All Forum Posts by: Sarah Purdum

Roofstock is just the vendor, you get traditional financing. They offer suggestions for mortgage providers but you can choose whoever you want.

Thank you everyone for your reply replies, I did not quite understand how a cash out refi worked, as I’m reading your responses I’m beginning to understand that you can’t cash out refinance a turnkey property unless it goes up in value through renovation or appreciation or if I hold it long enough that’s it accrues equity. I’m going to try to buy something undermarket more locally (two hours away but drivable) and fix it up then find renters and manage it for my next endeavour. I appreciate the feedback!

Thank you Lee, after you mentioned these cities I did some research and you’re right I’d be able to buy something in those cities. What I may do (as I still haven’t gotten the PSA from roofstock) is just pull out of this current deal and look for a foreclosure under market value in twenty nine palms and rehab it, hopefully bringing up the value and cash out refinancing six months later. I’ll manage it myself but as i have a flexible schedule and hold it. Can you give me some insight on the rental market there? It makes me nervous buying in the desert, can you find long term renters there? The Cashflow of a fully finished property was my initial attraction to buying turnkey, but if I can move forward with property investing faster with the brrrr method and there’s cities close enough to Los Angeles then I’ll check that out instead. 

Hi Sarah! Yikes, I will be careful. I figure I'll learn as I go along. I pulled up the zestimate of the property I put an offer on and it's (thankfully) more than I paid for it and less expensive than the comparable homes around it. It will definitely need repairs when new tenants move in, the homes on roofstock come with undated inspection reports.  I also picked a property with a high irr and high cap rate, better than any of the current properties listed on there. I figure the good deals get scooped up fast.

In the future I would like to purchase, renovate, and rent my own property through a realtor but for this first one I wanted to see how my investment would turn out. If anything comes up I'll definitely post it on this thread!

Lee, thank you for your response! That does get me thinking. I have been interested in BRRR investing, though it seems a little more complicated than buying a fully set-up turnkey property which is why for my first investment I started there. Capital is definitely a lacking factor for now...maybe as I get more familiar with the property managers and realtors and contractors in Memphis I could buy my own fixer upper in the same area...too bad LA doesn't have $100,000 properties! I would love to live near my property, manage it myself, renovate it myself, etc. etc. Maybe when I strike it big or can do a 1031 exchange into a property closer by. Would be a lot easier lol. And no, the appreciation on this property is probably 1.8%, so not a lot of luck in it appreciating over 75 LTV quickly.

Thank you, that does help. I have a normal, non-retirement index fund however I also have a Roth IRA and I'm glad to hear I can convert it into a self-directed REIT and buy a property that way because I'd rather not eat the 10 percent fee to pull it out unqualified. I'll have to keep that in mind down the road. i don't have a 401k but I wonder if I'm able to pull from my index funds tax free if I roll them into an investment property. I also could start an individual 401k since I technically am my own business which may help me with taxes down the road if I can take a loan against it. I'll have to ask my advisors on that one and I'll ask about the Roth conversion as well.

Question-in regards to a lender having to see equity in the home, how much equity would they need to see? The home I'm in the process of owning is $91,000 and I put 25% down, or $22,750.

Thank you so much for your reply, all of that input helps a lot! You have a lot of knowledge on this stuff and I just learned a few things that will definitely help me :)

I am excited, my goal for a long time has been hurry up and invest now and then later go explore life with a financial safety net. Travel, go backbacking for a month etc. I have always invested in index funds and there's a big place in my heart for them but had no idea how to use leverage to make some of my money go further and that's very cool to me. Blows my mind.

As far as getting a cash out refinance from a conventional lender and waiting six months, I don't mind at all. I agree with you that I should get my sea legs and a lay of the land before buying another property, I figured maybe I'd try to buy one a year to start. I just didn't realize I could refinance even six months after buying a new home. That's pretty amazing, I figured you'd have to wait a few years and build the equity yourself that you'd want to pull out. I'm thinking I'll go for a refinance about twelve months (or more depending) after the purchase and then use some of my own savings to put 20% down on my next one (another good suggestion that'll get me closer to another property sooner).

Also, I didn't know about using OPM, thank you for bringing it up!  I don't own my own property in LA, neither do I want to for now, and so any property I'd own would have (hopefully good) tenants. Roofstock properties come with a vetted tenant in place (for example the tenants that live in the property I purchased have lived there since 2008) so that's good news if that's what I need to buy another one when the time comes.

Lastly, thank you for your advice to observe and evaluate how this land lording thing in Memphis is going before jumping into my next purchase. I'll try and wait a year in between to see what happens, how much repairs come up, what my cash flow really is and see how the property managers work out. I don't think at this point I'm clever or brave enough to do more than one deal a year, and as time goes on we'll see if I pick up steam :)

Thanks Cara, I really appreciate the response!

I'll also add that the loan I took out is a 30 year fix conventional loan.

Hi guys!  A little about me, I have been lurking around BP for about a year, listening to the podcasts and reading blog posts.  I saved up some money over the last couple years and just put an offer for 25% down on an awesomesauce property from Roofstock. I'm stoked to start learning more as everything related to renting that property unfolds.

Here's my background:

I make about $45,000 a year, sometimes more (I'm a personal trainer in Los Angeles) and my goal is to buy ten properties minimum over ten years. All around 100k-150k in different cities. I love Roofstock's set-up, it makes it easy for me to buy in a more affordable market than LA with tenants and options for property management and financing in place.  I figure over ten years I'll be able to purchase five properties with 25% down while simultaneously getting a cash out refinance on those five properties to buy five more. That's where I'm starting anyways-as I learn more I'm sure my strategy will evolve. 

If I cannot qualify for those loans I plan on partnering up with my boyfriend and being the capital while he helps me cosign as together we make over 100k.

So, here is my question:

How soon after closing escrow on a rental property with 25% down can I cash out refinance for another rental property? And if I apply for another 100k rental property, what's the likelihood I'll get the loan with $50,000 income and two mortgage payments (both paid by tenants)?

How realistic is my plan?  Any feedback is appreciated from those that've been doing this longer than me!