All Forum Posts by: Josh Engelhart

Your lender behind your 203k loan is likely going to require a licensed and insured contractor to complete any of the work subject to repair in your appraisal report and any the repairs that you want to finance.

Any renovations on top and outside of that will be under your control. Some of the people here are reasonably against doing the work on your own. If you are going to do a bad job or can earn more in your own time than the amount you need to pay in labor to complete the task than I completely agree. If your wages are below that which you would pay a contractor and/ or you can complete the work in your free time than it is worth taking a look at doing the work on your own.

Got any more details on the deal?

If it cashflows you will get your money back pretty quick. If it doesn't you probably don't want to put your money there in the first place.

@Greg Scott is right. It won't count to the 10 loan limit. @Edward B. nailed it on the overlays.

My employer won't finance more than 6 investments properties. Pretty much every bank/ lender will have additional overlays on top of Fannie/ Freddie minimums. I'm seeking the best terms possible on my first loans and then seeking the most flexible lender's to round out my financed piece of my residential portfolio.

There are a lot of third party services that will do credit and background checks for you. I most recently used cozy.com. The credit and background check costs the tenant $40. I thought that sounded steep, but none of the applicants hesitated to pay including the one with a 450 credit score who was well aware of our minimum qualifications. It also allows them to you rent online for free as well. I do not use the service for that.

There are a lot of places that give you sample leases for free. I made mine from a combination of things I found online. I know bigger pockets recently started offering them or you can do a google search and just keep what you like.

I don't think you need a checklist, but I would recommend running the numbers through your worst case scenario simulation to make sure you feel comfortable with the deal.

I recommend doing your own research on what you think you can rent the property for. I use zillow, facebook, apartments.com, craigslist, etc. to get a feel for market rents.

@Ryan Deeter l would be curious as to why their financing fell through. If it was due to the condition of the property you will likely have similar issues if you are also seeking financing. If it was due to their qualifications I wouldn't worry about it.

I agree with @Jay Helms that everything is negotiable. If 9 other people are lining up to buy this house they probably don't want to budge. If you are the only other buyer than you probably have some room to work with.

I check the MLS for Franklin county multi family properties every 30 minutes or so. I have probably seen the house you are looking at and I would be happy to talk about this in more detail with you if you want.

Since it's permanently affixed to the ground, if they are working with the right lender it is possible they can get an FHA loan on the property. 99% of lenders including myself cannot do that loan and would be a bit annoyed by your buyer for wasting our time.

If the lender can do the loan FHA appraisals are a bit more picky, but you have a 10k cushion to fix any little items the appraiser may have issue with. If I were you I would call the bank listed on their prequalification letter and tell them you want to buy a mobile home with an FHA loan. If they don't hang up on you it's probably okay. If they tell you that they don't finance mobile homes I would throw the offer in the trash and move on to the next one.

I would buy that personally in your situation if your rent expectation is correct and it's a place you actually want to live. That's a 16% cash on cash return and an even higher ROI when considering the equity built every month.

I personally think 50% is too general for an expense ratio and prefer the Fannie Mae/ Freddie Mac 25%  expense ratio while taking into account the mortgage payment including taxes and insurance. I found that a lot of "good deals" I was looking at had crazy property taxes that were overlooked when simply assuming 50% expenses.

Your loan numbers are off. That rate is too high for an FHA loan or Home Possible 5% down payment loan, but you also aren't accounting for mortgage insurance.

Getting the seller to cover your closing costs will also boost your ROI/ minimize your cash investment into the deal.

I would completely ignore the tax value. It has no relationship to the actual market value of a property.

To figure out your true market value you need to look at the most similar and nearest comparable sales. Zillow, realtor.com, and your agent's MLS portal will all show you recently sold houses.

Make adjustments based on size, condition, age, and any other important factors. It's the same thing the appraiser at the bank will do. Just try to think about what you would be able to realistically sell the same house for.

I think the 2% rule is a bit outdated. The only places you can find a 2% deal by me are places where I'm worried about walking my dog. I think it was a lot more achievable after the big crash.

The better your marketing and more willing you are to look for value add the closer you can get to 2%.

I also think the 2% rule was based in a time period where the cost of financing was much higher so you needed that cushion in order to cash flow.

If after financing, taxes, insurance, and a healthy cushion for expenses you can get worthwhile cash flow and an acceptable rate of return than you shouldn't be too concerned about the price to rent ratio. I do generally look for a minimum of 1% before I take a closer look at the deal.

My properties are at 1.15%, 1.23%, and I'm under contract on an estimated 1.63% that needs a bit of work. I'm new to this, but it's all going well so far.

@Chris Mason Nailed it on the head. You can do whatever you want. With that much free "cash" you should try to focus mainly on value add/ distressed properties. If you do it right you can BRRRR and get all of your initial cash back out.

If you do a bad job you can still tie up that $850k into 20% down payments on a whole bunch of cash flowing properties.