All Forum Posts by: Kyle Shepherd

@James Allen@Nicholas U.

OK, noted re 3.5% vs 20-25%. But the big point is 30year amortization.

Then why is my loan officer saying this is not possible/common/etc.? Is it because I'm asking about it in a commercial loan context?

@James Allen - so to be clear: it is totally legal, doable, and standard for me to purchase a SFH as a rental property, that is not my primary residence, with a conventional residential loan where I only put 3.5% or whatever down, for a 30-year mortgage. Is that accurate?

Thanks @Moises R Cosme!

(As a side note, one of the properties I referenced in my original post is strictly land, and I understand that being commercial. However one of the properties is a brick-and-mortar 3br 2ba home that happens to have several acres with it. It is definitely a residential SFR right now, regardless of what I do down the road.)

Wow, so then my understanding must be really off. I've understood it, from the couple of conversations I've had, that if I am renting the property out, then it becomes investment/commercial property. Very straightforward. The conversations go like this:

Loan officer: "Will this be your primary residence?"
Me: "No, I'm going to turn this into a rental property."
Loan officer: "Ok, well, in that case, that makes it investment property and you will need a commercial loan on that. Our loans generally require 20-25% down, with 15-20 year blah blah blah"

Is this just incorrect and I don't have a very good loan officer?

Originally posted by @Kenneth Garrett:

@Kyle Shepherd

Buying SFR you can take out a thirty year mortgage in your name. Brandon is correct.

OK, but isn't this true only if this is going to be my primary residence? I have been told on multiple occasions that if I plan to rent it out, it moves to commercial status.

Hey folks - I am a noob, and I am confused. I have not done my first deal, but I am always looking at properties and crunching numbers. (I have not done my first deal yet because I am behind the game when it comes to a credit score/history - discussion for another day.) Somewhere along the way since I heard about BiggerPockets several months ago and begin reading/listening to BP stuff, I picked up the habit of using 30 years when calculating mortgages on properties. New SFR on the market? Crank out the amortization-calc.com and find out what the monthly payment would be over 30 years.

However, it would appear that this is wrong - it would seem, based on my conversations with banks and mortgage companies, that I can't purchase an investment property with a 30-year fixed rate mortgage. This keeps coming back to bite me - I am looking at a piece of property that would make a great trailer park, and another piece adjacent to it that already has several on it, but I keep forgetting that the monthly payment is WAY higher than I initially think due to my habit of using 30 years at first.

So 2 questions -

1.) Why do Brandon and friends use 30 years in their mortgage/BRRRR refinance calculation examples and books if you can't do a 30-year mortgage on an investment property?

2.) How would I secure a rental property (SFR) in such a way that I COULD take advantage of a 30-year fixed rate mortgage?

Thanks folks!

I'm looking to pool 5-10 investors together to form what is basically a small-scale REIT. I say "small-scale" because I think REIT is far far larger than what I am trying to do (e.g., a formal REIT requires 100 shareholders).

Is there a business structure that would allow 5-10 investors - family, friends, etc. - to put money in, and then get monthly payments from the profits?

@Aaron K. OK, that's all very helpful. Side note I forgot to mention - I'm seller-financing a good, used mobile home from someone else and would stick it on the empty lot, so it wouldn't be empty for long. I see your point about the unusable vacant property though.

Hey folks!

I have a realtor contact who is getting up there in years, and wants to get rid of a bunch of his rental properties (including his own house). He owns them all outright and has for years. We spoke the other day and he's interested in selling them all to me, but wants to do so as a package deal, not one-offs.

They're all older homes, built anywhere from the 40s-70s. The brick houses are older but on the "newer" side of older, if that makes sense.

Lot 1 - big older brick house, with a commercial building (warehouse type), small building that appears to be a garage + upstairs apartment? His own property

Lot 2 - old house, rented

Lot 3 - old house, rented (I think?)

Lot 4 - brick house, rented

Lot 5 - empty mobile home lot, rented mobile home lot, a good bit of property that is forest and unusable due to flooding right now (but road access)

Lot 6 - mobile home lot, rented out

Lot 7 - more currently unusable land

Like I said, he wants to sell all of that as a package deal and is open to lots of financing options including seller-financing as long as it's a shorter financing period as he doesn't expect to be around in 30 years.

Here are a few questions. I'm a noob here, so feel free to state what you may think is obvious!

1.) Given that several of the properties are rented and cashflowing, how would I go about assessing the condition of those properties and what may or may not need to be done to them?

2.) What's the best way to approach crunching numbers on this huge deal? I can't imagine a BRRRR approach would work, since the rehab phase isn't possible on almost all of the properties due to being rented out and my unwillingness to kick paying tenants out (one has been there for 12 years, reportedly, and he tells me they all pay on time).

3.) He's agreed to sit down with me and going through all the books, records, information, etc. about each of the properties. What are the big questions I should be asking about each property?

4.) Any other direction / advice on going about this?

Maybe these are too many questions for one post and I need to break them out into separate posts - just let me know and I'll be happy to do so.

So the small SFR I'm looking at purchasing in super rural Alabama has a little bit of mold/mildew (not black mold thankfully) in a couple of the rooms, on the lower half of the walls, due to poor drainage. (No gutters and no french drains.) What's the way to deal with this? Is this as simple as (1) install gutters, (2) install french drain, (3) use killz and repaint? Or do I need something more drastic?