All Forum Posts by: Kelli Bristol

I think buying and living in a 3-4 plex with an FHA loan is a wonderful idea. It's hard to know about how you'd qualify using rents without specifics on your finances; it's best to discuss with a lender. There is no hard requirement on how long you need to live there, but you should plan on living there for the foreseeable future. I think buying one that you'd want to live in is a good place to start anyway. It may look like there are better deals in areas you don't want to live in, but the costs associated with lower quality neighborhoods are much more and so is the headache of dealing with lower economic tenants. Getting a lender to give another loan, soon after the 4-plex purchase could be problematic due to the fact that they assess 100% the debt and obligations against you but not necessarily 100% of the income. Again, talk to a lender you feel comfortable with for specifics on your plan.

What's wrong with working with a Realtor and the MLS. Off market listings (at least in my market) are not necessarily better deals. I buy and rehab and have yet to actually find a good deal with a "wholesaler" and 70% of my purchases are via the MLS. A good Realtor will make the search so much easier.

Good luck.

Everyone talks about these Non-Performing Notes like they're risk free.  There are instances when foreclosure cannot happen and the seller has dumped a bad note.  In some cases the lien being sold is not tied to a valid note or the appropriate documentation no longer exists and investors can get ZERO return.  These investments are being marketed as bulletproof when the very high returns are due to VERY high risk and a lot of footwork, legal work, potential costs, etc.   

I would think their inability/unwillingness to easily follow the rental application process would be a legal reason to not rent to them.  I would document the calls, questions, and strange behaviors.  If you're using a smart-phone, utilize the "block number" technology and get these crazy people out of your life.  

Regarding phone use, I don't see how anyone can effectively do business without talking to people face to face or on the phone.  Call me old fashioned, but the telephone is the most powerful tool we have in this business.  Plus there are many states (Louisiana included) that also require phone numbers and a host of other information on every single marketing piece, electronic or paper.  

Check with your title company. That's how I've always gotten free lists.

In in New Orleans and did a flip property, a duplex in an area that used to be pretty bad, but has gotten better. Apparently, the fact that we re-did the "problem" house on the block, made a tremendous change in the area and an impression on the owner of the duplex next neighbor. The owner of the duplex now has a very emotionally charged relationship with their property. They don't want it anymore and seem desperate to dump it... to the point that if I don't take the property (yes as in, they're ready to just give it to me - and have even offered to pay me to take it), they're just going to abandon it and let it go back to the bank.

Yes, I realize that this is a wonderful problem to have! People wanting to just give you their real estate. It's like a real estate investor come true but the deal is a bit thin... as one would expect under the circumstances.

Here are the numbers:

Value as is: $130,000 or so - ARV - $151,000

Balance of Mortgage: 127,000

Original appraised Value: 158,000 in 2008

Total monthly payments including PITI and MI- $1319.77 (MI Goes away in 2 more years)

Potential Rents: 1500- 1600 monthly - will be vacant at the end of May.

Needs some minor repairs - $5000 or less, but rentable as is. Could also use removal of vinyl siding and painting but that's always a gamble since we never know what we'll find under the vinyl.

So as you can see, it's not a great deal, but it's a free duplex with the financing (albeit not great) in place. I'm in the process of selling mine (under contract) next door for $151K.

Questions:

-Currently held in an LLC, could I just have them transfer the LLC to me and take it subject to? This may be a question for a title attorney.

-They're thinking of doing a Bond for Deed (which is a land contract in Louisiana) that involves what I believe is unnecessary closing costs to the tune of almost $2000. This gives them the most protection, but like I said, they're over it and ready to destroy their credit over the double anyway so what's the point?

-Simple "subject to" purchase into a new LLC?

What would you do? I'd love some perspective on this.

Price: $144,000

Rents: $1630 per month

Insurance: $2300 per year (actual)

Tax: $598 per year (actual)

Water: $140 per month (estimated average)

This Rehabbed Historic "Raised Double" is in a non-flood area of New Orleans' West Bank call Algiers Point. The current contract for $144K isn't looking good due to the buyers financing so it will be back on the market this week. Located in a historic district, it was once home to a jazz musician that started the famous Preservation Hall. The numbers work. The tenants on one side are paying $830 per month via electronic deposit from a pension. The other side was getting $800 but was vacated for the current buyer to move in. I can rent it out again easily. Let me know if you want more info.

You can always ask the seller to pay your closing costs and make sure your offer accounts for that hit to their net on the sale. Additionally, consider that you could do a 203K FHA construction loan to purchase a "fixer" since traditional FHA loans require the property to have no "defects" such as peeling paint, etc. The 203K loans can include payments for the first 6 months while construction is under way and would be a great way for a beginning investor to do a rehab with all the tools and oversights offered by the bank. They will appoint a "consultant" to inspect for draws and keep your project on track. What a wonderful resource for someone wanting to learn!

Note, the loan and down payment are based on the ARV rather than the purchase price. When they do an appraisal, they will determine the value after the work you want to do.

Here in New Orleans I still have great luck with the MLS but the good deals in highly desirable areas go quickly (within a day). For a hold property in a not so hot area (not bad areas, just not the "hot" areas) are plentiful. Since there are not as many cash investors here and banks won't lend on properties that are not in nearly perfect condition, the Realtors know they need to price the properties appropriately for rehabbers to make some money.

Also note, not all the properties that need work here have suffered flood damage; many have just been neglected for years.

They make small sub-meters that you can utilize to charge the tenants separately for their electrical usage. Doing the calculations if you live in an area with tiered electrical charges is the hardest part but you should be able to come up with a spreadsheet to do the trick. I just did a quick search and found one on ebay entitled "Multifamily Multitennant Housing Electric Sub Meter". I'm sure a little time on google will turn up some additional options. Just be sure to build the electrical billing procedure into the lease.

One really big con to putting your PM on your insurance is that if there is a loss on the property, the insurance company will include them AND your mortgage company in any payouts. I had property in hurricane Katrina and it was hard enough just working with the mortgage company to get my properties repaired, I can't imagine having a PM in the mix.

I understand they want to be covered for liability, but I think they should have their own liability policy. If they have employees, the should also have workers comp.