All Forum Posts by: Mackenzie Grate

I agree. Let her exit the lease and not pay the penalty. I do think that would be very difficult to live with the noise of concrete work happening during the day, especially if you WFH. So be gracious about it. No one would want that living situation for themselves, especially if they didn't sign up for it knowingly. 

The other thing you could do, is offer a discount if it is going to be harder to rent out because of that. If renting it out again is not a challenge, then just let her end the lease early without penalty and rent it out to someone new who doesn't mind.

Good luck. What a challenging situation. Hang in there. :)

I'm not in St. Louis so I can't speak to the exact numbers. I do however think it's important to remember these are your starting numbers. The rents will go up over time and prices will fluctuate on the other items. Plus, once you move out eventually and replace it with a tenant it will most definitely cash flow. So it's not just about the first year, but about the long term benefits. I'd say go for it. Paying less in rent now and setting yourself up to have a cash flowing asset in the future is a total win/win.

Good luck and congratulations! I'm excited for you!

I'd 100% get an inspector out there. It's worth the money even if you have to walk. They will be able to tell you what was installed correctly or not (electrical). They will be able to tell you if the foundation is compromised, etc. etc. No matter what you can then take that report and use it to negotiate down the price. That way if you still are interested in taking the risk after everything you find out, you at least have a concrete report to show the seller about what the place needs. Older homes are a bigger risk. But when done right, and when the numbers are ran before, they can also be extremely lucrative and rewarding. So if you want to tackle it, don't listen to the naysayers (unless the numbers don't work of course, then listen) but go for it.

I'm rooting for you! Good luck!

There are some interesting responses in this thread. Things I have never thought about. I generally don't invest in college towns because I'm looking for tenants with less turnover. College students swap out pretty much every year and that rehab cost to unit can add up if they aren't maintaining it well. With that being said though, if you are interested in that, and the numbers work, investigate the school further. Make sure it's finances are rock solid and that it has some sort of unique program will draw students in no matter what. If it is a small school, and the only employer in town, I agree that could be extremely risky. But if there is something that makes it stand out and draws in a very unique type of student for a specific program... maybe that would be different? Based on the information you provided, unless it's a phenomenal deal, I'd look at other bigger/ more stable markets for my first investment property.

Get the hard money prequal. That will tell you either way whether or not the numbers really work. If they won't lend on it, it's too risky. And I agree with @Jaron Walling. If you can get the hard money lender to agree, then you should go for it on your own. It's a huge learning curve and better to learn with your money than other people's who trust you. Relationships are key and you don't want to make a huge mistake with someone else's money your first go around if you can avoid it (not that I think you will). Also, unless someone else is bringing some sort of skill or experience to this project, if you can get the money elsewhere, and why not do all the work and get all the equity?

If it were me, I'd get the hard money loan myself, and take on the project. I don't think you need anyone else for this deal if the numbers are good. Get the prequal and get it under contract. :)

Good luck!

This is a challenging situation. I agree with everything that was stated before. This is an unusual way to pay for materials and sends red flags from the get go. I think you are probably going to have to eat the costs at this point. But it may be worth it to take him to small claims court. That is usually the cheapest option, and often ends in the parties negotiating with a mediator. But if nothing was ever in writing, you really don't have a case. Just learn from it. That's all you can do. 

And for me, the biggest lesson to takeaway is if someone is proposing an unusual arrangement, there is usually a reason why and to be wary. Sometimes people get so caught up in the "creative strategies" in real estate, that they look past why certain safe guards are put in place. Unless you are super experienced, I'd only enter into traditional agreements until you get the lay of the land. This payment method for materials is not traditional and doesn't appear in reputable books about flipping houses and dealing with contractors.

So keep educating yourself. And keep moving forward. This is just the cost of gaining experience and education. We've all been there in one way or another. So hang in there and don't be too hard on yourself. :)

Good luck!

None yet. Especially not on turnkey homes because there is still a shortage of available contractors and high cost to materials. So anything turnkey that presents itself well is still going fast and over ask. Additionally there are still a ton of cash buyers out there who are simply avoiding any financing issue altogether. So I imagine it will take a bit more time for it to hit, perhaps fall or winter...

For more expensive areas, you'd probably want to lean towards flipping, house hacking or buying something intentionally for an appreciation play. That is the trade off. More expensive areas tend to have lower cash flow.

You didn't mention anything about investing remotely. Is there a reason why you are limited to those areas? Plenty of people invest long distance in cash flowing markets. Have you considered that as an option?

Good luck! The key is to just get started :) You've got this!

I agree with @Galen Ikonomov. We need more information. Depends on your plans for the property, your appetite for risk, and where you are at in your investing career. If it's a buy and hold, fixed rates are the way to go, even if they are a little bit more than the rates you are getting quoted for in your ARM. If you have a solid exit strategy sooner (and I mean full proof) then consider using an ARM loan if you must and you know you can get out before the rate change. But know that rates are probably going to go up from here so if you are unsure about your exit strategy timeframe, probably best to go with a fixed rate just to be safe.

Good luck! I'm cheering you on! :)

Hi! I have a client who is looking to buy a house that is part "mobile" home but has two actual extensions on it that are stick and frame. It's in Green County, NY. We called a few local lenders and only one said maybe. Does anyone have a lender they know that specializes in this? Any recs would be super helpful!

Thank you! I appreciate your help!

Mack