All Forum Posts by: Jeff Lee

@Michael Faulk "As I've said above... what are your goals? Do you want to pay that thing off as fast as possible or are you looking to stretch it out 30 years."

This being my first dance, I don't want to under or over-do it. Based on what you've stated, I'm thinking about a 15-year fixed loan.

If I decide I want to continue doing this after the initial 1-5 years, I'll have committed very little capital that I can search for new properties.

If I decide it isn't for me, I may just pay off the loan and let it be. Opinions?

@Jeff Pollack

"What kind of properties are you targeting?"

Properties that are in decent condition that can be rehabbed and ready to use as a rent house in 3-6 months. (I threw that number out of my butt. I have no idea what the avg. time is to get a house rehabbed and ready to go.)

"You said you have family who invest. Would they lend you money short term to buy and rehab? If so, consider getting them to fund your purchase using a private note."

Could you be a bit more specific? How much (%) would they be lending me to buy property? Example if you would.

"Buy at a discount and borrow enough to cover your purchase and rehab costs."

Assuming the cost of the house is $50k, does your scenario suggest I pay $30k with my own cash and $20k borrowed (from my relative)?

@Michael Faulk

Fa Perhaps I should consider conventional financing. I'm very stuck up on ARMs due to the low-interest rate. Perhaps a conventional loan will offer a percentage that is slightly different but give it to me for 30 years versus the 5/7/10 of the ARM. I must be focusing on the tree instead of the woods.

I do agree with your example (about putting 50% down) that I should try to maximize leverage in the event another piece of property comes into sight that I'm interested in purchasing.

@Jeff M. isn't it loud at Buffalo Wild Wings? Last two times I was there, the music drowned out everything.

@Eric Black Ah, got it.

In regards to closing costs, is there any way to negotiate to have it eliminated, reduced, or to have the seller pay for it? Is closing cost set in stone? Having to shell out a few grand for closing costs doesn't sit well with me.

@Eric Black - The "pre-payment penalty" you mentioned, would Closing Cost fall into this category? I'm looking at Rate Quotes from Aimloan and everything has a closing cost. Sheesh. Is it just this service or are closing costs normal?

Thank you all for the replies.

@Robert Leonard - Your advice on requesting closing documents is very helpful. In regards to acquiring a loan via LC, what would be the lowest interest rate, assuming I'm good for it? 

I know grade-A personal loans from LC are ~6.7%. May I assume it would be higher because LC wants their cut as well? I'm trying to explore every avenue/lender and the respective interest rate before deciding. If the rate from an ARM or 15/30 fixed is lower, it would seem that I should bypass LC.

@Michael Faulk

My cousin and I went to the 3268 Murphy location. "Oh my god..." is the only thing I've got to say about that house. I believe that big tree that is literally inches from the back patio is the current tenant. (It and its roots.)

About Me
Hello, everyone! I'm Jeff, a 29 (soon-to-be thirty) year old looking to explore the world of real estate. Specifically, I'm looking to buy, renovate, and rent out property. I have no experience, but I'm taking advice from my cousin and his father.

The two of them currently operate half-a-dozen or so rent homes. I'll definitely ask them for advice, but I also want to hear what the BP community thinks. After all, it never hurts to take in more opinions.

The Purpose of this Thread
I don't want to create a thread for every question I've got for which I'm sure there will be many. Therefore, I'll rather condense it to a single thread and not spam the forums.

Questions

Situation: I'm looking to purchase a house for $50k. I'm pondering how I should finance the mortgage. A 5/1 ARM looks real enticing with its interest rate under 5%.

#1. Should I go with an 5/1 ARM? I literally began reading about them within 24 hours. Are there better options out there?

#2. I have enough capital to buy the house outright, but I'd rather finance the house with a $50k loan and put down 50% (if possible). This would allow me to have enough money in the bank should I go after another rental property sometime down the road (2-3 years). Opinions?

#3. Can I pay back the (ARM) loan back after 2-4 years before it goes into 'variable interest rate mode' without paying any additional fees? I ask this because the rate seems too good to be true. Is there a catch?

#4. Are there any minimum/maximums with ARMs? I'm using the search at Bankrate and based on where I live (Bossier City, Louisiana), it seems I get no results unless I use 20% down or less. (I'd much rather put 40% or more down. I hate paying interest.)