All Forum Posts by: Michael S.

Forte Homes and VIP Homes advertise the following (again not including land, landscaping and upgrades).

Forte Homes- 3084 sq. ft. 4 bedroom, 3 bath, 3 car garage $419,000 = $135 sqft

VIP Homes - 2947 - Bdrms: 4, Bath: 2.5, Garages: 2 $290,000= $98.40 sqft

Completed I would estimate $125-$150 plus the cost of land.

@Nate T.

Nate,

Did you find a good handyman?

I am having trouble finding one as well.  My usual guy is now booked 8 months out.

I'm searching for:

The ideal handyman would charge wholesale prices rather than retail prices. Have his own tools, years of experience, clever solutions, and again wholesale prices.

Thanks,

Michael

@ kevin Richard

Not all lenders are the same.  I have found lenders with "in-house" funding to be the most flexible. You may also contact mortgage brokers who can choose from a variety of lenders.  After mortgages 1-3, it took me a while to find a lender to work with my self-employed situation.

I'm going to be very honest with you. There are some red flags in the situation you described. Tip #1: You need to have more cash in reserve for unexpected emergencies/repairs. Credit cards can serve for those emergency repairs though it is unwise to carry a balance if it can be avoided. Your credit card balance of 24K needs to be dealt with before acquiring more or at least put under the LLC. A credit card balance in an LLC has little effect on your credit score while credit card balances in your name will have a direct impact on your credit score.

A fast nickel beats a slow dime, so in this case, if you have a good deal with the 175K home you should try to extend the closing date (to give yourself some time) and flip the deal to another investor before the close of escrow. Otherwise you face acquisition costs, holding costs, as well as renovation costs, it adds up quickly.

Good luck!   

@Kevin Richardundefined

I'm uncertain of the points at this time. You are right to ask about points and other possible hidden fees. APR vs the Rate often help to indicate if the lender will be heavy with fees. Lenders always prefer to mention the Rate since it will be lower.

The 65% LTV was a little disappointing as I prefer greater leverage.

At this time I'm still weighing options.  I prefer to have a single non-recourse fixed mortgage on each property.  

@David C. 

A few more options you may consider:

3. Reselling the tax lien to another investor  - sometimes a fast nickel beats a slow dime or worse a slow penny.

4. Partnering with an investor.  In this case you would contribute the deal and the lien and they would contribute the additional amount needed to foreclose, etc

The decision will depend on your comfort level, knowledge of the area, and your available funds.

Good luck!

Spoke with First Key representative today.  As of May 18, 2015 these are their rates*:

5 yr balloon - 5.45%

10 yr balloon - 6.26%

30 yr fixed - 6.50%

* rate is for the 65% LTV. If the LTV selected by the borrower is going to be at the max 75% LTV then the rates are about a 1/2% higher.

Time to complete loan is about 60 days

Appraisal required for each property - $450 avg each and properties must be placed in a single purpose LLC

Still researching and comparing funding options.

Most often it is still a buy.

Is the home construction block or wood frame? 

 In the past I have purchased block homes with termite damage to wood trim.  This is my favorite scenario since it scares off many potential buyers but the damage is usually found only on a few pieces of wood trim and not structural. 

What is the age of the home home?

  In Phoenix, homes built before 1960 will often have redwood construction.  The redwood may have a few bites taken but seems to be very disagreeable with the termite palate and resistant to the termite advance.

How extensive is the damage?

If the home is wood frame construction it depends on how extensive the damage is.  A window sill can easily be replaced but it would be good to have an attic inspection to look for more damage.

In the southwest, I will have the home sprayed after purchase to halt any further damage.  In most cases, termites are not a deal killer unless the home is experiencing structural issues as a result of years of extensive termite damage.  I can't speak for your area but in the southwest, most older homes experience some amount termite damage at some time.

Sounds like you found a great investment. I hope this helps.

-Michael

It's hard to say without a photo of the situation...but I will give a guess based on an experience I had years ago.

In my case the drain overflow from the bathtub on the 2nd floor had settled away from the tub.  This resulted in over flow tub water traveling inside the wall and exiting in the 1st floor living room.  

From experience, my net worth prefers single family residence (SFR).

With the SFRs:

The tenant stays for longer period of time.

The tenant takes more pride in ownership and can be held responsible for landscaping (with the right lease).

Tenant is responsible for all utilities

Over the past 5 years I have seen greater appreciation with the SFRs

Easier to get financing on an SFR and the loan rates are somewhat subsidized in the USA for loans 1-10.

Easier to resell. Fix-up and a few accessories are appreciated on an SFR and you can get a premium from a SFR buyer. The buyer of a multi unit building is not as emotional and usually interested in only the numbers/ROI.

With the Multi Unit Buildings: 

More vacancies.  More turn over costs. 

More landscape issues with tenants leaving trash, since it is "not their yard". Overall less tenant pride and accountability.

 A large water bill - tenants will not bring leaks to your attention since they have no incentive. (Sub metering is a possible option but may lead to more vacancies).

Multi Units Buildings often make more financial sense on paper but the reality is different.

Carrot on a string.  Success is just one level or purchase away...oopps I meant the next level ..eeerrr the one after that.  The seminars remind me of a sign painted on the outside of Joe's Crab Shack that says, "Free crab tomorrow".

Ugghhh.. I have been to a few of these seminars.  Usually as a guest of a friend who had an extra ticket.  Even though the featured guest speaker changes,  the pitch is pretty much the same i.e get the attendee excited about real estate and easy/huge profits and provide them with just enough information so they will pay for the next level.  The next level of course is more expensive but will supposedly provide all one needs to actually use the concepts; such as contracts for sandwich lease options, wholesaling, flipping without taking possession, etc.(All of these may be valuable tools, but if you are really interested and have the drive, you can learn it for free on the internet).  The rebuttal I've heard to this is that the attendee "will not value the product if it is free".  If the attendee is not motivated, they will also not use the concept/product even if they do pay for it.

My favorite part is when the seminar speaker tells the audience about financing.  First it starts off as how to finance real estate but then it quickly changes into the speakers real motive of how to finance/purchase the next level of the seminar.  At two different 3 day seminars I have seen speakers tell the attendees to call up their credit card company during the break and and ask their credit card company to double the limit, "double it".  

Final note: The seminars can provide some valid concepts, however this information can be gathered for free. Also most of the examples provided in client testimonials are rare exceptions, luck, or will take a tremendous amount of time and effort relative to the reward received.  

If you are really interested. Attend the 3 days but leave your wallet at home. The next level is a carrot on a string.