All Forum Posts by: JP P.

@Ben Wilkins

I appreciate the response.  I understand what you are saying; go the Opt3 route and process and potentially work my way toward Opt1 to where we both benefit and to where he potentially makes more money in the long run!!

Man, that sounds like an amazing approach.  Thanks.

Sorry for how it came out I typed it in word first.  if you have any issues understanding I'll gladly clarify.

Need help analyzing a property (a property my family owns, older cousin) ---a little background on my family: I wouldn't have any issues with pissing off and upsetting them because they already call me the odd child and the "where is Waldo" of the bunch. They ALL understand I'M ABOUT MY BUSINESS and this particular cousin is all about his business as well. So hurting each others feeling won't be an issue.  House is already paid for. The City has it assessed at 30k, neighborhood probably only warrants 20k-24k. I think my cousin wants sell it for 20k but I will find that out when we have a heart to heart discussion.But I want to have a solid game plan going in to discussing.

Price: 20K                                                                                                                                                                                                                                    Est Rent: 550;  If fully renovated I probably could get 600-640                                                                                                                                   Needs everything to be update.In addition, because of the neighborhood the house needs to be hardened. 

Without getting very detailed I figure I would easily have to put in 30k to rehab/update and to harden the house. I DONT WANT TO PAY 20k AT ALL for the house. Where I think I need help is to come up with a win-win situation to make this transfer beneficial.Please BP look at my options and thought process below and comment/critic.

Option 1

• Maybe do a JV partnership where I put in the rehab cost and he owns (both names are on Title/Deed) the house and we split profits 75-25. I'm responsible for the maintenance and repairs.
• Get an appraisal on the house.
  • If/when we sell we split the profit 50/50 after his initial appraisal value at the agreement.

• Show him my success home where I have renovated and rented out and my own home renovation
• Update him through the renovation process and all deadlines. Keep him in the loop of EVERY stage of the process till rented and collecting money.
• Show all invoices of the work being completed.

Option2

• Owner finance with me paying for an appraisal and closing cost.
• For a flat amount of 13k-14k;15 year loan to balloon in 5, 6, or 7 years
  • Maybe less on the sale price if the appraisal comes back lower.

Option3

• Take time to get contractors bids on work to be completed.Get current value appraisal. Get 3 real estate agents opinions on price mark.
• Take information to cousin and make a cash offer based information.

Thanks!!!

Cuong,

Looking at your numbers it's not looking like this makes sense to be a good move in ANY way!! Prop1 is 195k, Prop2 is 259k totaling up to 454k in loan debt.  With that being said you are only paying 2600 on the 454k debt.  Now typically I estimate if one had a 454k loan then ones monthly mortgage would be around 4500; so you are doing good in that aspect.  With your combined mortgages only being 2600 and Prop1 is 43% of your loan, I figure it would be 43% of your mortgage as well.  Which puts Prop1 at 1040 monthly and renting for ~1300.

Like EVERYONE else said 200 profit doesn't seem much for incidentals that will rise.  If you were to refinance just on the rental (don't know how it's valued at 460k now) it looks to me that you would be running a grave negative cash flow, which seems counter-productive.  I figure it'll cost you 4500 in a new mortgage on Prop1. and now instead of paying 2600 for both homes you would be paying 4500 for both homes.

And lets say in some miraculous way is 4500 not what you really are going to pay, WE can guaranty that you would pay more than the 53% of what you are paying for your primary property - Prop2. So lets say this is true, more than likely you would pay an easy 2000 (53% of the 2600 combined mortgage is 1560 and rounding up to 2000.)

this just looks like a messed up plan all the way around.  Unless I'm missing something

@Mathew A.  I like some of the things the people above have said....but ULTIMATELY you have to think like a criminal.  Hence my background in growing up in the "hood"  I would hopefully give you some insight.

1. As @Jay Hinrichs mentioned DON'T put the condenser or water heater until you have tenants and you can have eyes there the few days between installation and tenants move-in.  And when you do install the condenser PUT A CAGE AROUND IT. lol

2. As everyone as mentioned I would do Simpli Safe as well.  The thing is with those, if I'm in and out quick..."you gotta catch me!" So what I'm saying is DO put a monitoring alarm system in, but the REAL criminals don't care.

3. You mentioned windows....I would install the windows and screw gun board the first floor windows when completed to potentially not have them broken. Second floor as well depending on the neighborhood.  Kids in mine didn't care throwing rocks high in the air to break second floor windows.

4. On the doors I would recommend something like this to help prevent people from kicking in doors

https://www.amazon.com/dp/B00E9ZGWNQ/_encoding=UTF8?coliid=I20WA588CFUFM1&colid=183FJ67YS0IQA

Now as for your property management personnel, you should rethink your business with them moving forward because both your interest seem to not be in line.  And me personally if our business interest aren't in line together, I may not be benefitting by giving you money.

Hope that helps and gives you some prospecitive.

WOW!!! When did FHA's change??

@Jeshua Patrick @Chris Mason 

@Justin Jolliffe In my opinion you are thinking along the right lines. Though I would like to add if you do an FHA that restricts you from having flexibility (not letting you drop PMI when you reach 20% equity) I wouldn't do it!!! The ONLY way I would in this case is if that 3,600 you mentioned is the income from JUST the two sides. Meaning you are already cash flowing positively the day you move into the third unit and living mortgage free. That way you can use the extra 1.5% in addition to what you charge yourself in rent ($1,800) and invest that money as you mentioned.

With that being said, my perspective is (with you living in there for a couple of years as you stated) that you put the 5% down, house hack, take the profit from the 2 units and put into the principal. Then use what you would pay into yourself in rent ($1,800) and invest $1,200 a month in investments with $600 being your reserves. This way it could potentially get you to the 20% equity you are looking for a little faster and be able to invest, have cash reserves for incidentals, and drop the PMI when you reach your mortgage mark.

Hope the perspective gives you more or something to think about.

Thanks @Dustin Davis and @Rachel Fazio

For me the name of the game is acquiring.  I'm not fond of selling off something unless it TRULY benefits someone less fortunate than me.  Goal is to get these forty acres!!! (if you all understand the meaning, in all light heartedness.)

When I look at those small local banks/credit unions I'm going to inquire about lines of credit that aren't tied to my properties.  I wouldn't care if it was tied to my car, lol, just not my houses.

@Tom S.  I appreciate the post.  I'm looking into Credit Unions in both my investment markets just to cover my basis like you've mentioned in regarding counties.

@Timothy Maloney

Thanks for the response.  My intention is the long game.  I'm trying to build for the short, mid, and long game. 

Do you think that a small community bank/credit union will loan for something like this even if it's to be purchased in a different state.  For instance I reside in Texas and lets say my Community bank/Credit Union is in Texas would they potentially lend and I can use it in the state of Louisiana, Arkansas to purchase?

Hey BP, I'm looking for advice on options that I can pursue in obtaining financing/"money" to purchase a home that is for 22k.

Here's the background and details:

Found a home for 22k and at most it needs 2k to put into it (this is without having a central AC.) This would be a buy and hold for me and the market rental rate I figured to be a minimum at 750. Previous owner has someone in it at 900. Needless to say you can see why I want this house. My ROI is extremely high.

The trouble is how to get the 22k:

--I have at least 20% and wanted to try to do conventional and make it easy on me. (a few different lenders don't go below 50K lending on houses.

--Hard money could be an option I would like to pursue, but because of the market the house may not value and or sell for higher than 30-35k on ARV.

--Straight bank loan for 20K; and it seems that most banks that I've contacted don't do general loans unless it's collateral against some other property.  (my other properties don't have available equity to draw from to make the 22k.  And I say that to say I don't feel comfortable borrowing against my other homes that cuts down their respective cash flow.)

--Private Lending; now this is an area i haven't stepped into and i'm learning about.  I think this might be a good option, but I'm not sure how to structure the terms that would entice fund'ers and still have both ends benefit.

--Non Recourse Self Directed IRA loan; I could put this house into my SD-Roth IRA and end up having to put down 40%+ on the house to secure a loan (that's if they would lend that low of an amount to purchase the home)

Those are the only options I can think of and I'm not sure which is the best, or looks more feasible and successful to in use to acquire the home.  BP's help me out.....Any advice helps.