All Forum Posts by: Josh Engelhart

Just a plan on what to do when you get an offer accepted. I would draw up a purchase contract and have a title company picked out. A real estate agent or attorney can do this for you if you need help.

There is no good way to tell what is still owed. I read that as they originated a $173,600 mortgage when they bought the house and the seller held $30,000 note. The Refi in 2006 could be a lot of things. They may have left off a 0 and that is really a $250,000 loan they refinanced based on a higher appraised value. It could be a small home equity loan. I would do a search on the county auditor site. Anything you find won't give you a current balance, but it will give you the balance at that time.

I would be more concerned with approaching them and getting them to agree to your deal than about figuring out what they might owe. If they don't want to sell who cares how much they owe on the house. Once you start talking numbers you can probably get them to tell you how much they still owe even if they don't mention it directly.

You won't find any lenders doing a cash out loan over 80% ltv. You need a loan not secured by collateral or something based on the new property. You could find a personal loan or hard money lender to fund your next adventure, but the terms are going to look much worse than traditional conventional financing. For the right deal the inflated lending cost won't be important.

The numbers on your house stink as a rental even if your mortgage payment is low enough right now for you to cash flow. 

You are in a great position to use a home equity line of credit. Most banks will lend up to 80% LTV on your primary residence. This leaves you at least 138k to play with if your house appraises for 350k, potentially more. You could then pay cash for a fix and flip or BRRRR. You could also use that money for a 20% down payment on one or more investment properties.

You could also think about selling it to recapture all the equity, minus 6% realtor fees and closing costs, and putting that equity to use on investments with higher ROI.

Looking for some advice on an unfortunate situation. I own a fee simple townhouse (No Homeowners Association). We came back over the weekend to find out our neighbors pipe burst on the 2nd floor of our shared wall. It leaked from the second floor down to the basement, wrecking the basement and causing minor damage on the way down.

Our insurance has a clause that specifically protects them from having to cover claims originating from damage caused by issues on the other side of the shared wall and told us to contact the owners. The owners told us to deal with it.

Any advice would be appreciated.

It can be done. It takes a special property and deal.

The biggest concerns are whether or not you can get traditional financing to begin with. It can need touch ups and still be eligible for conventional financing, but anything serious will cause appraisal issues.  It's tough to find something so undervalued that needs minimal enough work to pull out all of your cash. The other stinger is paying closing costs twice. Once on the purchase and again on the refinance. I recommend opting for a higher rate on the initial loan to get the lender to cover your closing costs.

If you can find something under priced but not so damaged you can't get a conventional loan you could potentially BRRR all of your cash out and have a "free house" that still produces cash flow.

Good deals are everywhere. In LA I would be looking for damaged and undervalued homes that could be flipped.

In the Midwest I'm assuming you want cashflow. You can find a 5+% rule in war zones or rural areas. There are 28k properties locally barely held together or liveable that get 1400 in rent.

I wouldn't really want to invest somewhere without some kind of connection or boots on the ground. Friends, family, work travel, kids college, some kind of connection.

If you do I'd probably just try to find a good realtor. You might get burned. If you are or become a serious investor and buy a lot of properties you could also be a great partner for them.

You can try to buy the house before it is foreclosed on via a short sale from the current owner.

Most foreclosures have to hit the auction first. If the owner owed less than the market value they would have sold it instead of foreclosing on the home. The banks then try to sell the property at auction to collect on either the mortgage insurance or the full amount owed by the borrower. If nobody pays up than the banks buy their collateral back and it becomes a bank owned property or REO. This also usually clears the property of other liens.

These are then normally sold via the MLS. Some do sell off market or at auction.

At a smaller bank or credit union you may be able to buy before it hits the MLS. Any larger bank is so regulated they would rather follow the rules, hold the property for 3 months - 2 years (bureaucracy), and list in on the MLS over making a back room deal with a first time investor even if it seems to make more financial sense.

If your ROI is higher than the interest rate it is worth it. Obviously the higher the ROI and the lower your interest rate the better. It might not be worth your time or risk to trade a nickel for 6 cents.

The one idea I didn't see here is to sell one or all of them. You could pull out all of your equity (minus fees) out at a 0% rate. You would also no longer have to deal with that asset. 

In the meantime soak up your cashflow, know your options, and be in a great position for when the next great deal comes along.

It sucks, but it sounds like you just had some bad luck. If the agent presented you some type of fraudulent documentation or fake pay stubs you may have some type of claim. If they handed you a standard form and the tenant lied about their income it isn't the realtors fault, it's your fault for not verifying the information. You need your own background, income, credit, and criminal check in place. Many websites offer this for a fee of less than $50.

The agent did their job finding the tenant and showing them your house and deserves the commission that you already agreed upon.