All Forum Posts by: Adam Petterson

Hey @Martin Dupuis - I ended up keeping this property and doing a cash out refinance. At the time I thought mortgage rates were low and locked in around 4%. Ive since refinanced again down to 3% and have some solid cashflow coming in on this property. Now, rates are sub 3% if you are occupying the property and probably still around 4% or so if it's strictly an investment property. I do both fix and flips, and long term holds, and think it all depends on what you are looking for with your investing. Im looking to build my portfolio up and have been leaning towards long term investments. When I flip a home, I am immediately using those proceeds to look for a cash flowing rental property

Every property is different, if you like the area, then it might make sense to hold here. If you were to do a cash out refinance and your property appraised for $350k, you could finance up to $280k (80% LTV) and take out $100k in cash to fix up the property and look for future investments. That $350k mortgage at 4% is approx $1,671 per month before taxes and insurance. Not sure what kind of rents you get on the property or what the taxes are, but you might still be able to get some pretty good cashflow (and $100k in cash) by refinancing here

If you are looking to sell, you might need to sell the property at a discount since there is some significant foundational work that needs to be done on the property. Also, if you sell the property you may need to pay tax on the gain you made. There are ways to avoid taxes (capital gains/1031 exchange). However, it might be nice to wipe your hands clean of this property, move on, and cash a big check.

Id recommend getting a 2nd or 3rd opinion on the foundation work, as contractor bids can vary significantly

If you want some help analyzing the deal, feel free to shoot me a direct message, Im more than willing to help out.

@Chase London

Hey Chase

You may need to pay off some debts in order to lower your Debt to Income ratio.

Also, if you are looking at a 4-plex I'd recommend an FHA loan, you should be able to count the rent off the other 3 units as income to help increase your chances of qualifying

@Justin Lee Taylor no money down can happen, but there is definitely some risk involved. With that being said...

brrrr strategy could work

1. Buy - buy the property with hard money in an LLC. Some hard money lenders can finance 100% of the purchase and rehab if you find a good deal

2. Rehab the property and force appreciation.

3. Rent - find renters for the property

4. Refinance - start the refinance when the rehab is almost complete. Once the rehab is done you can get the property appraised. If you have done the deal right you can refinance all the money the hard money lender loaned you

5. Repeat

Example

Purchase property at $100k and put $50k into rehab. The hard money I've used required 70% LTV on the finished product. If that the case you would need the after repair value to be at least $215k ($150 / .7 = $215k). If appraisal comes in or at $215k you can finance 75% of this value (which will help you cover loan fees, taxes, etc)

Don’t forget about holding costs as well - these can eat up all profits/chances at refinancing without needing to bring money to the table

@Tera Carter unfortunately white pages requires a subscription as well. 

@Warren Romig Im a real estate agent and can find his address, DOB, middle name, marital status, etc. However the property hasn't been bought, sold, or had a lien put on it in the last 30 years, therefore it is tough to find any contact information. Ive searched online and haven't found any contact information unless I want to pay a monthly subscription.

@Anthony Dooley I will have to try talking with the neighbors this weekend. Thanks

A few weeks ago I noticed a house in my neighborhood that had overgrown grass and some obvious deferred maintenance. It is a nice neighborhood and it would be a great opportunity if I can get the home for a good price. however, I am having a problem getting in touch with the owner of the property.

According to the tax records, the property is currently someones homestead, and I sent the owner some mail about 2 weeks ago. I sent him a second letter last weekend, and realized that the property may not be receiving any mail. As I drove by the house today I noticed that the concrete steps in front of the house have decayed, and there is no mail box for the property. I went and knocked on the door, but there was no answer. I am wondering if anyone has had success finding phone numbers or email addresses online, and if there is any way to get accurate information on an owner. Please let me know if you have any suggestions. Thanks in advance!

Jackie F. Jackie, 2-3% is standard on a refinance. You can always roll that into the loan so you don't have to pay the fees out of pocket. You need to decide what you are looking to accomplish with your refinance. If you are looking to lower payment, interest rate, keep the same amortization, etc. Feel free to reach out with questions or if you need any help crunching numbers!

Lucas Mills The questions you ask depend on your investing style, and risk tolerance. 1. Is 40k enough? Depending on your strategy, 40k is plenty. If you can find good enough deals, you really don't need more than a reserve account set up in case of disaster. I would look into using OPM (other people's money) before you use your own. I recommend looking for local hard money or private money lenders in order to obtain your goals. Once you fix up the property you can refinance into a conventional mortgage. Also, If your situation allows for it, I would recommend housing hacking a multifamily property. Look into FHA financing on a 2-4 unit and you can build equity while your tenants pay your mortgage. This will also help you figure out if you will want to manage the properties yourself, or if you will hire it out. 2. What to do with savings? I'm no expert in this field by any means, but I like to have liquid assets that are easily obtainable. Interest rates on a money market account are not very appealing, but it's nice to be able to get cash quick if you need it for an investment. 3. Roth IRA? I personally am a huge believer in having a Roth IRA. If you start young you can have a nice chunk of change for retirement, and it will also help round out your personal financial statement. Feel free to connect or message me directly if you would like to talk more! Best of luck!

Mark Smith Mark, I would worry first and foremost about the credit card debt. You will want to pay that off as soon as you can due to such a high interest rate. Once you have paid off the card I would start saving for the down payment. It sounds like you can qualify for a property without paying off the student loan, and I would recommend saving up an "emergency fund" of approximately 2-5k along with your down payment fund. You never know when your car will break down or your air conditioner will break. It is always nice to have a reserve of money that can get you out of a jam (since you paid off the card you always have that credit for emergencies as well, but 20% won't feel good on few thousand dollar balance) Best of luck.

@Mike Brown @Nam Nguyen

Good debt is debt on an asset that produces positive cash flow. For example, you have a property that you collect rent of $2,000 per month. Your expenses are $500 per month and your mortgage is $1,000. This gives you a positive cash flow of $500 per month. The debt on the property is considered good debt, because you are successfully using leverage (debt) to finance a rental property with a positive cash flow. The key is successfully finding investments that create positive cash flow. 

Kiyosaki will consider your home a liability (bad debt) because you have no money coming in, and have mortgage, taxes, insurance, expenses going out. Therefore the property has a negative cash-flow. As @Josh C. says earlier in this post, your home is a gray area because you need somewhere to live. I would recommend house hacking if you have the opportunity!

Best of luck, feel free to message me with any thoughts/questions