All Forum Posts by: Manon Sheiman

 Thanks, @Bryan Petrinec, good plan. 

 Thanks, this helps (or doesn't!) a lot. 

I am under contract for two SFR in San Antonio, and planning to pay cash to close, then would like to get financing as soon as possible. Am in a 1031 exchange, and property is in the name of our family trust, so I need to quitclaim after closing to get a conventional loan, I'm told.

Do you have any loan products that I might be eligible for right away? I'm using funds I'd planned for our new house remodel, and really don't want to delay it 6 months. 

@Andrew Postell How long does one have to be on title to get a cash-out loan? I've read 3 months, and I've also read that if I buy a property all cash, I can get a loan immediately, so I need better information. Does a HML have anything to do with this requirement?

Can you expand on your statement that the father can give a gift of equity to the son? I was under the impression that the gift limit was $30k per year for two parents to a child. Is there no limit when it comes to equity? (That would be fantastic.)

Is there a limit to the amount one can borrow on investment properties in traditional loans as opposed to private or HML? In other words, do the loans count against one's income in a traditional loan, or only against the income of the property as in a HML?

Sorry, don't mean to hijack the thread, but others may have the same questions as well, and thank you so much for your answers! So grateful for all the info and help on BP forums.

 @Dan Heuschele I am curious why you believe that the Midwest is 'probably the worst' RE market in which to invest, as I respect your opinion. 

I am searching for OOS investments, because my California investments have doubled in value but the rents have flattened. I started to study the Kansas City market, and although I found the older neighborhoods charming (and dirt cheap), with their small town America feel and huge lots, many of the schools have terrible ratings, with the basic test scores in the pits, and bullying and disrespect for teachers rampant (tho that's pretty standard now). That was the first discouraging sign, and that's just for starters. Lots more data, such as high unemployment rate in certain sectors, make the words 'rust belt' come alive for me. 

While I can see that much appreciation has taken place, and many investors have made a lot of money, I don't know if there's room for the average buy and hold investor like me anymore in the area.

I know many areas are developing high tech centers, such as Pittsburgh, etc., but is that enough for RE to be profitable right now? Has much of the cash already been sucked out of the air? There is so much more to study besides the cap rate and ROI on property, so I just wanted to hear a few words of wisdom from you, on why you hold the opinion that you do. Really appreciate your input!

 @Katy Wyly: Great chart! Thanks for that, and I absolutely agree. I would never rely on Zillow's 'Zestimates' of property value as there are too many data points they don't have access to, and also the market is fickle, so no company can track prices with 100% accuracy. It looks like a few areas have access to more accurate data than others, esp Denver and Minneapolis-St Paul.

One has to spend many hours on Zillow, Realtor.com, or any of the other sites to get a sense of what is accurate information and what is not. I have never seen Zillow being able to accurately predict the future appreciation of properties, although the past appreciation does seem pretty reliable. 

I've seen listings in my town go up on Zillow before my agent got them to me, but I've also seen houses for sale that were never listed on Zillow (e.g., a condo I recently sold while being rehabbed), and houses that remained on Zillow for a year or more after they were sold. The agent wanted exposure and leads and didn't want to take the listing down. 

But for broad beginning research of prices and rental listings, Zillow, Realtor.com, etc., can be valuable to get a sense of the market, also for neighborhood info, the GreatSchools.org ratings and reviews, price and tax history, and so on. Also www.city-data.com. 

@Ronald Rohde: Either I was misunderstood or didn't explain myself well enough when I said 'flat concrete roof' - I don't mean a true flat roof, I only meant instead of the curved concrete tiles (used to be clay originally) that characterize the Mediterranean style, which would not be in line with the styles prevalent in Texas, and I meant that possibly they could make roof tiles flat instead of curved, therefore look similar to composition but last much longer. 

I absolutely agree with you about true flat roofs. Not only are they not aesthetic, they have all the issues you mention. I've only seen them on older commercial buildings and some very old residences in California, not on new tract builds, but I'm no encyclopedia on the subject. 

However, your suggestion of metal roofs is ideal - they are beautiful and durable in many extreme weather situations. But don't they cost more than most builders in this price range can afford?  Therein lies the rub. The end user simply has to budget for a more frequent roof replacement than under other weather conditions. 

@Bryan Petrinec 

Are there duplexes in the Austin area that positive cash flow w ~30% down?

Asking for a friend who really, really wants to know.  Thx! 

@Caleb Anderson Is your family member savvy about REI? I would make sure they knew as much about the deal as you do, and that they go in with eyes wide open to the risks. Will their ROI be commensurate with the money they put into the deal? You want to make sure it is completely fair to them.

Many a friendship has been lost over deals that did not turn out as expected. 

I'm a newbie investor in Texas, but I've already learned a few hard lessons, so take what I say for what you wish. 

If they are requiring all cash, is it because the property will not appraise under a standard or FHA or VA loan? That's what it sounds like to me.

Which means it needs a lot of repairs, maybe as much as $30k or more, including new roof at maybe 10k. And will it be worth it after the 30k-40k repairs? No, it will negative cash flow, big time.

A HML will not loan on a property that either: is not rent-ready; is not priced low enough to compensate for repairs with a profit margin built in; does not cash flow with a margin for selling costs built in in case they have to foreclose on you; or that will not yield enough rent to provide that cushion.

It seems that you are from California, like me, and saw the prices in Texas and thought, wow, what a steal, when you are looking at shacks in your area for 1.5M. Don’t be fooled. The prices are lower because the rent is lower – much, much lower, and property taxes are high because there are no income taxes, so the money to run the state has to come from elsewhere.

I'm concerned that you are being ripped off, frankly. The good deals, or even the prize OOH, are being snatched up within one day, sometimes one hour (in my recent experience in San Antonio), so if this deal is hanging out there, it’s because the sharp investors don’t want it.

How many years old is this property? Roofs do not last long in the hot Texas sun, they disintegrate. They are composition – I don’t understand why they don’t use concrete tile roofs, well, yes, I do, it’s b/c they aren’t Mediterranean style construction. (Still, they could do flat concrete, but probably don’t b/c of cost.) I’m under contract for a sfr in SA and I could kick myself – the roof is at the end of its life at only 18 years, but the owners quickly patched up the few loose tiles within 24 hours and pretend like everything’s okay, and what can I do now? I can’t back out because it’s a 1031 exchange, and I have no time left to select property.

It was newbie lack of experience on my part, and also the agent had no interest in advising me much, only to tell me which areas he wanted me to buy in, the areas that would be the least management headache for him and make the biggest 10% commission. Oh, he offered me a discount of 1% on the management commission, but in my mind, that’s only so I won’t be such a demanding owner. I won’t take the 1% discount; I plan to demand full service and high level of pickiness in selecting tenants etc.

Have you spent time in Houston going over the market with a fine tooth comb? You should do many hours of research on Zillow, both the buy and rent sections, to get good ideas of the market, and of what your ROI will be, and then make a trip there of at least a week to do your due diligence and maybe find a good investment. There are thousands of sfh for sale in Texas; this is not the last one. Take your time.

@Bill Gulley 

"Loan scams are usually found by big name lenders who provide loans on line. Quicken Loans runs a shady practice.

They require you to submit a credit card number to pay for the fees before speaking with a loan originator. The originator is pretty much a sales person to "get the ball rolling". People have called back within minutes of the on line application to stop the process and the originator did not stop anything. You have a ding on your credit card for $500.00 which is non-refundable. Even after being assured your loan request is terminated or cancelled, a few days later you might see someone stop in front of the property and take a picture from their car. You just had your property appraised!

As to the BBB, that is absolutely worthless. The BBB only tells you if anyone has filed a complaint, not that the company is in good standing. The clerk at the BBB may not even tell you the truth either, especially if ABC Bank is amember and provides hefty contributions to the office party! Pure politics!"

Why do you say that Quicken Loans runs a shady practice? They are partnered/incorporated into (I don't quite understand the relationship) with Rocket Mortgage now. They advertise heavily in tv that they will approve your loan in sthg like 15 minutes, without any paperwork (as it's all done online), and they make it sound like a super easy quick way to get a mortgage, but in the end, they are really asking for all the standard documentation, just that you give them permission to access your bank accounts online instead of sending paper copies, and you send tax returns, W-2s, etc. via electronic means. 

They told me that they are the largest producer of mortgages in the USA, and that they don't sell to FNMA, they service the loans themselves. For one thing, why should I even care who acquires the loan, what difference does it make, and for another thing, why should I believe that? When I hear one thing that sounds untrue, I tend to mistrust anything else they have to say. 

Their interest rate is not the lowest advertised either, and he had a line for that, saying that other lenders quoted online are lying. 

They have a site that I should look for houses on, but it had far different offerings than Zillow or other RE sites, weird. They wanted to hook me up with an agent also, which I didn't need. 

He was a great conversationalist, I will say. 

As for BBB, I learned years ago not to trust their ratings in any way, shape, or form. They are paid for by the company themselves, the same as with the good old Good Housekeeping Seal of Approval (does it still exist? ha!). It's good to read all the consumer complaints on the company, however, and be forewarned. But with all that, they will still have a A+ rating, as all the complaints have been "resolved". What a lot of hooey. 

I'm getting so jittery after reading all these scams that I'm thinking of just paying for the properties all cash and refinancing later through my major bank.