All Forum Posts by: Account Closed

@Jerry Pollio Still waiting on my first deal. I have, however, had two deals in the past six months where I had everything set to go but backed out of. In these deals, financing was not the issue.
The first deal was a condo down in Destin, FL which I intended to use as a vacation rental (Airbnb/VRBO). For this one, I knew the owner and was planning to use owner financing. Ended up backing out before signing the contract. Looking back, I think it was the right move - a vacation rental would be a lot of work from 1,000 miles away.
The second deal was a small duplex in western Nebraska. My financing would have been through a local bank. The best product they could offer me was a 5/5 ARM. The purchase price would have been around $50K and not many banks like to do a 30 year conventional on that type of property.
I've looked at the market here in Wyoming constantly and it's pretty rough. Properties are very expensive in the larger cities - so much so that I really struggled finding a quality investment. In the more rural areas, prices are obviously cheaper, but they have there own issues such as fluctuating demand because of oil/coal booms and busts, limited selection of tenants and property managers, etc.

@Jerry Pollio I'm right there with you Jerry. There are so many options of scaling outside of conventional financing. For example, you can probably get a few properties with conventional financing, but by the time your looking to scale, you've hopefully built a solid reputation for yourself as an investor.

This reputation will allow you to tap into things like hard money lenders (if you can do some cash out refinances on earlier properties to pay off the higher rates hard lenders expect). You can also look to partner with other investors who may have the cash but not the time to invest. The better you can network in your area, the more individuals you'll have to potentially bring deals to. Another option is to ask the seller for seller financing terms where they carry the note and you won't have to worry about it affecting your debt to income (as calculated by banks).

I think that it will be harder to really scale with only SFRs. Consider having 20 SFRs spread across Houston vs having one 20 unit apartment. The economies of scale to that apartment building would give you much more time to look for other possible apartment deals to scale that way.

It's called "Creative Financing" for a reason, and I'm sure there are many awesome posts on BP that dive deeper into this subject :)

Best of luck!

@Jason Lavender I have absolutely no experience or knowledge really on this topic, but with that said, I think it could be tricky mixing this type of property class with a profit in mind. You've eluded to the fact that it's been done before, and I do not doubt that. Personally, it just seems that some things may be better left untouched by investors - and this seems like one of them.

I would think the pressure to crank out a positive cash flow or ensure you're making a profit could conflict with the goal and intention of providing the folks with a well-suited and safe environment.

Hopefully someone with extensive experience will chime in and give you a more appropriate response to your questions - I'm interested in at least learning more about this subject.

@Account Closed Best of luck! You'll have to let us know how the process goes. I think that could be a great strategy - especially if you were able to 100% finance more than one multifamily property. Depending on the market there, after the year in the 4-unit, you could roll into a nicer duplex again using the VA. If the markets hot, you might hit that $417K cap pretty quick though.

FHA 203K could also be an option - 3.5% down. A little stricter on their requirements than a VA, but I'm sure you could still find a solid deal around there.

Good to see some other grads on here!

I’m looking to use USAA’s rental property insurance as well for a property in Nebraska, but I just got quoted today higher than I expected. Being forced into a replacement cost policy by them is kind of a hassle as the property I’m looking to purchase is listed at $55K and the replacement cost is somehow $194K. A cash value policy would put air more money back into my pocket in the form of cash flow, but what’s worth it at the end of the day? More specific on the numbers, I was quoted at $1,400 for an annual premium on a small duplex. That’s about $115/mo!

@Nancy Bachety This specific HOA allows short term rentals as many of the units are used for vacation rentals

I spoke to a few PMs down there...best I found is 20%. That covers marketing on three booking sites, all interaction w/ renters, cleaning, on-call requests, and a few other things. Additionally, they only charge 10% if I bring a renter to them....that could be tricky up front though, especially since I'd be starting a VRBO site for the condo from scratch. I'm wondering if they delta of 10%-20% would be worth it if they could yield higher occupancy throughout the year. I will have to double check with them though to ensure that they don't have a bunch of those little fees that add up well over 20%...the way the PM made it sound was 20% for everything.

Andrew Johnson That totally make sense...although paying for property management would eat into my profits, I think it would overall be worth it. I may end up living in the area in a few years at which point I could cut off the service and do it myself. Would a property management company clean, market, and handle bookings via VRBO? Especially with short term, I'd just want to make sure they are no kidding trying to minimize my vacancy. I could also bring back some profits by charging a cleaning fee via VRBO. Looks like cleaning fees are standard these days for the most part. Maybe after I got the ball rolling I could manage bookings on my own and have an independent cleaning service. I think utilizing programmable code locks could be useful-I could provide each renter with a code that can be changed from anywhere. Some people like to just get into their unit without having to be briefed by the owners.

Chris Gerbig Peter Mohylsky Vincent Migliorino Andrew Johnson Steven Gillmer Hey everyone! I wanted to try and continue this conversation...especially in regards to potential restrictions on using STRPs in the Destin area. I saw an application on the city of Destin's webpage about applying to use a property as an STRP, and one of the requirements was that the owner/responsible part be within an hour of the property in case of emergencies, etc. I'm also looking at a property in Destin, and being out of state, these types of requirements concern me. Maybe it varies for property type, part of town, etc? I'm looking at a condo by the way.... Thoughts anyone??

@Tyler Bullis What I would say though is to research the heck out of it.  If you're looking at a different city, study neighborhoods, study home prices past and present, talk to local real estate agents, see what drives the economy/employment in the area, look into unique real estate rules/laws in the area, or if you're close to a different city--go there and spend a day checking it out. Overall, depending on your strategy, you are probably looking for a market thats on the up or a market that is and will continue to be stable.  Immersing yourself in a new area that you're interested in will help you identify several of these things.

I'm in the same boat as you Kenny. I'm looking to purchase but don't want to stay for a full year because I want to turn it into a rental before then.

I actually talked to a local bank in my area and they mentioned one of their loans that could possibly be as low as a 6 month owner occupance.  I know it's not ideal, but it beats 1 year. Maybe give some local banks a call