All Forum Posts by: Josh Engelhart

You can probably find success getting financing as an owner occupant. Most big banks are going to look at your student loans and hit you with 1% of the balance when calculating your debt to income ratio. (At some lenders) On either a physicians loan or FHA loan they will allow you to use your actual student loan payment when calculating your debt to income ratio (which may be much lower based on a different repayment plan.) In general both of those type of loans are only available on owner occupied properties.

Some smaller lenders can also use your income based repayment plan payment instead of 1% of the balance on non owner occupied loans. In reference to the above I max out at a 50% DTI on any loan type. I ave worked for lenders that can do a 56.99% DTI on FHA loans.

To boost your credit score I recommend wiping out the credit cards first. High credit card utilization has the most adverse effect on your score and that debt generally carries the highest interest rates.

If I were in your shoes I would take a look at the interest rates on your student loan debt before considering investing in real estate. I know my federal student loans were at a 6.5% rate. Paying off my loans was a risk free 6.5% return that also greatly increased my monthly cash flow. Your interest rates may potentially be even higher dependent upon on who holds the debt. If you feel confident that your real estate returns will be higher than the interest rate on your student loans go for it. If you have private loans in the 15%+ range you are probably better off paying off your loans guaranteeing that rate of return than speculating in real estate.

It will be difficult and ultimately that will be up to the underwriter at your lender. If the new home is bigger, nicer, more expensive, or in a better school district you have a good chance. If it doesn't hit all of those I wouldn't count on it and try to line up alternative financing. If it doesn't hit the above HUD probably also won't believe you will live there as your primary residence and may decline your bid until the investor period.

If you had an inspection contingency built into your contract you probably have an out and the only money lost will be the money you paid for your inspection. All of your earnest money should come back to you if you want to walk away.

The appraisal may or may not pick up the same issues. Appraisals are way less in depth and more of a quick look through and comparison to comparable sales to establish a value.

I would be worried about whether or not the deal still works for you. If this will still cash flow or profit as a flip after the additional repairs you might still want to move forward. If you don't like the numbers now or think you may only break even I would would probably walk away and take my earnest money back.

It sounds like you know or think there is a high likelihood this will not cash flow. If you can stomach that, pay for it, and realize it's not an investment but a luxury and still want it you should probably go for it because you really want it. In the right area it will probably go up  in value over time as well

If you you want this to be a profitable cash flowing asset it sounds like you need to keep looking and/ or start looking at different things.

You need to establish the right relationship with the right local bank. Where I work and at most larger banks for the first 6 months it's all about purchase price and after 6 months you can refi based on the appraised value.

If you have the track record and your ARV's are right I would either go in person or call local banks or credit unions. A lot of places will tell you no, but that one yes will get all your cash out and open a lot of doors.

Speaking from experience you will absolutely not get a conventional loan on a house that doesn't have a floor. The appraisal will come back subject to needing a floor and HUD won't put the floor in for you so it will never close. HUD homes are owned by the FHA and the repair escrow only works with FHA loans. If you can go FHA with the repair escrow, FHA 203k, or have alternative financing it may still be a great deal.

If your house is going to sell itself and you can field the calls and offers you probably don't need a realtor.  If you have no concerns about reading a purchase contract or the other intricate details involved in the transaction you probably don't need a realtor. I'm of the mind that the house sells itself and all most realtors is just unlock the door to let people look inside. No matter how great or bad a realtor is people will either like or not like the house they look at and most people direct the realtor to what homes they want to go look at based on whatever they see online.

You definitely want a service that will put you on the MLS. You should be prepared to pay a 3% commission to the buyer's realtor.

I think people are slightly less likely to want to buy from you if you represent yourself. I think some buyer's realtors will try to guide them away from you if you represent yourself. I think you will probably sell the house for a little bit less if you represent yourself. That being said your listing realtor is going to charge 3% to sell your house. A good realtor should hopefully be able to get you at least 3% more and take care of all of the headaches for you.

I don't think they have any special sauce. I think more than half of realtors are people working part time that don't do any deals and aren't worth your time. I haven't met one yet, but I think the right realtor could be well worth the fee.

I would recommend posting everywhere you can for free. When I post on Zillow they put it up for free on like 20+ other sites. Craigslist and Facebook are also great and free. When creating my lease I just looked at a bunch of other sample leases and apartment leases I had signed in the past and just kind of Frankensteined mine together with all the pieces that I liked.

In October 2017 I closed on my second property a 6 Bed 4 Bath 2100 sq ft duplex in Columbus, OH. I had been searching through MLS listings every day and just could not find a deal that I felt worked. I stumbled upon this completed renovated duplex in an up and coming part of town listed on craigslist for $165,000 for sale by owner. I got in touch with the owner and the property looked just as good as the pictures. Cheap finishes, but it was all brand new. Vinyl plank floors, laminate counter tops, new furnaces, water heaters, central air units, 2 brand new full bathrooms, gigantic kitchens with large islands, and 3 tiny little bedrooms per side. After walking through the house with the owner we agreed upon a $150,000 purchase price with a $3,500 closing cost credit.

I did a Freddie Mac home possible loan allowing me to put down 5% or only $7,500. Combine that with $3,500 in seller paid closing costs, a $750 preferred lender discount, $1,500 home buyer grant, $500 credit for completing a home buyer education course, and a $600 cash back mortgage offer. Those credits actually covered all of my closing costs and ate into some of the money required for my down payment. My total out of pocket into the deal was only $6,000.

I got a 3.625% 30 year fixed rate loan. The property taxes are about $1,000 per year. The insurance runs just over $600. The monthly payment including taxes and insurance is only $824 per month. I had the other unit rented out in early November for $925 per month before I had to make my first payment on December 1st. I just got my April rent check 12 days early. I am stoked about how this place is going to cash flow once I move out and can get both units occupied. My deal analyzing spreadsheet just glows green.

The risk. My mom called me crying after driving by the property for the first time telling me how I was making the biggest mistake of my life. It is in a C area and is 5 blocks north or west from places you don't want to be. That being said I feel like I am on the edge of progress and comparable sales are only going up. There is a much smaller 4 bed 2 bath 1700 square foot duplex a few blocks nicer that just went under contract at $210k.

Up next. I'm under contract on a 46k single family house (appraisal and inspection in the next few days.)

Huge red flag. You don't need all the fine details, but if they can't give you a general idea of what business they plan to operate in your building than you probably don't want them in your building. Somebody else who isn't going to run some sketchy secret business is probably perfectly happy to rent your space and tell you what they plan to do ahead of time.

All of those other questions depend on the terms of your lease. I would speak to someone familiar with your local lease laws/ regulations to make sure you hit all of the basics. Outside of that it's your building and as long as you aren't discriminating against any protected classes you kind of run the show.