All Forum Posts by: Jeff V.

While I can't tell you what the right answer is for your scenario, I can offer some advice.

Why not think of your investments as a portfolio real estate included.  Real estate is a third class...  Example portfolio might be:

Stock 60 % - Equity for Growth 

Bond 30% - Offers stability and income

Real Estate 10% - Bit of a mix for income and growth. 

You could adjust the portfolio to your risk tolerance and goals.  For example if your looking for income now hold more bonds and real estate.

The trick is your real estate allocation could be in the form of REITS or actual real estate.   The good thing is you can put small amounts of capital into the market to grow at say 6 to 7 % between real estate deals.

You might have a 200 portfolio that looks like so.

Stocks 50% - 100k

Real Estate 50% - 100k with leverage controlling 1M in real estate.

Point being I would and do use both.   I use the market to accelerate savings and putting parked capital to work while saving for the next investment. 

Note I would only cash out the portion allocated for real estate unless a deal came across my desk that was just too good to pass up and had the potential to drastically improve the returns on that capital. 

Hope this helps.

I would start with either a plumber, or well service tech... they should be able to point you in the right direction.

The well guy would probably be the most helpful, as they would know whether it was a jet system ect based on the hookups to the well.  Plumber might be able to point you to a good well guy, or may know the same information.

Either way that's where I would start.

Jeff V

Does anyone know how Dodd Frank laws apply to the seller financing land? I know there are some caveats to seller financing to an owner occupant of a SFH, but have not seen anything regarding financing of land... that's something that might be worth looking into if you plan to finance the property to your buyer...

I'm not well versed in the new Dodd Frank stuff, but I would run your scenario by an attorney to be sure those laws are not in play here.  Perhaps some other members who know more about this can chime in to see if this is even a concern.

Jeff

@Bryan Potts

Glad to see I'm not the only one.  

I have been able to work on my social anxiety, but I've never been able to completely get rid of it despite drastic improvements.

One way that I pressed forward was to do as @Dawn Anastasi suggested and partnered up with a co-worker of mine who is type A personality.

He does all of the social interactions such as calling vendors to schedule dumpsters, scheduling porta potty's, meeting with contractors to get quotes, managing our rental units, showing the units, working with the city for zoning and permits.

He loves talking with people...  I tend to ask more direct questions, get the answers I need to get the job done and move on. 

I do all of the back end support items such as paying invoices, keeping the books, keeping our filing system up to date, researching deals, running the numbers, working with lenders, filling out paperwork for new lines of credit and vendor accounts, Project Management, Maintaining Project Budgets, schedules and timelines, Meeting with contractors for change order approvals, Business Direction, writing contracts  and scope of work for signatures and Business Forecasting.

So you can see each personality has it's strengths and weaknesses and it takes both sides of the spectrum to get the job done.  We both do the walkthroughs, scope of work revisions, initial budget, due diligence, making random site visits to our ongoing projects and communicating with contractors.

I would suggest finding someone with the opposite personality, but with the same goals and interests in the business and see if it would be possible to work together.  It has worked well for me.

Jeff V

@Matt S.

What is the zoning for the lot?

We had the same problem with  a double lot that we bought.  Was going to put a mobile home on the lot but city said it must be a doublewide over a certain sq ft...  can't remember the number, but the lot is too small for a doublewide.

We are looking at buying a finished portable building as a tiny home 1/1 and possibly renting that out.  This also has to be approved by the city, but they seem to be ok with doing that on our lot.  Our's is zoned B1 Transitional Business...  basically a mixed residential/commercial zoning.

This may be something to look into for your lot, not sure what area or zone it is in though.

Jeff V

I'm still new to the RE arena, but from what I have read a good transition for retirement is note investing.   Way more passive and as you liquidate or refinance put that capital into notes.

That's what I'm considering seriously for my exit strategy.

@Konrad R.

It never hurts to ask...  in hindsight we should have asked for a price reduction on our deal.  Who knows they may have lowered the price by the entire quote amount of the unforeseen items just to keep the deal alive, or maybe just split the cost...  either way would have cost me less than just paying for 100% of the repairs myself.  Sadly, I'll never know now, but will think hard about it next time.

The way I see it is, If the repairs are truely something that you didn't find on your initial inspection it's worth mentioning.  If they will not lower price you are in the same position.  Make the decision to move forward, or walk.  Either way they have agreed to sell for the price and terms original to the purchase agreement, you are the one that gets to make the decision to move forward or walk once under contract.

Jeff

@Konrad R.

We just closed on our second property which was an REO. We had an issue where the inspection turned up a few extra items that we weren't expecting. Several of which seemed major at the time, such as the west bedroom addition floor joists and beams were severely undersized, termite activity was noted in the inspection as well as HVAC not having a sufficient temperature drop.

At this point we had banked on being able to fix everything for a certain amount.  We were not counting on any of these unforseen items, but we did have a contingency amount set aside in the budget for unknown issues.

We called in a contractor to get an actual quote on the now known things and turned out it could be resolved within our pre-established budget.

Had this amount been over our pre-established budget, it would have put us in a position to renegotiate.

Here are my thoughts that was running through my head at the time.

Option 1 - Continue with the deal if within budget.

Option 2 - Ask Seller to lower price due to unforseen items that came up on the inspection.  This would have been within our due diligence period.  

Option 3 - If Seller isn't willing to lower price and it is in fact a deal breaker then your only option is to walk.  There is no deal at this point.  They are not willing to accept a price that allows you to make a profit...  no profit, no deal.

Edit - We would have opted for option 2, but the bank had already informed us that they had a few backup offers come in after accepting ours.  We decided to stay in control, by not re-opening negotiations and staying under contract.

Luckily, in my scenario we had a large enough contingency to allow for some unknowns.  This allowed us to salvage our deal and move forward.  Something to think about is,  If the deal is so thin that a few minor unknown issues will sink it, then maybe its not that good of a deal.

Make sure that your initial offer has enough room in for at least 1 major issue and a few minor...  you never know whats behind the walls when you start demoing.

Hopefully this will help.

Jeff

@Ben Leybovich

Actually listening to your 2nd Podcast :D

Cheers!

Jeff V

I notice Homepath loans are investor friendly and will lend to an LLC with only 10% down and finance the repairs. However I can't seem to find if they will do 30yr loans to an LLC.

Does anyone have experience with this loan product?

If anyone can provide some information or your experiences in using this product and caveats involved I would appreciate your input. 

Have you been able to get funding when the property will be held in your LLC? Was 30 yr financing available as an option?

I also haven't found any lenders who have this product in their lineup...  any advice on that would be helpful as well.

Also on a side note... Do you know of any other options to get 30 yr financing when holding the property in an LLC?

Thanks,

Jeff V