All Forum Posts by: Mike Huang

Hey BP,

I've recently put a triplex until contract and had the inspection done a week ago. Afterwards, we discovered that along with other minor maintenance issues, the roof needs to be replaced. The seller on the property seems to be unwilling to lower the price any further or do any fixing himself. 

This is a fairly good deal given that the ROI is fairly high, good cash flow and the tenants have been there for a long time. Paying rent doesn't seem to be an issue though the listing agent is taking awhile to get me all the documents I've requested so I can confirm the leases/rent roll/expenses. The only con to this house is how old it is but in that market, all the properties are of similar age.

I have yet to get the property appraised by the bank. According to the previous property manager and my agent taking a quick look at the comps in the area, I could be buying this property with a fair amount of built-in equity.

 So far, my options seem to be these:

1. Take the deal anyway and find a way to come up with the money to fix the roof out of pocket. Currently I don't have enough to do that after making this purchase.

2. Walk away.

3. Perhaps there is a strategy where if the house appraises for more than I expected, could I work the equity into my loan to give me the funds to replace the roof?

If anyone has any tips, strategies or recommendations, please let me know. I would greatly appreciate it. Thanks.

I don't see why you can't put the property on both your and your father's name rather than looking at those lending terms.

In your situation, everything is about how much hustle you can bring to the table so that other people would be willing to invest with you with their money. Definitely consider the refinance option and see if you can force appreciation on the property so that you can pay your dad back quickly.

Taking out a loan against your 401k is generally seen as not the best idea unless it's for a solid business plan and paying off another loan would not fall under that.

If you want to use your 401k funds, you can roll your funds into a self directed account, which allows you to use them for investment purposes.

In terms of getting a loan approved, while the loan is hurting your credit score, see if you can work on all the other factors that an underwriter may look at. Look at this blog post by @Brandon Turner and see if you can structure your next deal so that the underwriter would have a more favorable eye towards your loan, even with your credit score 

Everyone's input is pretty much on point. 

When it comes down to it, if you're house hacking (and assuming your family is ok with it), it's a great way to start with a multi-family since you're consolidating expenses while having more rental income. 

You also should look at what your market is leaning towards.

Hey BP,

So I've been talking to various lenders about getting pre-approved for my deals and several of them have come back to me about buying the house as a first time home buyer, with the intention to live in the property, rather than as an investment property. 

Now I don't plan on living on it but since I still live with family and do not have a place of my own yet, I was told this could be treated as my personal residence, even though I plan on renting out the units (looking at multi-family). With this, I would get lower rates. I wasn't pushed to do this but I was told that this is one scenario I could consider.

What do all of you think?

Hi J,

Thank you for the quick response. And I don't see what this has to do with my question? I'm not looking for a conventional loan, that will be something to refinance into afterwards. Additionally, unsecured lines of credit have been used to acquire properties. They don't have to come from a bank so I don't see what the issue is. 

Hi BP,

I live and want to invest in a rather expensive market (Queens, one of the 5 boroughs of NYC) and thus the most conventional strategies do not apply here. Working to save up for a down payment takes far longer than in other parts of the country. As for why I'm here, personal reasons aside, I have property management experience so I want to invest here, at least for the time being.

That being said, I have been exploring partnerships, hard money lenders and unsecured lines of credits. Most HML would not lend 100% LTV so I was wondering if it would be acceptable to use a line of credit to fund the rest. This is all with the intention of buying, rehabbing, renting it out and refinancing as soon as the seasoning period is up.

Has anyone used a combination of leverage like this? Or maybe there are other ways like this?

Another trick to counter the "friend as a landlord" trick is to call first and pretend to a potential tenant and watch them get flustered as you ask about technical lease terms.

And to play devil's advocate, you also have to take the rental market into consideration. Is it hard to find high quality tenants in your area? You want only the best of the best but that standard isn't going to be same in every market.

http://www.fastcoexist.com/3049280/this-shape-shif...

How cool is this?!

I have heard of changes to the FHA loan where they will only allow MIPs to be for the life of any new loans. You should probably look into this more since the nice thing about MIPs is being able to get out of them after a certain equity has been built up.