All Forum Posts by: Roger Vi

@Account Closed 

Regarding the different down payments and interest rates, I would go through each scenario and just compare the numbers. Most of it will depend on the property you buy and whether it can support the payments required by the loan you get. If the property cash flows enough, any terms can make sense. Just set your rules/requirements BEFORE you shop for property and stick to it. For loans, get rates from one lender and bring it to the next. Repeat a few times and you will know you have the best rate offer.

Regarding worst case scenario, you have to accept the risk and plan for it if you are going to leverage money in real estate. Reserve money is very important. More importantly, I prefer multi-families so when you have vacancies you can still cover loan payments (the whole thing doesn't sit empty).

If we were three months away from a financial crisis, I would get all the money I could get a hold of, short the market, and start shopping for my retreat island. ;)

Whenever a crisis comes, no one will be able to predict it except the guys that predict it every year/month/day. If you are investing, you just have to understand anything is possible and make sure you can handle the worst. If you couldn't handle being in debt during a crisis, don't get into debt in the first place. Buy cash only.

HELOCs and other loans all have different terms, pay attention specifically to adjustable rates and fixed rates. Adjustable means at some point you will not have the same rate, and it will get adjusted with the current prime rate. Could go up or down (at this point, it cant go down much lower). Fixed rate means you will have the rate for the life of the loan, regardless of what happens in the rest of the loan world. 

Interest rates actually have nothing to do with the economy. Basically there is a lady named Janet and she's got 11 friends that vote 8 times a year whether they think it is wise to raise or lower rates. They call themselves the Federal Open Market Committee (FOMC).

Hope this helps!

Not sure if they will let you use the income or apply for HELOC if it is owned under LLC. In my experience, they prefer to see people own in their own name for loans. I may be wrong, just have to ask around!

Off the top of my head, I would say a HELOC on your primary using the income from your MF would be the easiest way to borrow money at low interest. You would have to qualify, which would mean good credit and finding a lender that will accept your rent as income. If payments are well documented, this shouldn't be too hard.

@Ashley Millar I did a FSBO last summer and have a few tips I wish I would have known before hand.

In WA state where I'm from, you cannot have a lock box w/ 4 digit code unless you are an agent. I didn't know this until way later and ended up having to schedule someone to open the door for every showing. I would check the rules in your state for this.

I would not use sites like FSBO.com, Forsalebyowner.com, or any online service that claims to give you the ALL-IN-ONE package. I had a terrible experience with the customer service and in the end it felt like I paid $600 to get my listing on zillow, redfin, and craigslist. The only people you need is a flat-fee listing agent to get your home on the MLS and a lawyer to read over your documents. I personally skipped the lawyer and just did due-diligence on the buyers agent and title/escrow companies. I would hire a lawyer if something odd came up, but the buyers agent ended up being a very reputable agent in the area.

One last thing I would recommend is a good photographer to take EXCELLENT pictures. Stage the home if you have anything already in there. Something like 56% of shoppers start their search online these days and these pictures are more important than the actual home in some cases. You can have the nicest home but if you have no pictures some buyers would pass you up.

Flat Fee Agent, Lawyer, Photographer, and it is smooth sailing from there!

Hope this helps and good luck with your sale!

@Tim S. Come up north for up and coming around 200K. Everett and Marysville would be my first choice since they have exits right off I-5. 

Everett has the big waterfront project as mentioned above. I have lived in Everett since 1997 and have never seen as many changes in one year as I have in the last 12 months. Outside of the $360M waterfront project, there is a new bank/office building downtown, new 156 room Courtyard Marriot, completely renovated 124-suite Red Lion Hotel on Broadway (former Best Inn Motel, gutted and redone), expansion of EVCC (student housing + classrooms), and another large apartment building by the hospitals. This is all in a 1 mile radius that I can name off the top off my head because I pass by daily; there's plenty more going on up here. Bottom end prices off the MLS are 170-180K. Plenty of 3 bedrooms and 4 bedrooms under 300K, but they go quick off the MLS! (less than 7 days or there is usually something wrong.

Marysville has the Tulalip Casino / Seattle Premium Outlets. That tribe has been very good about reinvesting profits into their community and expanding every year consistently. There has been something new added every year for what seems to be a decade now. Growth projections for Marysville are very strong but I do not pay as much attention to it as Everett.

Other places I would look for up and coming neighborhoods in this price range are Lake Stevens, Snohomish, Monroe, and Arlington. They are a little further but there are people in all those places that commute to Seattle for work daily. They won't have projects as big as Marysville or Everett, but many new neighborhoods are being built and they are a short drive to everything.

Hope this helps and good luck on your search!

Gift from family like @Brett K. said would be a good for sure answer if that is the set price.

Other way I can think of is to have the seller pay the closing costs and raise your price. Seller gets the same size check and you have a lower amount to close. Only difference is you will have a higher loan balance (original + closing costs). I am not sure what you are pre-qualified for so if you go this route you will have to work with your lender to see if its possible.

Hope this helps and best of luck on this purchase!

This depends on the paint but I think every five years is reasonable. Not long but not unheard of.

If this is not a high-end rental, I would consider using a gloss, satin, or eggshell enamel for your next paint. The pro painters might not recommend this for appearance, but it is MUCH MORE durable than flat paint. When spaghetti sauce hits the wall and you wipe it off, you will most likely leave some type of "wipe" mark on flat paint but never with gloss.

Rents being below market is a normal thing. Every landlord has their own way of doing things and I know a lot of them that just don't care about market rent. As long as its rented and they aren't losing money, they just try to be as hands off as possible. Very common with older landlords, my guess is they have other business they would rather focus their time on. The rents you are describing are actually a lot closer to market than a lot of "below-market rent" properties I've looked into.

Most importantly, make sure you are calculating your market rent correctly! Are amenities comparable? Washer/Dryer in unit and undercover parking can command $200/month more in my area. Attached garage would make that $300+.

I would be more concerned about the 2 months its been on the market and the price reduction. What is the average time for other duplexes to sell in this area? Has there been any offers? If the price was reduced after someone offered and backed out, call the agent and ask why. If something came up during the inspection they will have to disclose it to you.

Also, is this duplex overpriced? Something I've noticed very common in my area (been a sellers market for a while) is owners of rundown multi-family homes will list their homes for sale at a ridiculous price. You can see plenty of deferred maintenance just driving by but they are pricing it like its new construction. I believe the strategy here is to see if some rookie with plenty cash will bite on the high price. Since the building is rented out and cash flowing monthly, this is a win-win situation for the seller. 

Hope this helps. 

Welcome to the site @Jen Allen ! Prepare to watch your real estate knowledge increase at a faster rate than ever before!

I've actually been pretty interested in Jacksonville, FL lately for rentals. Could you speak a little bit more about your goals with your real estate business? Do you plan to invest mainly in Jacksonville or elsewhere? What kind of properties? Strategies?

From what I understand, you will only be able to take the actually equity and exchange it. The mortgage balance needs to be paid back upon the sale and you will not be taxed capital gains since you never see the money. You can use the cash you get at closing as a down payment for a completely NEW loan, and I think that will accomplish what you are looking for. You cannot just keep the same mortgage and just change the properties if that is what you are asking.

How long have you lived in the home? I believe if you have lived there 2 out of the last 5 years, you do not pay capital gains tax up to 250K profit; 500k for married couples. If this is your situation, you will not need to 1031 exchange to avoid tax.