All Forum Posts by: Nicholas Spohn

Hi I'm Nick and I'm a house hacker. I have 5 rentals right now and I am looking to get my 6th as an owner occupied. I have an offer in on a house I really like and because of the 5% down, 4% rate loan think I can make it work even though it definitely will not be my highest returning property. I need someone else's unbiased opinion because I want to live in it I know my perspective is tainted. 

So here are the details:

 Its a 4 bedroom (3 and an office technically) 2 bath right on a busy road ( 3 lane one way). So its great for visibility but not so great for resale. No garage but 3 spots in the alley. Its within 1/2 mile of two small colleges and a block from 3 bars and needs almost no work to move in. It is listed at $99 k and has been on the market for 3 months. My other rentals have varied greatly in rent rate so I have trouble committing to a solid rent projection. Here is the rent from my other properties that are all pretty close by.

2 bed: $1000

3 bed: $875

3 bed: $1,100 (I got some desperate students at the last minute)

3 bed; I'm living in with 2 roomies paying $300 each)

3 bed: $900

None of these properties are as nice as the one I want to buy, but the rental market is weak now, there are a ton of properties close by that have been for rent for months. My current roommates are going to move with me. So negotiations have brought the seller to 92 k and I came up to 90 k. Neither is budging. Am I being to stingy here? For some reason I am just hung up that I think I will overpay at 92 but not at 90. So a $92 k property with owner financing that will maybe bring in $1200 in rent max. Would you do it?

The more the better. I come up with any excuse to bring it up to 2 months deposit. "Your rental history is weak", "you are a student", "your 5 lb chihuahua might tear up my house" etc. You have to gauge their interest in the property too. If they really want the house then hit 'em with two months! I know you aren't supposed to spend it, but it is an interest free loan for 1 year! Covered my butt for an eviction.

Does 800 per month include insurance and taxes? I would tell you to be patient and keep looking at deals and running the numbers. I am buying homes for 300-400 monthly PITI and renting for $1100 - $1200 and I still don't feel like my margins are big enough after management, repairs, vacancies, city fees etc. But I am buying 100 year old homes in so-so neighborhoods. Be patient and analyze a lot of deals but in the end you gotta make some moves!

I just got pre approved for a home-path renovation loan and the lender asked for 15% down and quoted a rate of 6.125%. I thought I was gonna get 10% down. Should I keep shopping or is this what I'm working with?

Here is what I did: Found a deal, presented to my cousin, let him get the loan in his name and I did the work. Turned out to be a good deal. Get creative there are lots of ways to do it. There are lots of deal and lots of investors out there.

@Adam B. Step 1. Read your states landlord tenant laws, this is free and very informative.

Im late to this discussion but Iowa is 2 months deposit limit and I charge it!!! one of my rentals is $1100 a month and I have a $2200 security deposit. This is a $2200 interest free loan and motivation for your renters to take care of the place. I would be willing to take less rent if I had to get a 2200 deposit, but it depends on the type of tenants you have.

@Rick H. I am looking for cash flow with little money in initially with the way I have the deal structured. My market is more cash flow than appreciation. The opportunity is that I know the seller, I have been watching the property for quite awhile now, I know she has been eating about $1000 a month since thanksgiving and needs to sell because she got into real estate investing without biggerpockets. I think I can, with the help here, structure a deal so we both win.

@Jerry W. I like the second mortgage idea. I wont be able to get conventional financing on a property for a couple months probably so even using her second mortgage wouldn't be enough. I would definitely not offer her $110, it sat on the market for like a year before she got it for $95 and its been on the market 55 days now.

@Account Closed What about just going to her lender and asking to get approval to do a subject to? She just got the loan recently so its not like she is gaining a lot of equity on each payment. Plus someone else would buy the house and that loan would go somewhere else. Sounds unconventionally simple to just ask but is that possible? I have two houses with no loan, could I use one as collateral to get them to accept?

So I buy subject to, let her take as a second, I have no money in but will have not much cash flow due to large mortgage payments. But a small return on nothing invested is an infinite return!

Thanks for all the advice!

Thanks for the tips. @K. Marie Poe: Isn't a lease option going to be the same idea except without the risk of getting the loan called due and avoiding realtor commission, bc she hasn't sold the property? She just sold an option on the property? She probably has 15k-20k in equity on a fair market value 95 k house. Good tips on the negotiating.

So I am stripping linoleum tile adhesive off of beautiful wood floors (yeah people are stupid) getting my rental property ready to rent and listening to the latest BP podcast on creative financing and got an idea and would like some ideas on structuring this deal.

So awhile ago I was looking at a beautiful old house right on a main street across from a park, 3/1 with a 2 car detached originally listed at 109 k. Never met with the sellers on price (not even close). Well, a friend ended up buying it for 95k after 8 months on the MLS, it should rent for $1200 easy. She hired a terrible property manager, its been vacant since thanksgiving she now has a listed at 110? and just wants to get rid of it.

I have college students fighting over the house I am working on now and could put 3 of them in this house probably on a 2 year lease with 2400 security deposit.

Possible deal structure; $5,000 downpayment on lease option for a purchase at 90k in 5 years. I pay her mortgage over that time, she gets to write off depreciation and capture the equity. I get 1200/month in rent for 5 years, with 2400 back in security deposit. After 5 years I get to buy at 90k? Its her first home and she has a good job so presumably a good interest rate and terms. Is there enough margin in here for me? I would never pay that much for a conventional deal, but using her financing and a low downpayment might make sense. Would she go for it? Thanks! and great podcast.