All Forum Posts by: Rodney Buford

@Kody Thompson thank you for your input, stopping contributions is an option

@George Blower thank you very much for the information.  Would it be alright if I reach out to you privately if I have additional questions

Good morning BP'ers,

I hope this doesn't come across as a dumb question but I am really struggling with this decision.  Due to COVID-19 my W-2 income has taken a 15% decrease for an undetermined amount of time.  My wife was out of work for several months and just now starting to get back to work.  Due to the CARES Act, the 10% penalty is being "Waved" in 2020 assuming you meet the loose requirements that they have.

• Any individual who has experienced “adverse financial consequences” because they’ve been quarantined or furloughed, or because their hours at work were cut.

• Individuals who haven’t been able to work because they’ve had to stay home to take care of their kids.
• Business owners who have had to slash operating hours or shut down due to the outbreak.

Basically the Fed's are printing money at an alarming rate which in turn "devalues" the dollar.  Why would I continue to save in my 401K and why would I not take advantage of this "10% discount" now and pull $100,000 out of my Retirement and invest in good quality rental properties.  I realize I will have to pay tax on that $100,000 but would pay tax on that at some point anyway.

I am no finance expert and honestly just trying to get feeback. I just try to dumb everything down and simplify things.  I am struggling to figure out the pro's and con's of this.  I am in the 50+ crowd so this may make a difference on what I do.  I want to build my cashflow now, my nest egg is not close to where it needs to be and to be frank I am concerned with our economy overall.  I realize there are risks in real estate but I feel much more comfortable owning cash flowing real estate then the stock market.  So I would welcome feedback positive or negative on my thinking.  

Thank you in advance,

Rodney

@Boaz S. I found a local bank that did a 5/1 ARM at 80% LTV, so I took that and will keep looking for a 15yr or 30yr fixe rate mortgage.

@Justin Merod Good afternoon Justin, I am sure you will get some great recommendations. I called around a lot as I was looking to setup a Series LLC so that I could spread out my liability. I used a gentlemen by the name of Tim Denker at Denkerlawfirm.com. He also has a website called LexLaunch.com where I requested my Series LLC. Tim is a great guy very responsive and helpful. Hope this helps, wish you the best.

Rodney Buford, Real Estate Investor

Lighthouse Property Holdings, LLC

@Mark F. @Zack Karp @Jerry Padilla gentlemen thank you for advice, sharing your knowledge, and your resources. Hoping this BRRRR has a happy ending in the next month. Thanks again.

@Shaun Weekes Sir appreciate the reply and your willingness to give your thoughts.  Your information was very helpful, certainly if this local bank doesn't pan out, I will be getting in line to PM Jerry to see if he can help.  Currently don't have a broker or loan officer on speed dial at the moment.  Tried a broker once and had a horrible experience so maybe it's time to research and identify another one.  Thank you.

@Jaysen Medhurst @Alex Bekeza Thank you very much for your thoughts, currently working with a bank in the town where the duplex is. 5/1 ARM locked in at 5.75% cap 11.75% at 80% LTV. I figured once my son graduates (assuming he isn't on the 10 year plan :)) I will refinance again or sell depending on market. Realistically I shouldn't really have to worry if I get this done before the 5 years.

@Brian Hill I figured why pay rent when we can get some passive income coming in and let the other parents pay for the mortgage.

Appreciate the feedback as always.

Good morning BP,

I am writing this out of frustration partly and also maybe it will help someone else down the road. I was feeling pretty good about my first BRRRR project. Instead of paying someone else rent for my son to live while attending college, I decided to find a property in his college town to fix up and rent out (Duplex).

Everything went pretty well, acquired a hard money loan, hired a contractor (dealt with some issues there), and successfully got it rented out by the bedroom for $300, total income $1200 (2 bedroom 1 bath per side).

My hard money is due at the end of September so I started securing refinancing options at the end of August.  Here is where my challenge started.

I have been through 2 lenders thus far all saying they could do the refinance only to find out after paying for appraisals and submitting all documentation that they couldn't.

• First lender said they could do 80% LTV cash out refinance only to find out the highest they could go was 65% (wasted 2 weeks)
• Second lender said they could do 80% LTV cash out refinance only to find out at the very last minute (wasted 2 weeks) that because my son is living there they consider that an owner occupied property and could not do it.
  • Evidently there is a Fannie Mae and Freddie Mac guideline that prevents me from getting a fixed rate refinance because of my son living in the property which I honestly don't understand.

I am trying to stay positive and mark this down as learning the process.

I pride myself on having tremendous integrity and honesty, so during the process I listed my son on the rental agreements.  Had I put "Joe Bob" on the rental agreement than none of this would be an issue.  I feel like we get penalized for being honest and forthright.

Just needed to vent.  I am facing a hard money penalty now so working through that piece and working with a bank on a 5/1 arm to see if we can do a commercial 5/1 arm cash out refinance.

Not sure where else to turn on this as I don't understand that Freddie Mac / Fannie Mae guideline at all.  Hoping the bank comes through on the refinance.

Thanks for listening,

Rodney

@Tim Herman  Sir appreciate that input and that does make sense.  I have asked for 2016 & 2017 expenses to see if they are consistent.  50% rule for expenses seems to be the barometer but obviously its good to understand the real numbers.  Thanks again for your advice.