.

Other than being behind on his HOA, what makes you think he'll be motivated to provide a good deal? Is he to a point where he's in danger of getting foreclosed on by the HOA?

Is the UPB greater than the property is worth? You can't just set the reserve amount without records supporting it. You are correct on doing due diligence on prior liens. You should also check that the seller has proper chain of ownership of the mortgage. There are a lot of issues that can delay or stop your foreclosure from happening. Just because the original borrowers are deceased, doesn't mean no one has standing to challenge the foreclosure. Is there a right of redemption in your state? You should definitely hire an attorney to conduct the due diligence and talk you through the foreclosure process. There may be a lot more uncertainty than has been presented to you. FYI, I'm no longer a practicing (or licensed) attorney, so none of this is intended to be legal advice. These are just some of the issues you want to get clear on before trying something like this. If it's really just 60-90 days, why not buy the home at the foreclosure sale?

If the heirs really want nothing to do with it, and there aren't junior liens, you may be better off paying the estate a nominal fee for their interest in the property, and negotiating a payoff with the note seller. This could take a lot of time and uncertainty out of the process, depending on the answers to all the questions above.

Are there any restrictions on STR/Vacation Rentals and is there demand in your area? We do really well with very large short term rentals in my market. That way you don't have to cut up a beautiful old property.

You caught my attention with that headline! Investing in San Antonio, TX is my favorite topic. I little more detail in the question would be great though.

A lot of my clients are doing well in the San Antonio suburbs headed towards Austin. Towns like Selma, Converse, and Universal City have both small multifamily and single family deals that have been appreciating well, but still are priced to cash flow. There are also plenty of spots within San Antonio that are doing well too. Near the Pearl and in the Med Center are two areas that are doing very well for STR/vacation rentals.