All Forum Posts by: Chris H.

Stephen wrote:

"You are looking for a return greater than 20% before management, property taxes, and insurance. Are you joking? If any of us knew where such a thing existed, we'd have bought it."

However, I don't think it's *that* insane if you know what you're doing...I think Stephen is forgetting the power of buying undervalue. If you buy broken down properties and fix them up, you can earn an instant 20-30% return in terms of equity.

For example, if you buy a house for 50k, spent 20k fixing it up, and now it's worth 90k...you made 20k. That's an instant 22% gain.

If you consistently make a 22% gain on each purchase, you can use that 150k to buy ~185k worth of property.

If you do this with leverage...say, 200k worth of bank loans...you start with 150k, and end up with: 385k in property, and 185k in equity.

If the bank loans are under 5% interest, this is not the highest risk strategy in the world, and should be capable of generating a return on equity of over 20%. However, it's a lot higher risk and you can definitely expect to not get 20% in practice. I'd probably say ~15% return on equity in practice.

And I'm assuming you are managing it yourself.

Got it!

Does the type of deed need to be specified on the contract/offer? If we get down to signing and he refuses to do a special warranty deed, who gets the earnest money?

I contacted my traditional realtor and she was happy to take care of writing up the contract, running comps, and run a title search at a relatively cheap (compared to percentage points) fixed price.

If the title search comes up clean (except the one loan), and we go through a title company (I suggested a local one I've used before), is a quitclaim okay?

So, you'd suggest to go to a title company and ask about how to do it?

Hello,

I found a property an investor who has since moved out of town listed on Craigslist. After speaking with the owner, he was willing to sell it at a price quite a bit below comparables if cash (or cash plus willing to assume the remaining 25k loan).

The sale would be done with a quit claim deed and he'd want the equivalent of one month's rent as earnest money. He said the easiest way is to just write him a check for the earnest money. This makes me nervous.

He had his son (still in town) show me the place (he arranged a few simultaneous showings, I wasn't the only one) and it definitely needs work, but from what I can tell, mostly superficial. Roof's good, saw no signs of mold, just lots of drywall work and cleanup of filthy tenants.

Only problem? It's currently occupied, on a month to month basis. He says he can get the tenants out very quickly, 20 days, though he'll give them 30 since they've been good tenants.

I am willing to buy it, but only contingent on the renters being evicted and also a home inspection.

I've never done this before without a realtor holding my hand. How would I go about it? I'm tempted to go ask my past realtor (who I have a good relationship with) if she'd be willing to help me with the contract for a flat fee, but can she write a contract with "assume the mortgage" in it, and who holds the earnest money?

Daniel H. : There is no mortgage on the property. It is fully paid off.

So, I live on the west coast and am on the title of a property on the east coast (specifically, in Georgia) worth more than all of my other assets combined.

It's occurred to me that if I had that cash available, I would easily be able to purchase properties without needing to use hard money lenders. (I have been buying properties cash, then refinancing, butI am limited by my funds to very small properties.)

I went to a local national bank (since my local lenders can't give loans in Georgia), and was pretty much told that "no one" will give a HELOC on an investment property. They can do a cash out refi and give me 75% LTV, which is fantastic, except:

* $4k origination fees
* Obviously, I will be paying interest on the full bulk at all times, even when I'm not using the money or only using half of it.
*Interest will be higher than usual because it's a cash out refi on an investment- they tack 1.5% on top of the going rate, so it ends up a little below 5% interest.

So...no.

My next step is to start googling and calling random mortgage brokers in Georgia. But I wanted to ask your view.

Is there any way to get a HELOC on an investment property?

If not, do you think it's worthwhile to shop around for a cheap <4% interest 30 year cash out refi to have the money to invest? I'd love to have the HELOC, I'm extremely skeptical about doing a full refi because I don't want to be paying interest all the time.

If I own a house that I owe an existing mortgage on, can I turn around and sell it owner financed?

For example with some made up numbers, let's say I owned a 100k house, and I owed 60k on it at 3.5%. Could I turn around and sell it at 100k, at 8% interest, owner financed, with a 10k down payment?

What kinds of pitfalls would I need to worry about in such a scenario? And what would the process be? I assume I would start with a real estate lawyer to draft it.

Thanks much! I'm trying to decide between this or lease-to-own options, but I want to make sure this is even feasible.

Per the last two landlords, no months late in the last 48 months. I like that.

Hm, concerning.

Present rent is equal to my asking rent.

There is currently no monthly debt obligations.

I'm thinking about this exactly, depending on the quality of the cosigner.

Looks like medical collections and a bankruptcy a very long time ago killed the credit.

Both prior landlords reported that the tenant paid on time every month for two years but left the place in poor conditions (I think I'll try to call them and ask exactly how bad), but made no attempt to recover damages and simply kept the deposit.

The tenant actually warned in advance that this was due to a domestic violence situation with a partner who is now gone.

The tenant has had a stable job for about a year making a little over 2x the rent, and receives a very small amount on child support as well.

I guess I'll investigate who the cosigner would be and exactly what damages were done on the prior home.