All Forum Posts by: Sherry McQuage

Hello,

Talk to a couple of lenders (not just one) to see what their requirements would be to refinance this property in a couple years.  You don't want to buy it, then when the balloon payment is almost due then try to finance it.  Definitely hire a real estate attorney to draft or review any seller financing agreement to protect your interests.

Ask the real estate attorney how to handle the POA situation...can you talk with any of the other property owners who are short term renting out their properties to see what/if they have any issues? Check with the town/city to make sure they don't have any ordinances on the books or in the pipeline that would affect having a short term rental there.

Let us know how it goes!  Best to you.

 Nicholas has some good points.  Is there a part of the country that you would like to live in?  Have family or friends that you can go live near/with to get a feeling for an area?  Many military families that move to Moore County NC (Pinehurst, Whispering Pines, Carthage, Cameron) rent a place for a year to see what it's like, and find out more about what area they really want to buy in....maybe move somewhere and rent 1-12 months to get a feel for if you want to buy/live there.

Find a good real estate agent in whatever area you decide to buy in.  They can guide you and give advice  on what they see is popular or "up and coming"...often, they hear of properties that are going to go on the market before they hit the market (some "for sale by owners").

Keep learning at BP, keep asking questions, read the BP books. You'll find your way.  In the meantime, keep saving up money.  You might find someone on BP (or in your real life) that is doing what you want to do and will be a mentor or sounding board for you.

Let us know what you decide to do, and how it goes.  This is a golden opportunity for you to change your life and finances.  Best to you!

In NC, I can't find REO's that the lender wants to sell. I have called lenders, and they say either they're renting them out, or they don't have any REO.

Since lenders can often be slow to respond, I stopped looking at them. Most property owners that get into the start of foreclosure sell before it becomes REO...the internet makes it much easier for owners to sell instead of take the foreclosure route.

Discuss your options with your accountant.  "It was my intention to hold this property for a very long time"....what has changed?  Do you no longer want to hold it for 10+ years to benefit from the appreciation?  

I'm not a tax guru, but if you planned to hold it 10+ years and are considering selling it only to "save" on taxes, you might want to have your accountant run the numbers of selling it now, selling it in 3-5 years, and selling it in 10+ years.  You might find that "saving" on taxes is small compared to what the property might be worth (talk with a trusted real estate agent who knows the area and can give a projection of property values).

Don't forget to factor in closing costs (real estate fees, pro-rated property taxes, etc) and take into consideration your other income and/or investments.  Sometimes (talk with your accountant) a loss in real estate can off-set income in other areas.

Let us know what you decide and how it works out.  Best to you!

Congratulations about buying your first rental property!

Once you decide to move out and turn this one into a rental, will it be a STR or a LTR? What type of renter do you think it will attract? How important is privacy for that type of renter? Would a privacy hedge noticeably add to the privacy of the back yard? Would it make the yard "more attractive"?

I'm not familiar with Clusia...is it really hard to maintain/trim?

What type of fencing/privacy hedge do nearby attractive properties have? 

See what is popular (rental wise) around you.  Since it will eventually be a rental property and you'll have to hire someone to cut the grass anyway (I assume there's grass😂) would trimming the hedges add a lot to the expense, or add a lot to the desirability of the property?

Let us know what you decide, and how it turns out.  Best to you!

Hello Mike,

I don't know if Texas lenders have a problem with it, but here in NC lenders really don't want to let one open a HELOC on a rental property. (Unless you opened the HELOC while you still lived in it.)

So, you probably need to run the numbers on alternatives. If you refinance the rental house and get the equity out, you'll end up with a higher interest rate and a good amount of cash to use on your next house. Since you'll be looking for a house to live in (primary residence) you'll get better loan terms/interest rates than if you were buying it as an investment property. If you could find a duplex property (or a single family house that could be turned into a duplex--check any HOA restrictions first), or a "fixer upper" to live in, that could be a better use of the equity you have in the rental house.

If you run the numbers and decide it makes sense to sell the rental house (check with your accountant, figure out closing costs to selling and buying) then you'll possibly have more money to put towards a primary residence.

You may want to check the neighborhoods that fall in the school district you want to stay in and look in "under appreciated" areas...maybe not the A class neighborhoods, but ones that have potential of becoming "improved".

While I understand your desire to stay in a particular school district, it's not the end of the world to consider other districts if they will allow you to build real estate/family wealth that will put your entire family tree in a better position.

"The current area we are living in is very expensive and is heavily deed restricted"....sounds like you're currently in a HOT area.  Hard to buy in a hot area and make money, in my opinion.  School district ratings are not all encompassing...they don't measure some things that are important.  If you stay/buy in the expensive/deed restricted area, you know you're going to have some challenges...you might become "house rich and cash poor"....Just something to think about.

Let us know what you decide to do, and how it turns out.  Best to you!

Some great suggestions! My husband and I are under contract to buy a STR in Beaufort, NC. Will need some work to get it ready, and I'm collecting ideas to make it stand out. The suggestion to have kids utensils, a cooler, and beach chairs is great!

One item I can add from being a guest at a STR...keep up on your pest control (this includes mice/rat control). We rented a STR in Hawaii and ended up buying rat traps because "that area is know for rodents". The owner/manager has been very responsive about calling an exterminator, but cleaning the kitchen counter of rat poo every morning is...memorable.

You're spot on about getting a good cleaner; they can make or break the quality of the guest's stay.

Keep up the good suggestions, and thank you!

Sounds like you’re learning, that’s great! Learn before you earn.

Again, I am not trying to be “mean”, just keep in mind that you don’t know everything the seller is going through…from your side of the table this may look like an “easy deal” or a no brainer good deal the seller should jump on…seldom is this true.

You probably won’t ever know what the seller is dealing with (could be multiple sellers, family issues, health problems with a loved one, and a hundred other things). They might also be a different personality type than you. Some people make quick decisions based on a few bits of information; others take more time and want way more information before deciding.

Neither personality type is good or bad…just different. That might be what is happening here…

The good news is that you are open minded to trying to buy a property, and are happy to learn (even if this one doesn’t pan out). Keep listening and learning, and please continue to let us know how things turn out.

Oh, and if you don’t get to buy this property, you can (after the fact) ask the agent (politely and respectfully) why they think your offer was not the successful offer. You will learn something, and you might be memorable to the agent if another suitable property comes to the agent’s attention.

Real estate investing is a marathon, not a sprint. You are doing fine.

Hello Jennifer,

I have probably driven by your house, as I live not far from there.  Would love to hear more about your real estate journey!

Warm Regards,

Sherry

Hello,

I'm not in Pennsylvania, yet I've seen this type of thing before.  The seller might trust the realtor more than a stranger that walked up at the job site.  Don't know if they have a previous business relationship or not.  

Regardless, we're all in real estate to make money, and to serve others.  As an investor, your primary goal is probably to buy at the lowest price (you make your money when you buy at below market value), fix it up, and either hold or sell/flip.

The seller might realize they "don't know what they don't know"....in general, investors sometimes come across as "transactional" (they ran the numbers, and just want a yes or no from the seller).  Sounds like this seller wants someone who will get to know him, HELP him, PROTECT him from aggressive buyers/investors.  Or, there could be some other reason that you may never know.

You might not get this deal. You might talk with the realtor and decide the numbers don't work for you. You might talk with the realtor and feel "pushed"....like the seller probably already felt when you approached him (maybe?☺️)...you might talk with the realtor and it goes on the MLS and it sells to someone else....or it might sit on the MLS for a while and you eventually get it.

My point is, as a realtor and investor myself, put yourself in the other person's shoes...they don't want to feel "pushed" or like someone is trying to take advantage of them.  You might be offering a generous amount (I have not seen the property or run the comps).

Real estate is a relationship business.  My advice is to do as the seller instructed and talk to the realtor.  The more you push, the less progress you'll make is what I have found.

You seem to know what number you need to pay in order for this to work for you.  That's good.  The more deals you do, the more you'll learn.  Even though the seller may not have signed yet with the realtor, evidently he trusts the realtor more than he trusts you.  Can't push the seller in order to "get what you want"...that just proves the seller does need the agent to protect him from getting taken advantage of.

I'm not trying to be a "butt head" to you, just giving you my honest opinion.  If you went to a car dealership to look at cars, would you want a salesman trying to push you into buying by offering you 3 options? 

Get to know the agent, be friendly and professional...if the property goes on the market and doesn't sell for a while, that agent will probably call you back.

You might want to send out letters/mail campaign to find your own off market deals.  

Basically, the seller told you to communicate with his agent (not to contact him directly), so please do that.  I don't think you're going to change the person's mind by being aggressive.

Yes, money is important...but it's not the only thing.  People want to be heard and understood, not confronted by an aggressive investor...you can only control how you react to what happens.  However this goes, learn from it and you'll be better equipped when you find the next deal.

Sometimes, when we don't get to buy a property that we really want to, it turns out to be a blessing. Besides, if the real estate agent is honest and good, be nice and professional with them...they might come across a "deal" that wouldn't work for them to list and tell you about it.  

Best to you!  Would love to hear how this turns out.