All Forum Posts by: Jose Thompson

Like @Drew Sygit said, the 203(K) loan seems like the way to go. Only 3.5% down, and will fund purchase + rehab costs. And it only needs to be your primary residence for a year after your close date.

It's a government-backed FHA loan, so I've heard from a person who has used them that there are a number of requirements that differ from conventional loans. So the lender he used the first time said "no problem" when he mentioned the 203(k) loan, only to realize later that it was more complicated than he thought. His recommendation was to find a lender who is familiar with them. You can search for lenders in your area that actually do these on the hud.gov website.

Other than that, a private loan from someone you know. 

@Patti Robertson @Daniel Paloscio @Jesse LeBlanc

Do either of you have an assignable VA contract that I can use? Or can you let me know where to get one? The purchase contract and assignment for I used in AR way back in the day were from a mentor I had at the time. I want to make sure I'm using a document that's tried and true - not some generic Office Depot contract.

I'm sure that title companies that are experienced with wholesaling are also a big part of the equation. Do you have some title companies that you work with that you recommend?

Thanks so much for your advice. I'm just not getting back into real estate and I want to make sure I'm doing things the right way. 

For those of you who are familiar with wholesaling in Virginia, what is required to do so? Do you need a special contract for this or a separate assignment form? Do you simply write in "Your Name and/or assigns" under purchaser?  I can also ask a title company since they would be familiar with how this is handled but I figured I'd start here.

I used to wholesale in Arkansas back in 2008-2009 and I used a generic purchase contract with a separate assignment form to go with it. But I've never done that in Virginia so I'm not sure if the rules are different. There are a couple of abandoned properties I've spotted that I want to tie up. I'd keep one or two for myself as rentals and assign the rest. 

@Doug Pretorius @Joe S. @Chris Seveney

Thanks for clearing that up, guys. 

The lack of money has been quite the hangup for me. Or maybe it's what I've been telling myself out of fear. But I need to get over that. 

Private lender or hard money seem like the way to go. I also have like $150,000 in equity that I could use now that I think about it. And it would be way less expensive than hard money. 

Hello, everyone.

I've heard plenty of interviews on podcasts where investors buy real estate with 80% bank financing and owner finance the remaining 20% of the purchase price essentially getting you into the deal with no money down. However, a local loan officer told me that I'd have to put 20% down of the amount financed regardless of the LTV. So based on what he is saying, even if a property is worth $100,000 and I buy it for $50,000 for it I'd still have to put $10,000 down (20% of 50K).

Is this correct or did he misunderstand my question? Does this only work with multi-family? Prices in VA are a bit high so I was banking on the fact that I could use this creative finance strategy to get started. But if this is not the case I'll have to try something else to get around the large down payment.

Thanks in advance for your help.

This depends on who you are trying to attract and the area in which the properties are located. What is typical for the area? If most houses have updated kitchens new cabinets, tops, and stainless steel appliances, then you should probably do something similar. RTA (ready to assemble) cabinets are probably what we have used for the last few houses. They are easy to assemble and look great. And the cabinet doors come in lots of different styles and colors. IKEA is also a source for cabinets and kitchen materials, although I don't have much first-hand experience with them. I know a developer in town that loves IKEA cabinets and countertops in his apartment buildings. 

And when it comes to cabinets - just because appliances are stainless steel, that doesn't mean they are much more expensive. White or black appliances look cheap. Home Depot or Lowes usually has sales on appliances all the time. And you can also just ask for a discount, even if one isn't advertised. The worst they can say is no. Contractors also get additional discounts on appliances, so if you have a contractor friend, they may buy them for you and pass on the savings as long as you use their services. 

Yeah, this takes time. Plus, a house that cashflows only $100 a month does not seem worth the trouble in your scenario. If your goal is to live off of rental property income and your goal is $3,000 a month, you need to adjust your strategy to get you to your goal with less than 30 houses. At $200 a month per house, you only need 15 houses. At $400 a month per house, you only need 8 houses. You need to look for houses that are selling at a discount - particularly distressed houses that need work. If the house is already fixed up and move-in ready, then your margins will be razor-thin. 

Also, consider buying a two or three unit building. Live in one unit and rent the rest. This would save you a bunch on down payment, since it would be an owner-occupied house (3%-5% down) as opposed to an investment property (which requires 15%-25% down). And best of all, the tenants would pay all, if not most, of your mortgage. So for example - you buy a triplex with a mortgage, taxes, and insurance of $1,500 a month and you rent the two available units for $750 each, you would make $1,500 a month in rent and live there for free. Now you can save those $1,500 a month and save them for a down payment on your next houses. :) 

That's unfortunate that there are idiots like that out there. That is on my my mind quite a bit now that my sister is getting her real estate license in Tennessee. And just a few years ago, a woman was murdered showing a vacant house two doors down from my in-laws' place in Arkansas. The guy was caught a few days later but all that could have been avoided if they had used the guidelines posted in the original comment.