All Forum Posts by: Mariah Jeffery

I'm looking for a mortgage broker to help me finance a triplex in South Dakota. Credit score is 790 and debt to income is very low. The purchase price is $100K and rent is $1,325/month. I'm particularly interested finding a lender that will allow 20% down without a premium over the 25% down rate. Please PM if you can help.

Thanks,
MJ

I'm interested in purchasing a property like this, but the one lender I talked to said it may be difficult to find enough comps like this to do an appraisal. What are my options to finance? I don't really want to purchase it if the rate is higher than 6.5% or so, so hard money is probably out of the question.

Dave,
It just so happens I have a duplex in Rapid City with a 3/1 unit coming available soon. I will PM you.
Mariah

Jon - I do have cash to purchase the property. I had no idea it would take so long to get it back! I may have to choose flipping for my exit strategy if that's the case. I had some other deals I'm considering, and I'll need the cash sooner than that if they work out.

I was actually planning to get a HEL. Is that the same as a cash out refi?

Jim - Since this one is in my neighborhood, I feel that I have a pretty good idea of the value. The problem is that there are 4 more in the neighborhood for sale, so I would have to offer it at a lower price.
I think my strategy would be to buy and hold. It should rent for about $1,500-$1,600/month. I would take out a HEL for the max I can get back out of it. Alternatively, I could flip it. I think it should sell for about $275K after some fix-up. I have a good friend looking for this kind of property, so it he was willing to give me the $275K with no agent, I'd probably just do this. I was considering trying to rent it for a year and then sell to reduce my taxes, but with capital gains taxes going up to 20% next year, there's not a big enough gap between that and my marginal tax rate to make it worthwhile.

Regarding having a local realtor do a CMA, why would one do that for me when they wouldn't get the commission? Would I have to offer to give them the listing if I do buy and resell the property?

I already called the attorneys who are handling the sale. The cannot tell me the starting bid until 3 days before the auction. I'm hoping to find out sooner.

I'm interested in a particular property in my neighborhood that is being auctioned off in 3 weeks. It's two blocks from me and I heard about it from the neighborhood HOA. It was supposed to be auctioned off in July, and was rescheduled for Sept. Since finding out about the property, I have done the following:

- Gone to the courthouse and searched the county records. I found only 1 lien by the HOA for $400.
- Walked past the house several times each week and talked to any neighbor who would talk to me. They all said the homeowner was not the type to trash the place. She lives out of state and is going through a divorce. (However, the deadbolt is missing, so it appears that someone could have broken in. Looking through the deadbolt, I can see dirty carpet and a few missing fixtures).
- Sent a letter to the homeowner, which was ignored.
- Called the trustee to check on the status, and all they can tell me is it's still on schedule. Starting bid will be available 3 days prior to auction.
- Gone to the courthouse twice to watch the auctions, but both times no one bought any properties because the bids started at more than the properties were worth. I do plan to go back and hopefully watch a purchase soon.

Is there anything else I should be doing?

I briefly subscribed to Realtytrac and it listed two different starting bids - one about $112K an the other for $156K. Zestimate is ~$300K. Is there anywhere I can go to find out the approximate starting bid sooner than 3 days before the auction, when the trustee will have it? I keep looking for it in my local newspaper, but I haven't seen it. Will they post another notice on the property? The last post was back in July.

In my county, I have to pay all cash the day of the auction, so it would be nice to have a rough idea how much I will need to bring in cashiers checks.

That makes a lot of sense. Maybe I need to start looking in Indiana! Got any to sell me? I'll settle for 2.5%. :-)

I'm amazed at the difference in "investing" strategies I see. I have friends who buy where the rent they think they can get = the PITI payment and they think it's so cool that "the tenants pay the mortgage" without thinking about how much they lose on vacancies and repairs. They think I'm hard-core (and unrealistic) when I refuse to buy something that doesn't meet the 1% rule. Then I come to this board and see there are people getting 3%. It's been very educational.

I think there is a HUGE difference between meeting the 2% rule and getting the rent to cover you PITI payments. For example, with the duplex I mentioned in SD, my PITI is $620/month. The rent is $1270/month, so I have $650 left over for maintenance, repairs, vacancy, replacements reserves, and profit. In addition, I'm paying down my mortgage principle. To me this is an outstanding deal; I'd love to have 5 more like it. However, it doesn't come close to meeting the 2% rule because I paid $100K for the property; it would have to rent for $2K per month! If I were to buy something that just covers my PITI payment, this property would only have to rent for $620, but I would be losing tons of money on the repairs and when the property is vacant. So now I'm confused with the huge discrepancy in the advice being given.

Personally, I like to use the 1% rule: The rent minus owner-paid utilities should be at least 1% of the fixed-up cost of purchasing the property. That seems to give me a good enough margin, but then again I've only been doing this for 2.5 years, so maybe I'm just not experienced enough to know what all can go wrong. I'm also not relying on the rent to make ends meet, but I do only want to purchase properties that will "pay for themselves" and at least break even under the worst-case assumptions.

My FIL will take care of those items, with us reimbursing him for actual expenses. The seller claims to be selling because he plans to move out of the country in approximately one year. He has 8 properties for sale and I'm only interested in these two.