All Forum Posts by: Matthew Martin

@Harrison Colunga By the way. I'm from Riverside, CA as well. That's how I found your post. I am currently in escrow on both those SFH's that I mentioned I bought in 2012 and 2015. The net profit from those properties is going towards $2M (40 units) in the same area as the triplex I mentioned. It started out extremely slow as I was simply passive and doing everything without other investors. I started with an 11K down payment on that first property and that was almost half of all my liquid savings. Your 35K is a lot more than I had when I started.

I started with a SFH in 2012 and then another in 2015.... then nothing until last year. Since last year I purchased 7 units in 3 different states without ever seeing the properties in person. Not to brag, but to simply show that it can be done. I know there are people out there doing way more deals and volume then I have. It really is not that difficult and 35K goes a long way in the mid-west (even now). Just take action!

My last triplex was closed in October. Purchased for 140K and appraised for an ARV of 294K based on structure and 386K by the income approach. To be clear, this appraisal was conducted as if my scope of work was already completed, so it's all subject to change. However, those numbers gave me confidence to move forward. Rehab starts full swing in about two weeks.

I had no contacts in the market whatsoever. I googled agents in the city and called a few. Got a good vibe from one of them and decided to go with her. As she sent me properties and I evaluated them I also reached out to property managers (found on google) until I found one that passed my interview process. We talked about the area, what to expect for rents, and how we would conduct the rehab. I told him I wasn't paying his 20% maintenance fee for a complete rehab and he agreed. From there I found a contractor and got estimates and signed the contract to complete the scope of work. I also found a good RE lawyer who helped me create an LLC for $400 in a single day. That easy. Now it already brings in $2275 per month with $1000 per month payment (interest only hard money at 9.35% interest). Once rehab is complete I will refinance and do it again.

If you want to talk then PM me. I am extremely busy, but if you reach out we can find some time to chat. However, I would not blow 35K on educational materials, etc. There is plenty of free information out there on BP and other pages. Even TicToc has a lot of people who explain how they do real estate deals. Obviously a lot of the info is vague, and the only way to learn is to do it yourself. You don't need to see the entire road in front of you. Just have to be able to see one step in front of you at a time (two, three, or four is better though). Just like driving through fog. You can't see the road a half mile in front of you, but as you drive closer you can see further and further. Cheesy, but true. Good luck!
 

@Derek Smith. Thanks for that info about no cap anymore. I hadn’t heard that, so that may be a serious game changer. From your knowledge.... does that apply for 2nd or 3rd properties as well? And does it apply to Refinance’s or only original purchase?

I have house 1 with VA. House 2 is a conventional, and House 3 is current residence(also conventional 5% down). House 3 is 4.75 right now... waiting about 6 months to be at the 20% equity. That may be a good option to refinance to VA if there's no cap.

Thanks in advance for any info.

@Patrick Blankenship it would have cost me more money to use a second VA loan at the same time instead of a conventional. They charge significantly more for the VA Funding Fee(their version of PMI) for the second house. The first VA funding fee for me was around 4K. I lived in the first house 3 years and bought another SF to be my next primary residence. I decided to rent out house #1. The VA wanted 11K just for the funding fee for house #2.

Also, I only had about 200K of entitlement left because I had almost exactly 217K in house #1. I believe total allowed through VA in most areas is $417K. Still with me?

Anyway, House #2 was 315K. So even if I got the 200k from VA with no down payment then I would still have to pay a down payment on the remaining 115K. It would have been about 22K to use the VA loan to get into the house and my payment would have been higher then just using a 5% down conventional loan. I believe I paid 17K down including all closing costs and down payment, and had a lower monthly mortgage payment because more of the money went toward the down payment as opposed to funding fees.

I hope that makes sense. Good luck, brother and Semper Fi. I’m active duty 15+ years now as well.

I was thinking of using this same strategy. I was a little worried that if I had a HELOC for the down payment then the banks or financial institutions would look at it as a loan on top of a loan. Essentially, that none of the cash is technically mine even though it is in the form of my equity. Is that the case, or will banks still finance that. Keep in mind in my case I have an 800 credit score, two rentals, and a primary home if that changes anything from the banks point of view.

Thank you, @Shannon Wright. Very helpful. 

Never mind @Jay Hinrichs . I found this exerpt:

Setback requirements vary by zoning district. The uses that are allowed on a particular lot are governed by the regulations for the zoning district in which the lot is located, and other general regulations. The minimum yard requirements, more commonly referred to as "setback requirements," and other restrictions, regulate the location of structures on a lot.

@Jay Hinrichs  what do you mean "set backs"? Do you have a link or anything I can check out on that topic? Thanks again.

Thanks for the advice, @Kiersten Vance, @Jeff B., and @Jay Hinrichs. This is all good info, and pretty much what I had in mind. The only bump was the info I found after a quick search on the internet about needing the agent at the appraisal which did sound strange because on my last two houses I didn't need them there. I found the California property agreement online, and have my previous contracts to reference to ensure that all the spots get filled out. I just wanted some extra advice. Why not? @Chris Mason This doesn't mean I don't know what I'm doing. I may not know 100%, but I know enough to ask and cover my bases. If I let the fear of not knowing hold me back I'd still be sitting on zero property instead of about to buy my third in 3 years. I just wanted to cover my bases to make sure that I wasn't missing something. Anyway, thanks a lot Jay for your advice. The part about the line by line with the title company is great. I plan on doing this because there was an addition as well on the property, and I want to ensure that it was done properly (permitted and recorded by the city) or else I may get stuck getting everything corrected after the fact. I'm going to check the city tax records online. 

Thanks again.

My neighbor knows that I am a young investor, and I asked him to contact me first if he decided to sell. Well he's selling, and it's a pretty good deal. Anyway, I think I can make it even sweeter for both of us by saving a commission since we found each other without an agent. From my quick research I found articles stating that in California you do not need an agent, however, an agent must be present during the appraisal. Is this true? If anyone has bought and sold a home in California without an agent in the past please give me some advice. 

Quick summary of the deal. He wants 360K and will pay half the escrow costs. I am going to propose to him that we agree on 345K. This will save me 15K as the buyer, and will give him a total of about 7K more than if he sold it with a commission. Any help will be greatly appreciated.