All Forum Posts by: Ronald Allen Barney

Rezoning is a long drawn-out and often expensive process without a guaranteed outcome.  You can informally run the idea by the applicable planning agency to get an idea of its likeliness to happen but I would be floored if a seller in this market would accept an offer contingent on rezoning.

The variables that will change the most will be taxes, at least in the USA.  Any labor you contract out may be higher or lower cost depending on a number of factors.  ARVs and rents will be higher in the cities but then so will purchase price.  All deals need good validation that they have a reasonable chance of cash flowing.

 It won't hurt to make whatever offer will work for you now.  If that gets outbid by open house visitors, keep countering until the numbers no longer make sense for the cash flow situation.  Then instead of "winning" the top bidder now has a problem they don't yet understand.

I would look into a 1031 exchange for a less toxic property, and in your due diligence (check the roof next time!) estimate the cost of hiring a property manager to also achieve that simplification of your life.  Capital Gains will be deferred.

It's entirely possible and the plat form of legal description (with subdivisions and lots) was designed for making such a thing easier than ten paragraphs of survey compass directions and distances (called "Metes and Bounds").

Reviewing the lease should have been part of the due diligence for your investment.  But now that you're playing catch-up, review it now and see what it is you signed on for.  You're taking whatever the lease says you're taking now.

At the end of the lease it's up to you but I would get rental comps to see what market is for that unit.  If it's more than what they were paying during the lease period then you have a decision.  If they were paying rent on time, weren't trashing the place, and weren't causing trouble, I would go about a third of the way from previous rent to market rent each lease renewal.  On the one hand you want to get to the market rate for rent, but on the other with the eviction moratorium the entire world is starting to see rent payment as optional now so if they're paying, hang the f* onto them.  My two bitcoins.

The 40k HELOC minus about 10k for closing costs puts your price range with 80% LTV, at $150k. At that price range, you are most likely going to need private money for rehab. You may find a deal with a high enough ARV and rental income cash flow to make it work. Much will depend on what deals you can find.

Find and work a steady part-time job at a firm you plan to work at when you graduate.  What they pay you won't matter so much in the beginning but it obviously has to be part-time while you're in school.  When interviewing make sure that they will be able to convert you to full time upon graduation.  After your second full time paycheck you'll have two pay stubs to establish an income level, and the longevity at the same employer will give the bank a warm fuzzy you're a good candidate for a mortgage.

Then use a first time home buyer loan to get into a house with 97% of LTV (3% cash down if the house appraises at the sale price, or if it sells higher than the appraisal you'll need more cash). Keep enough for closing costs to be ready for that first purchase.

Then when you have the house building equity and a full time job, live frugally in that house, make repairs with an eye for rental marketability, and keep building up both the house equity and some cash savings.  Investments are fine but they have to be liquid, nothing that gets locked in for years.  No IRAs, no 401(k)s, none of those.  If everything looks scary just park it into an interest-bearing savings account.

As both your equity and savings grow, that will grow your cash position for getting into your next deal which should be 5% down conventional. After you move from the FTHB house to the conventional loan house, you can rent out the FTHB house. That's your first door. Now you'll have cash flow on top of the first mortgage being covered. And then you're off to the races. You'll be able to keep doing 5% conventional houses for a while although most mortgage lenders cut you off at about 10. At whatever level you can no longer get the conventional owner-occupier loans, then your cash flow should be accelerating your savings to where you can swing the 70 to 80% LTV loans for conventional investment property.

The eviction moratorium ups the ante on vetting renters.  Smart landlords are being extra careful with whom they rent to and I can tell from my daughter's experience it's harder to get a rental these days than to clear mortgage loan hurdles in most places.

For the fear of it not renting out, that's where rental comps come in.  Shop as if you were looking for a pace to rent, plugging in the same bedrooms and bathrooms as the house you're considering renting out.  Zoom the view on whatever search site until you get the closest 10 rental units to your house.  What are they renting out at?  A quick mental average should be fine for a first cut, or for more detailed due diligence make a spreadsheet with all the rents and then features or amenities available at those places that are different from your potential rental house.  After weighting those rent values and averaging them that should give you a price your house "should" rent out at.  As a further due diligence make sure the crime situation doesn't change dramatically between your house and those other rental units.  Crime can swing the price a lot either way.

Once you've figured out a realistic rent you should be able to plug it into "investor math" for the rest of your decision-making.

Realtor.com sources from MLSes nationwide as both the MLSes and Realtor are part of NAR. If it's not in Realtor it's either off-market or the dummy that listed it put it into the wrong category. If you can get to Realtor you basically have just bypassed any agents to get to the MLS.

What an agent can do is employ some special knowledge and familiarity with quirks and dirty secrets of their local MLS, such as how less savvy listing agents drop their listings into the wrong category and subcategory making it not show up on search sites like Realtor. Agents often also have a short list of off-market deals for their valued and exclusive-signed clients which won't come from any public search engine. Agents will also have market knowledge of their area and a public search engine will leave that research up to you.