All Forum Posts by: Merin Porter

@SteveVaughan Thanks for your response! The mobile home is in decent shape. Our realtor said we could word the contract so that the mobile home is moved off of the property while we are getting it appraised and then moved back on the property after closing. I believe we would technically be asking the seller to cover the costs of removing the mobile home and putting it back in place after closing. That means they would also have to do something with the current tenants (possibly relocate them into the empty garage apartment for a little bit?). But if they are having to spend $10,000+ for that, that's a $10,000 concession we won't get elsewhere.

Thank you all so much for plowing through that huge post and for your input!

@ShariLawson Good question. We are actually moving because we love the area and want to transition while our kids are still very young, before they get settled into schools. We are just using the move as an opportunity to jump into real estate investing. The idea would be to live in the house for at least a year, then possibly rent it out and purchase another property. Wash, rinse, repeat.

@MaxMatrin What if the conventional loan actually offers better rates (3.625 for conventional vs the 3.875 we were quoted for the VA loan)? No PMI with the VA loan, but no funding fee with the conventional loan and no need to move the mobile home. Would it just depend on what percentage our PMI was of the loan?

@GloriaMirza What an interesting thought! We may have to try that! 

Hello everyone, 

I have a somewhat unique situation and could really use some advice from seasoned investors. My husband and I are looking at purchasing our first investment property. We currently live in Texas, and the property we are looking at is in Colorado. Here are a few of our considerations:

• My husband is a veteran. This will be our second home purchase, and we have our full VA loan entitlement available.
• The property we are looking at is almost three acres, is zoned multifamily (hard to find in the area), and has three units on it: one stick-built home (3/2); one garage apartment (1/1); and one mobile home (3/2). Two of the units are currently rented (actually, under-rented) for $2400 total. The third unit (garage apartment) is currently unrented. These are detached, rather than attached. 
• Two of the units need cosmetic updates, but are livable.
• The property has been on the market, all-told, for about four years. This is mainly because it's been overpriced and because it needs some updates. The seller has indicated they would be open to the idea of seller financing.
• I am a salaried employee; my husband is self-employed. We are planning to move into the stick-build home to use it as our primary residence. This means that we will be moving to another state. My husband travels for work anyway and so his income should remain about the same. I will be freelancing for my current job, but anticipate switching from a W2 to a 1099 employee. (This has been a concern for some lenders.)
• The VA doesn't want to touch the property as long as the mobile home is on it. Our realtor has suggested having the seller move the manufactured home off the property while it is being appraised and closed on. The cost of doing this would be about $10,000, plus they would need to relocate the current renters/possibly compensate them a month's rent for their trouble. My realtor made the point that if the seller concedes this on moving the mobile home, that will be money they probably won't concede elsewhere in the deal (like by lowering the purchase price, etc.).
• This would be our second purchase with a VA loan. We will offer $600,000 on the property and would put 5% down, so our funding fee would be 1.5% ($9,000). But we wouldn't have to pay mortgage insurance. We have been quoted a 3.875% rate.
• Another option would be to go with a conventional loan. We could put about 10% down. We've received a rate quote of 3.625%. We'd have mortgage insurance for at least two years, but we wouldn't have to move the mobile home. 

So, my bottom line question is, if it is going to cost us a $9,000 funding fee plus $10,000 to move the mobile home if we go with a VA loan, is there any scenario in which this would still make sense versus a conventional loan with PMI? My head is swimming a bit here, because I've always considered the VA loan the best possible way to go. But am I wrong? Have I finally encountered the situation where conventional would be better? Or is there another kind of loan or creative financing we should be looking at?

Sorry for this really long post. I sure would appreciate any input you could offer.

Thank you so much!

Merin

@CaroleG, thank you so much for the input! I spoke with an appraiser (among many others) out there who really impressed on me the difficulty developers face when trying to build multifamily properties in the area. He said, "You have to ask yourself, if demand outstrips supply as far as it does, why aren't there more developments? It's because it's very difficult to do." If I can't make the multifamily option work, what would your thoughts/suggestions be on the possibility of buying a house on acreage with a guest house and above-workshop apartment and renting those out (or possibly building them if they don't already exist, since we're real DIY people)? What sorts of challenges do folks face in attempting something like that? I am wondering what La Plata County's general stance is on things like that if the home on acreage is zoned single family residential....

My family is planning a move to Durango, CO. We are looking for a small multifamily property that we can live in while we manage it. Word on the street seems to be that the market is strong, but I've been stalking the real estate sites for a few months now, and I see a lot of houses that are staying on the market for a long time -- especially in a certain price range and/or that need some updating. I would love to hear from someone who's familiar with that area on your opinion about the strength of the local market, where (if anywhere!) the deals can be found for someone who's willing to put some sweat equity into a fixer upper, and whether the market appears to be getting stronger or weaker. I'd love to know anything else about the area that you feel is important for a newbie investor to know, as well! I've been reading a lot about REI, but I have a long way to go! :) Many, many thanks in advance for any information you can provide!