All Forum Posts by: Thomas Ruf

Lower rates will lower rents over time. People will choose to buy, if they can (Supply is still around 1/2 of what it was at it's peak and people are moving in Knoxville area at an increasing rate).

I expect rates will start falling a lot more in 2025 if the Republicans take the Senate by 5 or more seats and the House by 12 or more. However, I also don't believe there will be a lot of equity building in the next 3-7 years due to lack of supply. Meaning, it will go up some, but not at the rate it has in the past 10 years. We don't have a lot of builders here in Knoxville.

Also, many investors have been lobbying for High-Density legislation. Therefore, multi-family will take some demand from SFR. Polls have shown younger people prefer less, even if it costs more.

As municipalities expand, then contract, then expand, and so on... equity will grow at similar rates respectively.

Michael,

This is a tough one. It all depends on your risk tolerances. If young and willing to take risk, renting is an option. Even if the market corrects a bit in 2024-2025, you'll probably be slightly ahead if you can get it rented at those dollars. If more on the conservative side, then I would say you need to take into consideration all your debts. A DTI (Debt-to-Income) ratio of 50% or lower, when including all expenses you pay/month, would be safe IMHO.

You're in a good market for rentals for a few years. Supply hasn't caught up to drive rents down like they will in larger cities. However, keep in mind, once they do you'll need to be prepared for the worst. So plan for the worst in a few years and hope for the best.

Good luck!

That sounds about right! We’ll done surviving the rehabilitation process. 

Reading lots of articles about inflation and many suggest taking cash-out on rentals and even primary to borrow on 30 year. Argument is the debt will end up having banks paying back. Example:

* If you get $300,000 house (20% down = $240,000 loan) @ 3% and inflation rises 2-4% / year. First, you're dollar is worth less, but rents will continue to rise (because of inflation). Thus, effectively, you'll be paying back your mortgage with less monies.

Any investors our there considering/doing this? If so, are you cashing out to buy rentals at current inflated prices?

The condos do look nice, but I too stayed away from them because of cap rate. It also appears they were built right about the time market fell and appears many investors have been holding out for market to return value.

I couldn’t agree more with your observation on the 15 year mortgage. If you’re not looking to create cash flow to pick up many many more properties and be close to retirement in 15 years, than the 15 year mortgage is what I would do all the way. Otherwise, the 30 year is great if you are just starting out and not retiring in 15-20 years. Keep it simple!

I have a home that the buyers look great for buying in May, but want their in-law to move in Feb. Trying to figure out which would provide me (landlord/seller) the most protection via Lease Option to Purchase or Early Occupancy Agreement?

Josh,

If your ARV and Rental values are accurate, I would say this is not a bad deal. I would recommend staying on the lower in when it comes to rental income expectations.

I'm not sure what the bank will do once rented. However, if you're needing that $5,000 or more for future projects, I may be willing to lend. 

Let me know if your concerns for the bank is to replenish your funds for future projects because I may be able to help there.

Best,

Thomas Ruf

Thanks for your response.

Spenser,

Having been a lender for 7 years (2001-2008... part of which I was at KB Home there in San Antonio), I would recommend doing the leg work regardless. Many companies/lenders/loan officers reply with the basics and focus on relationship building (sales instead of actual needs). There is so much competition in San Antonio, you shouldn't have a problem fishing a few to get the best results.

I would highly recommend doing the following:

1. Call a big-box builder's new home sales agent. One that you know is selling well and ask that agent for 3 recommendations. Act like you're interested in their product, but you want to make sure you qualify first before looking at houses. New Construction that sells, brings refined qualified talent in the lending world. These lenders try to win easy business (New Home Construction), but also work the streets for everyday loans. These agents get the pick of the litter and they don't want a buyer's experience to go wrong, so this is a great place to look. 

2. Ask for a Loan Estimate based on the Sales Price your looking for from each. They all may want to do an application over the phone (time consuming 10-15 minutes), which I would recommend doing just to get it out of the way. The loan officer will feel you're more committed and put more effort into it. Plus, you'll learn what you qualify for based on what they're looking for. Be sure to tell them you're shopping! Let them know so they can try to earn your business.

3. If you've decided to purchase (wherever it may be in the state), focus on the bottom line and see which company works best to fit your needs.

Wish I had 3 specifics, but no longer there. Hope this helps.

Best,

Thomas