All Forum Posts by: Manuel A.

*I Am A Newbie*

Congrats on your choice to at least look into this! That's pretty amazing that you can save $1k a month (to me anyway)! ... Here's my general critique:

1. Cashflowing $300/month on each property is... dare I say, too ambitious. I'd say plan for around $100/month per property. But hey, maybe someone more qualified can say otherwise.

2. Maybe I'm wrong and you can plan for $300/month. But with properties being worth only ~$40K, it sounds like your looking to buy in the rougher neighborhoods. I'd plan, and look into the experiences of other landlords who have done this. If you're trying to relieve financial/general stress by investing in RE, I'd say investing in rough neighborhoods isn't the best path to go down.

3. Is it odd for you to purchase rentals before your own home? Odd as in unconventional/ out of the ordinary... Yes. But it's definitely not a bad thing.

4. How will these rentals effect you in qualifying for your own mortgage later. If you're still have mortgages on them, and you have three, I think it negatively effects your chances. But ask someone else to be sure.

5. Should you look for single-family or townhomes only? I think everyone would agree with single-family over town homes or condos. I think they're easier to sell and appreciate more. Also, people just in general like single-family detached housing more, so it increases your marketability...

Hope the general answers at least satisfy you while waiting for a better answer from a more experienced person :)

Welcome to BP!
-Manuel

I haven't worked a job I haven't liked since I was around 18 because I figured how big of an impact it has on your life working at a place you hate. Currently I'm a Texas Hold'em Poker tournament director. It's the funnest job I've ever had, so far!

Now, REI will be way cooler, specifically rehabbing. For me, (admittedly after reading philosophers like Marx... which I don't embrace all his ideas, but his ideas on labor are great) for a job to be satisfying:

1. You must find the subject interesting.
2. You must be able to make a product, and take pride in it as yours.
3. It must allow for a creative outlet.
4. It must allow for socialization.
5. It must allow for growth.
6. It should be something you would do for free.

Now rehabbing fits all of this for me. And if you think about it, it may fit for you, if not, maybe partially at least.

Should you take part in this? I'd say, if you think you can do it, then you should at least try it once. Could you imagine how happy and prideful you'd be after fixing up a house and being able to show it to your family? I mean, that's what I'm going to do anyway :).

Even if you don't really like it, but can pull it off, it's probably better than your current job, so might as well transition to this in the mean time while going to college. If you can financially pull it off anyway. At the least maybe cut back on hours/find a different job. The money lost for the hours taken off will be minuscule compared to the the negativity lost and happiness you gain from having more of your life in your hands. At least it would for me. But I only spend like $200/month, $300 max. So I live cheap, but love life, and I don't have much money to spare because I don't work a lot, I go to school mostly, and the money I do save, I don't touch as I'm going to use it to get into rehabbing.

So, I don't have much, but life's good!
-Manuel

Basically:

1. Hard Money
2. Private Money
3. Partnership
4. Traditional/Bank
5. Credit Cards (which is very iffy and probably hard to do. But it's been done. But most wouldn't recommend.)

There's probably more ways, but that's just off the top of my head... It's a general answer, but it's been answered a lot of times and I think you can find a better, more comprehensive answer by using the search function.

But I think it's great your starting and welcome to BP! I sincerely think you'll have a bigger benefit searching through the forum. :)

-Manuel

Yeah, I'm not sure whether to interpret the response from my agent as, "you never know..." or deception. Kind of like how I don't like to ever guarantee things, but just give certainty, cause in my head I'm always like, "you never know...". Something crazy that I can't think of may go wrong. That's my thought process mostly.

To her credit, she was patient, very helpful, gave me great comps, and is quick when I ask from her. She's also rated highly even by investors which is why I chose her. (I emailed a list of agents and just picked which one I liked best from there) She did tell me she'll research my question more thoroughly and get back to me tomorrow...

Thank you J Scott and Jesse Tsai! I have my confidence back in my contingencies now.

Good lookin' out :)
-Manuel

So I was about to sign an offer and I asked my agent is my EMD "safe". As in, can I get it back if my estimates are wrong/not close to the actual bids, cause (and this is probably obvious, I know...) I made my estimates in person today and was going to get actual bids when I actually got the house under contract.

Anyway, the answer I got from my agent is, "I can not promise you that you will get all EM back. If you back out because a home needs more work than you expected you should get your money back with Fannie Mae but I can not guarantee what the bank will do." She also told me HUD won't give back the EMD, which I understand. But:

Can Fannie Mae or any other bank/entity (besides HUD) really keep my EMD if my contingencies aren't met?!

I was always under the impression that this is not true. I feel confident in my ability to estimate, but I'm not sure that I'd bet $10,000 on it! (Well 10% of $92,500 which is still close to $10k...) I also didn't know I needed 10% for an EMD, I only planned on $3k which isn't that big of a deal but it definitely just hit me like a ton of bricks with what she told me! I told her I'm doing a cash offer, but I meant to say "financed" so I hope that's where the 10% EMD confusion is coming from...

I love learning new things,
-Manuel

Forgive me if that's so but just in my mind I'm thinking, "code" = permits = I don't know how much they cost = delays = me going crazy. Haha. But perhaps I suppose it could also go, "code" = have the contractor deal with it = peace of mind. One of those roads right? :)

But I must say, I did find some great small-ish rehab deals. The only thing that pushes me out of my comfort zone thus far is permits/working with the city, and foundation problems. Plumbing, electrical, and roofing I'm fine with. But those other two just scare me haha. If I just keep thinking of the scenario over, and over in my head and how to handle I'm sure I can get over it though.

Thanks for the encouragement :D

-Manuel

John Espinosa Just pure flipping. I could understand what you mean when you say a quick $5k. One property did need carpet, tile, paint, new cabinets in the kitchen and baths (with granite tops). And I was thinking around $20k. Another house needs basically the same except it's bigger and needs some plumbing which I feel safe with $30k. But I'm not sure if my numbers are grossly overstated or understated, but I'll find out once I get the contract and get actual bids. It'll be a learning experience for sure. Today was a good day!

-Manuel

To estimate a rehab? I went out and looked at a couple properties today and it took me about 45min to an hour to estimate a house rehab. I felt really slow haha. My Realtor was great about it, but I personally want to just get quicker. Any tips?

-Manuel

Steve Babiak Yeah, when you say the word, "code" it just scares the heck out of me haha. I think I'll skip on working with a house that is not up to code and needs major renovation until I'm more experienced. I think it's what's best. Thanks.

-Manuel

Randy F. Thanks! It's no where near stating the obvious for me and I'm sure other alike. Really, thank you very much!

-Manuel