All Forum Posts by: Phil K.

Thanks everyone for the advice and insights! I ended up pulling the trigger on this deal, working to get it under contract now. The seller won't be able to move until next year, and I'm looking to put some good faith money in escrow to secure the property. Any advice on how to hold money in escrow for 12 months? I know title companies typically only hold escrow for 30-60 days. 

Hi All,

New investor looking for advice on my first deal. As mentioned in a separate post, I recently found an off-market with approx 100k in equity off the bat. I’m skeptical because I’m usually of the opinion that if it sounds too good to be true, it probably is. It’s not a distressed property, however the owner is in a unique situation and fully on board with home inspection and contractor rehab estimate (my agent checked the house out and said it’s in great condition, minimal rehab). When I expressed my skepticism to my agent, he stated the seller strikes him as a really nice older guy who doesn’t need the money (he’ll be making a bit of equity but nowhere near what he could get in the current market.) To me, this just doesn’t add up, so I want to do my due diligence.

My question is this: Outside of a home inspection/title exam, what else can be done to ensure due diligence? It’s my understanding that Residential Property Disclosure Statement for Virginia requires minimal disclosures from the seller, essentially Virginia is a “caveat emptor” state. If I ask for disclosures on structural defects, plumbing, electrical, etc., is the seller required to provide them? What recourse do I have if something is to be found for the property? I’m also thinking about asking for 2 separate home inspections to see if there are any discrepancies.

The seller and his wife may need to stay in the home for the next year, but he still wants to sell the home (my understanding is their original plan was to sell the house and buy an RV.) I’m a current renter, but not comfortable buying other properties right now due to the fact that we’re in a seller’s market, and I don’t think current prices are sustainable. So, my thought is to write up a buyer’s contract with a contingency for the interest rate (protect myself as a buyer in case it skyrockets over the next 12 months, plus home inspection, title exam etc.) While I don’t believe in trying to time the market, my idea is that if the market crashes in the next 12 months, I can break my lease and buy a property at that time instead of competing in the current bidding wars going on in my area (Northern Virginia). If the market corrects after that, at least I’ll have a property I can stay in as a buy and hold and possibly pick up a 2nd IP.

Is this deal too good to be true? What are the flaws in my strategy? Any thoughts are greatly appreciated!

Hi All,

New investor looking for advice on my first deal. Recently found an off-market with approx 100k in equity off the bat. Initially I was skeptical because if it sounds too good to be true, it probably is. It’s not a distressed property, however the owner is in a unique situation and fully on board with home inspection and contractor rehab estimate (my agent checked the house out and said it’s in great condition, minimal rehab). Ran some checks on HomeSnap and mortgage, taxes, and title all look good, (will confirm with title company/attorney). The original plan was to put 5% down and house hack it. However, due to an outside circumstance, the owner needs to stay in the home for the next year, maybe 2. He’s on board with either doing the sale as a Subject To or an IP and I rent the property back to him in his family until they’re ready to move.

Here's my situation: Current renter, lease is up in July and still looking to pick up 1st house hack. My agent recommended if I can front the cash, buying the off market with 20% down to lock in current interest rates. HomeSnap shows the current loan interest rate at 3.5%. I'm talking with my lending agent Monday to figure out how having 2 loans out at the same time will affect my DTI/credit and what the numbers look like. If I do 20% down, I'd still need to put 5% down for the other house hack that I live in. Under the Subject To, I would house hack for a year or 2 and then move into the off market. So, I'm trying to figure out which deal makes more sense in terms of: 1) Cashflow, 2) What I need for cash reserves. I can easily swing the current mortgage on the off market.

So the question is: Do I pick up the off market with a Subject To with approximately 20-40K or an IP with approx 80K? Does it make sense to tie up that much cash to lock in a lower interest rate assuming the current rate is 3.5%? My RE strategy is to house hack and do buy-and-holds, so I'm leaning towards Subject To. As a newbie, my thought is use local house hacks to cut my teeth, and then buy out of state IPs which could provide better cashflow/ROI than rentals in the Northern VA area.

From my research on Subject To, most of risk is carried by the seller. The biggest risk for the buyer seems to be the Due On Sale clause, but from what I’ve read, in practice this is almost never enforced (I’d still like an exit strategy if this happens). Banks generally only care about getting their monthly payment. My agent’s advice was to lock in the off market and do the IP if I can swing it, both for the lower interest rate and contractually a Subject To will be more complicated, (we’d have to set up a trust.) If not, he said we could still do the deal as a Subject To. Any thoughts are greatly appreciated!

Thanks Russell and Tim. Your insights are much appreciated!

Taking into account rules of thumb like the 70% rule, the 50% rule, the 2% rule, ect., does anyone have ballpark numbers they generally shoot for when assessing potential investment properties in the DMV area? For example, what do you look for in terms of ARV, monthly cashflow, CoC return whether doing a buy-and-hold or a flip? Recognizing that every property has a number that makes it a good deal, just curious to hear from more seasoned investors in this geographic market on what numbers might lead you to pull the trigger.

Additionally, does anyone have any other methods you use to assess whether an investment is a good deal beyond the deal analysis tools provided on BP? Interested to hear your experiences and appreciate your insights.

Thanks for the responses everyone! I drove through the area where the property is located and it's kind of a dumpy area, so I decided to waive off. I'd rather buy in a B/C class neighborhood if possible. I also agree it makes more sense to do the house hack first to get experience buying property/landlording, etc. I appreciate everyone's input!

Hello Everyone,

Does anyone have advice on driving for dollars in the DC Metro/DMV area? Specifically, does BP provide any market analysis of the best places to drive based on geographic location? I've looked through BP Insights posts that look and up and coming rental markets, but haven't found anything specific to driving for dollars beyond discussion of apps like Dealmachine. Appreciate any advice anyone might have.

Hi All,

I'm looking to buy my first investment property and came across an off market yesterday. It's a distressed property in Northern Virginia (older condo) and I'd like advice on whether or not it's a solid candidate for a BRRRR or Fix and Flip. Here are the numbers:

Market Value: 210K

Purchase Price: 140K

Rehab Estimate: 25K

Cash Invested (Down Payment + Closing Costs): 38K (65K if I cover the rehab)

Gross Rent: $1650

NOI: $300-600

Estimated Cash Return: 19.17%

Here are my questions:

1. 1. Do these numbers make sense from either a BRRRR or Fix and Flip perspective? (I need an ARV estimate).
2. 2. It’s an older condo, which makes me nervous as a new investor, (home inspection is a given). Beyond looking at the condo association’s fees, cash reserves and assessment history, what else do I need to dig into before pulling the trigger? Based on the local market, I know these deals are few and far between so if I don’t jump, other investors will.
3. 3. Seller’s motivation. I need to dig into this. Does getting a deal for 70K below market value with 25K rehab seem too good to be true? (Note: I got the lead through a friend who I trust).
4. 4. I'm planning on buying my first house hack in about 6 mo. How would this purchase affect my ability to get an FHA loan? (I was advised I could always get a REFI on the rental if I need to free up money for the house hack).
5. 5. Is this a good enough deal to buy now even with the uncertainty of future market conditions (deferments, CARES Act, etc?) To quote Ken McElroy, I don't want to catch a falling knife.

I'm inclined to see if I can get a loan to cover the rehab so less of my cash is tied up. I plan on doing my own property management/tenant screening to eliminate that cost. I was also advised we might be able to get the rehab done for 20K (contractors are already vetted through someone I trust and do enough volume with to get a discount). Overall, it appears to be a good cash flowing property for a BRRRR, while also having potential for a Fix and Flip. Appreciate any thoughts or insights more seasoned investors might have.

Thanks everyone! Appreciate the responses. Joaquin, thanks for the advice and I agree getting the first deal is the most important thing right now. 

Aditya - Yes, I'd be happy to chat more, and I'd appreciate the wholesaler contact info. As mentioned, I'm still new to RE investing, but am hoping to relocate to Fredericksburg next year and start building a portfolio. Feel free to connect with me and we can go from there. 

Joel - Sounds like you've got some great cashflow going! Any words of wisdom from your experiences with house hacking? Unfortunately I'm stuck in Arlington for the time being, but once my lease expires I hope to buy in Fredericksburg. Do you have the property listed for an agent or are you selling it yourself? I have a few contacts interested in buying investment properties and can ask around.

One other question, not sure if this has been covered in other forums - are there any investor meet ups in the Fredericksburg area? I know COVID has thrown things for a loop but I'd be interested in meeting and networking with other like-minded folks. 

Hi All, 

I'm just getting started and looking to house hack my first rental in Fredericksburg VA, sometime in mid-2021. I've been looking at Craiglist to get an idea of what rooms rent for ($500-$700 seems average). I've read that Zillow rent estimates aren't that accurate, but even so it seems like the CoC returns for that area aren't that great. My near-term goal is to 1) Watch the rental market with COVID, 2) Try to find an off market deal if possible. With that being said, I'd appreciate advice on the following:

1. 1. Any recommendations for finding a good house hack in the Fredericksburg VA area?
2. 2. Any thoughts on living in a trailer on the property vs. living in the house? (I initially thought a trailer might be cheaper, but given all the costs involved, I'm not sure the cost difference justifies the inconvenience, in addition to zoning/HOA considerations)
3. 3. Any advice for buying out of state rentals while house hacking? Living in Northern Virginia, MFHs aren't exactly plentiful, so I'd be looking at mostly SFH/MFH in markets with better cashflow.

I have a stable job which I plan to stay in while I build my portfolio. My basic plan for FI is to combine the BRRR strategy with the stack and buy 2 rental properties per year over the next 5 years, each cashflowing $500/mo. I recognize this might be high (obviously a lot of variables affect cashflow), but my mindset is this: If I hustle hard enough, all I have to do is find 2 properties per year that hit that criteria. If I put in the work, I believe it is achievable. I plan to snowball my cashflow into the next property until I have 10 doors which net $60K. Because I live in a high-cost area, my strategy is to invest out of state in areas that have better cashflow.

What else should I be doing? I'm committed to taking action and getting in the game. Any thoughts or insights are appreciated!