All Forum Posts by: Jeremy VanBussum

I like the idea of offering a discount, but you could also add the stipulation that the prospective tenant would need to put down a bigger deposit in order to get the discount. This also serves the purpose of protecting you from nonpayment of rents and vacancy. Typically, if someone has the cash to afford the bigger deposit, it might indicate this person is not living paycheck to paycheck and has the means to pay timely.  Also, don't ever take partial payments and make sure you get the Notice to Pay Rent on the door the day after rent is due and its not in your hand. Not only is this important for legal implications should you find yourself needing to evict, but you're also setting the expectation early in the lease.

Here’s a question: Is there anything under the paneling? I was lucky enough in the house I am in now to have drywall under the paneling. You could cut the paneling at 32” high, remove the top portion, repair the drywall, add a chair rail and paint the paneling that is left white.There you go…inexpensive wainscoting and it looks great. Of course, this only works if you have dyrwall under the paneling.

Hi @Meg K. - Is 12.5% the APR or the interest rate? Usually with these loans there is an upfront cost (origination fee), if so, add that to your basis. How much is a new roof? Add that to your basis. I wouldn't use Zillow for an estimated value...I would look at recent sales and trends for the area. If values are declining in that area, what will it be worth in 5 years? How is the electrical, plumbing and HVAC?

Good Question. I am considering doing the same thing. I have a property which I am purchasing for $27 cash and ARV is expected to be at least $40 with $3 in repairs/improvements. When I spoke my loan officer (who handles everything in-house), she didn't to seem to have a problem with this if I was going to reinvest the cash in another property. She told me it was a common practice. Find a local lender, develop a relationship and let them know your plan. Let me know what you find out.

Wayne Brooks - I agree, the property itself would not be protected. I am mostly looking for a way to remain independent from the property itself and have one property independent from another. Being so I have a property manager, do you feel this would help?

Bill Gulley - Thanks Bill. Great advice and thanks for the detailed response. I currently use a property manager who is already licensed, so I think I am in the clear there. I hear so many different perspectives that it hard to decide what is best.

Before I go mortgage shopping, I get my credit score, put together a balance sheet and a schedule detailing my DTI ratio. If you want to avoid the hard inquiries in the future, I would suggest this. You can call multiple lenders and say, "assuming a credit score of x and debt to income of y, what would closing costs be and what is the rate?" I hope you are not actually considering the deal. That is just straight up absurd.

Shawn Sorter - Real Estate for me is just like investing in your IRA. There are properties that are income properties and there are ones that are balance sheet (growth) properties. I'm just getting started, but I have one of each and like them both.

My first house was $128K. I consider this a balance sheet property. It is in a highly desirable area and I expect it to appreciate over the course of three to four years. I will have no problem selling this property quickly when/if I want to free up capital.

I just bought a house from HUD for $27K. This house rents for $825. Its obviously an income property. The problem...the area is nothing to brag about and I don't see this property ever regaining its value that it had four years ago. With Dodd-Frank in place, it will almost be impossible to sell this place unless I finance the buyer. That said, I consider it a higher risk property, but as we know, with higher risk comes higher return.

Diversify your portfolio :-)

Depends upon the lender. I would say about $1,800 base is about right (origination fees, attorney fees, appraisal and title services) and you will also have between 1.75 and 3.00 points adjustments/added because it is an investment loan. The points will depend upon your down payment...25% to get the best rate. My rule of thumb is to always take a higher rate to offset closing costs. If I can get a no cost closing, this is the best scenario. I feel good about it on day one. Investing is a cash flow game for me, and less out of pocket for expenses means more cash for investing and higher returns. Good luck.

I believe you can only have four mortgages where the funds are loaned to you personally. Ask if you can get a business loan in the name of the new LLC that you are setting up. The bank will probably be okay with this, but you will need to personally guarantee. Ask your loan officer how this actually benefits your credit (DTI ratio). I had a similar conversation on Friday with a loan officer and I believe this is how it works.