All Forum Posts by: Matt Fisher

I think I'd avoid @Tom S.'s advice on the 0% credit card.  A.) you have to qualify, B.) you don't know how that will affect your credit and C.) I ALWAYS advise buyers "DO NOT buy anything or do anything that will affect your credit negatively during your pre-purchase". 

It's possible that your lender could deny you your mortgage because your credit criteria has changed. So you bought your house on a 0%? Now the bank won't lend to you... Tough spot. Oh, that introductory period is gone now and you have 24% APR. Best of luck!

That said, I do like those 0% cards for doing remodels. You can put an entire remodel on them a lot of times and pay them back on sale/or refi.  You can rack up some serious points or cash-back too.  I'd just be leery of doing anything that affects your credit.  Start talking to people who have money laying around, self directed IRAs etc.  These are people that could charge you a little interest for a personal 'bridge' loan and help you out.  But always keep in mind the worst case scenario with lending.  What is your exit strategy?  What happens if X, Y or Z does or doesn't happen?

@David Doherty Des Moines has some pretty good outdoors opportunities nearby (giant whitetails primarily come to mind).  But getting to the important thing-is it the right market for you?  Although we're definitely less expensive than Huntington Beach (and we have a great standard of living) we're currently in a hot sellers market. I suspect our inventory is going to catch up over the summer, but there's fierce competition for 'deals'.  

What you need is a bridge loan or a private investor to help you out.

I like properties in the $130-$160k range in the Des Moines Metro.  I just think you have a better selection of respectful tenants in that kind of house.  I don't get the cap rates of cheaper ones, but I would rather have one better asset than two marginal ones...  and with that in mind I've built 6 SFRs in the past year-I THINK they will perform great.  Ask me again in a couple years if they were worth the trouble!

From a strictly financial point of view, take if from a guy with an advanced degree: Don't go to college for anything unless it meets 2 criteria-1.) the degree is essential to be employed in a field that will 2.) provide you with a substantial salary very quickly or immediately upon graduation.  

The best means of education are now at our fingertips, not in institutions of higher learning.  If you can learn it without paying for it, that's the way to go.  Not only do they charge you for superflous classes, but there is also the opportunity cost of your earnings at the most critical point in your life!  Everyone talks about college debt, but nobody is speaking about the additional opportunity cost AND the compounding value of the dollar!  Arguably the most valuable dollar you make is the very first one-it it's used as an asset and not spent.  The cost of college is substantially more than the debt.

From a more practical point of view, college can help a young person build essential skills, such as the ability to write clearly and concisely and reinforce motivation and determination.  Although I'm largely 'anti-college' I do think that young people, especially our current crop of young people, need these skills badly.  And there is a certain level of reputation building that comes with a degree (eg to lenders).

...And as others have said, college isn't necessary to learn about RE, although there may be some programs out there.  This forum could teach you sooooo much more!  Entrepreneurial programs and groups within our colleges may be a good opportunity for budding business owners, however.

Tech schools offer a great bang for the buck.  Why spent a half million dollars and 10 years of school to be an MD?  A lineman can go to school for a (year?) and come out making close to $100k a year!  If that individual was frugal and bought assets, they'd be making way more than an MD before the MD became a resident!

Matt

You're probably doing this in the wrong order.  IME one of the best moves I ever made was sit down with a lender and my business plan and talked about my options RE their loan products/terms.  Then you have the bounds of what works for them and they know you're going to be coming at them with something that fits.  

Which city is the property in? I suspect most of the good ones in Des Moines would work in Warren Co... If your smaller banks aren't on board, what did they say about why they wouldn't do it? Is it in need of major repairs? Do you have confidence in your numbers (rehab cost, timeline, rents, ARV/Comps)?

I think any of them would do just fine with it--I have used Iowa Title Co. or Bill Blue and Assoc. for almost all of my transactions.

I don't know what a room rental price is, but pushing $1000 sounds like a LOT.  Especially to live with a stranger.  Maybe I'm wrong...

If this is something you want to keep as a primary residence, then I think it's better to focus on that first and foremost and if a roommate helps defer some of those costs, so be it.  A house that is an ideal residence for you might not mean that it's a great investment property.  A personal residence isn't an asset in a traditional sense because it doesn't generate money for you.  So IMHO it doesn't make sense to think of it as one.  Get the house you want and forget the numbers.  If this is something you want to pay down, then turn into a rental, it doesn't sound like a great fit.

...and one other caution: You aren't putting down very much money. This market feels a bit inflated, if it corrected in the next few years you could easily be under water. Not to mention it will take a lot longer to chisel down the interest. The PMI takes a considerable hit out of your numbers too.

I guess I assumed you'd be working at Camp Dodge too!  Southside has a lot of value for the Des Moines market and is a good rental area.  Some great neighborhoods, some less great.  It's really varies from one street of sub-neighborhood to the next.  

I agree 100% with @Jason Bergan As much as they are disparaged on BP, I like townhomes for investments. As long as you have a good handle on the HOA, projected cap ex, etc. The ones he recommends are nice, and they are the most convenient "affordable" property in the Camp Dodge area. For that same reason, they would be very attractive to military personnel as long as you own it. Not sure about rental policy from the HOA though... Surrounding housing options are much more expensive.

I love SFR's because they will always have demand and are fairly liquid. And when you look at the returns, they are similar. That shared roof matters a lot less than most profess and everything else (eg HVAC) is doubled or tripled). Also, my highest priority is great renters, and I believe SFR's attract a better caliber of renter. But if I find a good deal on a small multi, I'll buy it. There is a fairly high concentration of duplexes/bi-attached in Northwest Des Moines and Urbandale. None in Johnston or Grimes come to mind, but I'm sure there are a few.