All Forum Posts by: James Orr

I'm a real estate broker in Northern Colorado and have been focusing on working with clients that owner occupy first then convert properties to rentals (we've been calling them Nomads).

Any other agents out there been working with clients like that and might be interested in sharing strategies, tools and resources?

Thanks.

James

> So my first question is, is the 7 year wait for sure from the date of the sherriff sale? It's hard to find a definitive answer on this. I don't want to get to April 1st and find out we can't even apply for the mortgage until April 29th.

I'd seek a definitive answer from the lender from their underwriting department on that one. The lender is ultimately who will make that decision. If you don't like the answer you receive, I'd suggest trying a couple other lenders.

I've not done them, but I had a lender (in Fort Collins, CO not your market) tell me he had some special non-FHA loan programs with much higher interest rates that would do stuff like bankruptcy (not sure if they'd do foreclosures though). So that might be another option.

> Second question is, can we get an FHA prespproval and submit that with the offer, but change to conventional financing before we close?

In our area, on our real estate contract, you can enter in the type of loans that you're able to use like FHA or conventional. So you could mark down that you were going to get either an FHA or conventional and submit a pre-approval for the FHA. Then, if you can get the conventional you could switch to that.

If you can keep the previous property as a rental, I'd recommend it. I love that Nomad investing model!

> When making an offer on a MF property, is there any way to verify the rental income that the seller claims to make on the property?

Yes, you can ask for tax returns as part your due diligence documents in your offer. You can and probably should also get Tenant Estoppel statements from each of the tenants with them stating what they are paying and what they have paid in security deposit, etc.

> Is it appropriate to ask for tax returns?

Yes. You may get some push back on that.

> This is a small 8 unit property and the seller is apparently "old school" and collects rent in cash/money order and keeps hand written records.

OK.

> Come to think of it, he might not report all of the income on his tax return anyway.

Yes, that could be a challenge to verify it on tax returns, but the tenant estoppel statements should help some.

> I guess the only thing I can do is check out rental comps in the area and see if they are reasonable.

Yes, that's a good idea as well.

> I just don't want to get stuck with tenants who don't pay rent on time/leases that don't exist/rent amounts that are lower than seller claims, etc.

Yes, the tenant estoppel statements are statements made by the tenant to verify these things.

> I guess these are just the risks you take when investing in tenant occupied properties, though!

Yes.

> Anyone have any advice to offer?

Get copies of signed leases as well.

Hope that helps.

Yes, VA or FHA loans will allow you to buy single family homes, duplexes, triplexes or fourplexes.

If you can get VA, you may want to consider using your VA benefit for the first one or two (really until you run out of VA benefit). Then, consider moving to FHA loans for your next purchases.

After that to purchase your next homes as owner occupants to live in for a year then convert to a rental, you'll probably need to do single family homes unless you refinance out and then use your VA/FHA benefits again.

Hope that helps.

James

I hire Private Money Coordinators (and insist they get licensed if they are not already) so that I can pay them 1% of the money I use. I use an IC agreement.