All Forum Posts by: Josh Young

Zillow rental manager is free (except $10 per week to list property for rent) and does everything you need.

You can buy an investment property to rent out as soon as you want, you just have to qualify (usually W-2, tax returns, DTI, Credit, reserves etc.) and have the 20-25% or even 30% down payment, but these guys are right buying a new primary residence will be a better interest rate and you will only need 5% down payment. When you bought the house you are in now you probably signed a form saying that you intended on living in the home for at least 12 months (because you get better terms on your loan for it being a primary residence), but it's been six months now, so as long as you buy a house that's at least a little bigger you can tell your lender that your circumstances have changed and you need more room for your growing family. And then put a lease on your current house and they will count 75% of the rent to help cancel out the mortgage on your DTI.

Quote from @Marco Samame:

Hello, 

I am looking for input from those who have used online rental payment applications for their tenants to pay their rent.  I am looking into Innago, Avail, apartments.com, a few others.  Ideally I am looking for an app that allows the tenant to pay thru direct deposit at no charge and for the payment data to be collected for credit scoring purposes.  I know apartments.com used to offer that feature of reporting to credit agencies for free but it's no longer available as a feature.  Any advice or lessons learned from your experiences is greatly appreciated.

Thank you.

Marco

I use Zillow rental manager and it works great to list properties (cost $10 per week to list a property for rent), screen tenants (free for landlords, applicants pay $30 per person for credit report and background check) and collect rent (free for landlord and tenant unless they use a credit card then the tenant pays a fee), but it doesn’t report to credit agencies. I’ve actually been looking into reporting to credit agencies just because it seems like a win win for me and the tenants, it encourages them to pay so they don’t hurt their credit and helps their credit when they do pay. I really like using Zillow rental manager so I’ve been thinking about using https://frontlobby.com/  it looks like it’s free to do. Has anyone else used this website?

Quote from @Josh Young:

Quote from @Priti Gupta:

Hello BP community!
My name is Priti and i live in the South Denver Metro area. I came across Bigger Pockets podcast last year and i have been reading RE books and listening to different BP podcasts since then. I truly believe at this point that RE is the way to go to build wealth and achieve financial independence. My goal is to achieve FIRE and also be able to give back.

I don't even own a primary residence yet. So I was thinking about starting out by doing a live in flip so i get some experience with rehabs and have a primary residence at the same time. May be also do a house hack by renting out the basement if possible.
But since i read the BRRRR book and Long Distance real estate investing by David Greene, i am also thinking about doing out of state BRRRR with the money i have saved up for down payment.

I was hoping to get some recommendations from this community

1) about the strategy to pick as a beginner

2) how to structure research to pick the market/sub-market to invest out of state

Thanks in advance! And hoping to engage more with this community.

Priti, welcome to BP. Buying a primary residence is the best 1st step, conventional loan 5% down payment. In a few years you can cash out refi and that is basically a BRRR, or you can sell after 2+ years of it being a primary residence and it's tax free. You can also buy out of state, but you definitely want to buy a primary residence 1st and then keep buying a new primary residence every few years. Nice job saving for the down payment! That's the part most people can't do! Make sure you always have at least 6+ months of reserves, that gives you time to pivot if something unforeseen happens, good luck!

 The major things to look for when picking an out of state market are high paying job creation like tech jobs moving into a market and the other thing is population growth, so basically people are moving to the area and there are high paying jobs for them to get, these two thing typically lead to price appreciation and rent growth.

Quote from @Priti Gupta:

Hello BP community!
My name is Priti and i live in the South Denver Metro area. I came across Bigger Pockets podcast last year and i have been reading RE books and listening to different BP podcasts since then. I truly believe at this point that RE is the way to go to build wealth and achieve financial independence. My goal is to achieve FIRE and also be able to give back.

I don't even own a primary residence yet. So I was thinking about starting out by doing a live in flip so i get some experience with rehabs and have a primary residence at the same time. May be also do a house hack by renting out the basement if possible.
But since i read the BRRRR book and Long Distance real estate investing by David Greene, i am also thinking about doing out of state BRRRR with the money i have saved up for down payment.

I was hoping to get some recommendations from this community

1) about the strategy to pick as a beginner

2) how to structure research to pick the market/sub-market to invest out of state

Thanks in advance! And hoping to engage more with this community.

Priti, welcome to BP. Buying a primary residence is the best 1st step, conventional loan 5% down payment. In a few years you can cash out refi and that is basically a BRRR, or you can sell after 2+ years of it being a primary residence and it's tax free. You can also buy out of state, but you definitely want to buy a primary residence 1st and then keep buying a new primary residence every few years. Nice job saving for the down payment! That's the part most people can't do! Make sure you always have at least 6+ months of reserves, that gives you time to pivot if something unforeseen happens, good luck!

Quote from @Sam Brasseale:

I’m looking at buying a new house. I currently own a 3/2 with approx 185k in equity and 115k left on the loan. My plan is to take out a home equity loan for the down payment of 20% on a 520k house.

Current mortgage is 1100/mo and HE Loan payment would be ~900/mo

My plan is to rent our current house out as a LTR.

My question is, should I consider the HE loan amount as a loan service in the cash flow equation on the rental, or consider it just as an expense on my new home?

Sam, you can buy your next house as a primary residence using a conventional loan and only need to put 5% down. But you are smart to take out a second position loan on the house you are in now before you turn it into a rental, just make sure your DTI will qualify. You want to count both loans on that house as loans on that house, but it's probably better to do a second rather than refi the 1st since the rate is probably super low on the 1st loan. This will probably mean your cash flow won't be very good if anything at all, but it's better to take it out as your primary residence now rather than wait until it's a rental because it's harder and higher rate to get a second loan on a rental, even if you don't need all of the available money, might be smart to have extra reserves, so you can buy another one next year too. Just make sure you will still qualify with DTI. When you qualifying for the new primary residence you can put a lease on the current house and count 75% of the rent against your mortgages, so that will help your DTI.

Quote from @Nick Caravaggio:

I am looking at building a new four or six plex  complex in the Phoenix area on raw land.   What would a fair price per square foot cost be for such a project be in this market.  

Looking on the MLS of what sold in the last 90 days it varies a lot, but $200-$225 sq ft is what most are trading at, but there is one that looks like it’s just got flipped and is right next to ASU in Tempe and it sold for $2.4M at 7340ft, so $325 sq ft. It just really depends on the location.

Quote from @Josh Young:

That’s a great question, if rates decrease and you cash out refi into a fixed rate loan in 3-4 years then 25% down is a better deal, but only if you have the reserves and the risk capacity to cover if rates increase in the next 5 years. What if rates increase, values go down, and rents stay the same? That’s unlikely, but possible, just make sure you understand the risks.

I feel like I need to elaborate on the math here, lets assume a 5 year hold period since that's how long the ARM stays at 7%, so with the ARM you'd be putting 3.635% (extra DP minus points) more into the deal up front, but you'd save 3.125% (0.625 x 5) over the course of 5 years, so it's pretty close as far as cash outlay, but the difference is that 5% of the deal is going into equity with the ARM and that same 5% is going into interest/points with the Fixed rate mortgage. So that means interest rates would have to increase a lot after 5 years to make the fixed rate the better choice, and if rates decrease your rate will adjust down without any refinance closing costs, but I can't stress enough the importance of having reserves to give you time to pivot if something unexpected happens, extra reserves is the key to being a successful real estate investor no matter which loan you choose in this situation.

That’s a great question, if rates decrease and you cash out refi into a fixed rate loan in 3-4 years then 25% down is a better deal, but only if you have the reserves and the risk capacity to cover if rates increase in the next 5 years. What if rates increase, values go down, and rents stay the same? That’s unlikely, but possible, just make sure you understand the risks.

Hi Nadia, welcome and good luck on your learning/investing journey.  I started out with limited capital, so I bought a primary residence and turned it into a rental when I bought my next primary residence a few years later, but there are lots of ways to get started, this was just the easiest way I could find.  Top books are rich dad poor dad and the millionaire real estate investor.