All Forum Posts by: Chris M.

@Joel Owens I could spend up to around 100k.  I found the seller on the myhousedeals website looking for a good deal.  I specifically asked the seller about the condition of the property, roof and other items before ordering the inspection and he claimed everything was in good condition. So I'll just have to accept the inspection as a sunk cost and walk.  Thanks.

Its a suburb of Indianapolis.  @John Weidner Yeah, the inspector actually said it could be 30k on the high end. I believe comps for ARV would be 50-60k. So the inspector actually said I'd have to get it for almost free considering I'd have to do so much in repairs. Its not a high end area, so I don't think I'd get much more in rent, maybe $700.

The seller of course claims there is nothing wrong with the property, which tells me he basically hasn't taken care of it - and leads me to think I could find even more issues as soon as I open the walls or look in the attic.  Most of these items aren't about improving anything just fixing problems, making it safe livable, and insurable.

I'm looking for a rental investment, and found a 3 bedroom 1000 sf house for $30,000 in Indiana, currently rented at $600/month.   Seller isn't willing to go any lower.  I thought it was a good deal, but ordered an inspection and came up with a number of issues including the following:

-cracks in the foundation cinder blocks although told that's easy to replace 

- roof has 3 layers.  I'm told this will need to be replaced to be insured.

- all windows need to be replaced.

-crawl space is rotting.  Told the house could collapse if the supports aren't replaced.  Also told this is a signal that it has humidity issues that could cause mold or other problems in the house.

-electrical/circuit breakers unsafe/need some rewiring

-furnace is very old, but the inspector couldn't check it because the tenant couldn't afford the gas.  Also because of this some of the pipes have been freezing in the laundry room in the winter.

-inspector couldn't access the attic but says there could be other potential issues there

-the kitchen/bathrooms probably also need updating

The inspector said he estimated it costing at least 8-10k to fix these issues, but maybe a lot more.  So does it still sound like a good deal, and how much would these issues typically cost?

Well I'm getting really discouraged.  I live in NYC, so being an out of state investor is a must.  I'm looking all over trying to find a decent deal that compares to some of the success I see here on BP.  First deal I had to walk away from due to defects on the title that the seller wouldn't fix.  Now I found 2  houses for 30k each which I thought were good deals and ordered inspections for them thinking it would be an easy win.  Then the inspections come back, with all sorts of problems.  3 layers of shingle roofing, making them uninsurable, open electrical sockets and bad wiring, cracks in the foundation, etc.  The seller isn't willing to reduce the price, and the inspector basically said I'd have to spend almost the same as building a new house to fix all the issues.  

The inspections saved me from losing even more, but I basically just threw away $800 in inspections on 3 properties I won't buy.  What can I learn from this, and how can I stop wasting on inspections only to find the deal would never work?  How do you weed out the bad sellers and wholesalers and find the ones that have really good deals?

For a particular property, most of the repairs are done within of month of me purchasing them.

But it would seem optimal to always buy more fixer-uppers every year so the renovation expenses reduce taxes???

@Amanda Hensley

Yes, I agree @Jon Holdman's formula makes sense as it uses the net income... unfortunately the bank I was working with was not using his formula. I was wondering if that was because I've only had them 1 year.

Also, on a related note, I tend to buy fixer-uppers that need some repair and renovation which is regained in equity. However this gives me a negative rental income on schedule e, although they are really cash flowing. Do banks understand this?

Thanks

Thanks for the responses. The properties are in Florida. My score is currently around 700 (not 720), so I guess I'll have to wait a year for it to go higher?

As for DTI, something isn't right. If all debt payments were divided by the income no one would be getting financing.

@Jon Holdman had an explanation here http://www.biggerpockets.com/forums/49/topics/77330-dti

where he said

DTI = (total debt payments except rentals) / (W2 income + net rental income)

I have a mortgage on my primary home, and 3 other mortgaged rental properties (making that 4). I have two other rental properties that I bought in cash. One I was able to get a HELOC on. The other, I tried to get a HELOC on and was denied because the bank said my DTI was too high. I asked the bank how they calculated it, and they are adding all the mortgage payments and HELOC to the debt side (even though all properties are cash flowing). In other posts, I've read that the bank should be using just my home mortgage on the debt side divided by net income. Is this because I've had the properties for less than 2 years?

Any ideas for how I can finance another purchase? I have equity and cash flow, and a decent paying job but the banks just don't seem to have any sense to them. I have no rich uncle to ask for private financing so I feel stuck because I can't think of any way to get financing even though I have enough for a down payment and carrying the debt.

I'm in contract to purchase a house in Florida. I'm paying in cash. I've just been told by my realtor that there is a mortgage for the house from prior to the existing owner, which should have been cleared but somehow never was. In other words the title company which sold the house to the existing owner made a mistake. I'm told the current title company that is doing my closing will obtain a "title indemnification letter" from the previous title company. Is this safe for me to buy? Will I be at risk of this old mortgage, or have problems reselling the house? Thanks.