All Forum Posts by: Taylor Robinson

@Mitch Davidson and @Zeona McIntyre

Thank you both for the replies, this was very helpful!

So assume for this first deal, I am on the loan and the deed and my partner is only on the deed. When my partner goes to qualify for a second home loan for a property in the same market some time in the future, does the lender not care (or not see?) that he is on the deed for a property in that market already? Does this not rule them out from qualifying for the second home loan? What if all income/expenses for the first property flow through a shared bank account (or not even shared bank account, but my partner’s share of profit/loss goes to his bank account each month)? Is this a concern for the lender that would rule out a second home loan?

Hi BP!

I'm hoping you can help me with this scenario. I'm planning to purchase a single family STR with a partner and there are a few things we are hoping to achieve.

What we want to do:

     -Finance using 10% down second home loan and do the same on another property in the same market within a year (our primary residences are on the other side of the country and we will personally use the property a few weeks a year)

     -Ensure both parties have a claim to ownership (e.g., if one person dies, the other person needs to be able to say "hey I own part of this property")

Other assumptions:

     -Down payment would be sourced 50/50, though each partner can front this themselves and be paid back at a later date (i.e., an individual partner can qualify without needing the other)

     -The parties are not in any way related, simply business partners

-Both parties have excellent credit, DTI ratios, and W2 income

One may say "why not just buy it yourself and ditch the partner if you can do this on your own" but for the sake of this question let's assume partnership is a given.

An option I am researching is to have partner A solely on the loan. Partner B is not on the loan, this way partner B can secure a 10% down second home loan in the future without being denied for having a property in the same market already. Does this mean partner B should not be on the deed? If partner B is on the deed but not on the loan, will a lender still flag this as already having a property and not allow the 10% down second home loan? If partner B is not on either one, how do they ensure they have an ownership claim? Does a written agreement between both parties suffice? Should partner B be quitclaimed onto the deed at a later date? Should the property be quitclaimed into an LLC owned by both partners? If quitclaiming, do you still have the issue of not being able to secure another 10% down second home loan or a due on sale clause?

Understood that an attorney is the best source - just getting a feel for what others have done. Hopefully this stream of consciousness makes sense...thanks in advance!

@Andrew Postell Thank you very much for your input! Whether it's good or bad, I'm only in search of the truth, so I appreciate your response even if it makes this deal look worse.

Appreciation: This is a good point. Not having appreciation certainly makes it more difficult. For this particular property the Redfin estimate has actually appreciated 43% from 2014 to 2019 (or an effective annual appreciation of 7.4%). This might just be their algorithm attributing the local area's zip code appreciation to this particular property though and it may not translate well to this home, so I definitely take it with a grain of salt.

Financing: Do you have any recommendations for people I can reach out to who may be able to offer financing for a single wide manufactured home on its own land?

Closing Costs: Good point, thank you. From other research I've done and pre-approvals on other single family homes maybe $4-$5k would be more appropriate?

Out of Pocket: What percent of purchase price do you think is a reasonable amount out of pocket? Even if I didn't need to make any improvements, I would still be out $12,000 (20% of $60,000) for the down payment and let's say $4,500 for closing costs which puts me at $16,500. Are you saying I should be able to do this for cheaper? Maybe by putting less down or through some other creative means? I've read a little bit about BRRRR and understand it at a high level but I haven't analyzed any deals assuming I'd use this strategy.

Property Taxes: I used Redfin to get my initial estimate of 2% but this seemed low to me considering Fort Worth averages around 2.75% I believe. To estimate using Redfin data, I just took the 2018 taxes of $426 and took that as a percent of the current assessed value of $21,244 to get 2%. I then apply this to my purchase price to estimate what I would pay in taxes. Is this a reasonable way to do this? Using Zillow's data and the same methodology I also get about 2% average using the last 5 years of taxes. As @Alex G. mentioned though, I'm hesitant about the accuracy of this. Since Redfin and Zillow are in agreement though perhaps that's a sign it's correct.

Rentals: You make some good points here. I use school ratings as my quick way of determining if an area is "good" or not, but, as you point out, in doing so I'm surely eliminating many properties that are still good options just because their schools are rated 2/10 instead of 7/10. At this time I don't have a great way of differentiating homes in different areas both with poor schools. Maybe one of them with its 2/10 schools is actually a decent area for rentals and the other, also with its 2/10 schools is in a terrible area for rentals...I just don't know. I'm working with a realtor but she says she's not allowed to tell me if areas are "good" or "bad", but can only try to lead me in the right direction using things like school ratings. Is there a way I can determine which of these areas are good for profitable rentals despite poor school ratings?

Thanks again for all of the information - I really do appreciate it!

@Brit F. same issue with me. Hopefully they can fix it soon!

Hi All!

As the title indicates, I am a newbie, so keep this in mind as you read my post.

I am analyzing a property for a potential buy and hold strategy in Fort Worth, TX. I have never purchased a property before so I would like some feedback on my analysis and if there is anything I should be wary of. The details are as follows:

• Property Address: 11412 White Leaf Court E, Fort Worth, TX 76135
• Property Type: Residential, Single Family
• Style: Single-Wide Mobile With Land

• List Price: $69,900
• Analyzed Purchase Price: $60,000 
• Estimated Closing Costs: $2,400
• Estimated Rehab: $5,000 (replace flooring with heavy wood-looking linoleum, also get fridge/stove and tidy up the place)
• Down Payment: $12,000 (20% of $60,000)
• Total Initial Investment: $19,4000
• Expected Rent before Vacancy: $1000/month (my PM estimated $1,000-$1,200, but I'm using $1,000 to be conservative)
• Vacancy: 5%
• Principal + Interest: $261.35/month (assuming 20% down, 5.125% interest rate. Given that it's a manufactured home I'm not 100% certain this financing is available like it would be for a stick-built home)
• Taxes: $100/month (assuming 2% of $60k purchase price - this may be a bit low...any recommendations for how I can easily verify? I get a little lost using the Tax-Assessor website for Tarrant county and don't know where I can find the info for all of the districts necessary to compute tax rates)
• Insurance: $55/month
• Maintenance: $69/month
• Property Management: $116/month (11.6% of rent before vacancy - this includes leasing fees)
• CapEx: $183/month
• Estimated Net Cash Flow: $166/month
• Cash on Cash Return: 10.3%
• Cap Rate: 12.2%
• 1% Rule: 1.67%
• 5 Year IRR: 10.3%
  10 Year IRR: 15.9%
• 20 Year IRR: 17.2%
• (IRR calculations assume 3% rent growth, 2% appreciation, 2% inflation, 8% selling costs). All of my analysis is performed in a pricing tool I built in Excel which I'm happy to share if anyone would like to use/review!

Some of my main concerns about this are the following:

• What are the downsides of purchasing a manufactured home? It is on its own land and not within a park which is good, but are there other issues I should be concerned with? It has been on the market for 135 days as of 9/19/2019; should I expect similar difficulty when selling it?

• Is the area good? Another thing to note is that I live in Southern California. This will be an out of state purchase and I will not (and probably will never) view the property personally. I have based most of my deal finding in Forth Worth/Arlington/Dallas areas on assigned schools. Of all the properties around the $100k price range or less, this has the best schools that I found, feeding into Azle. Is it smart for me to base so much of my deal finding on school ratings? As of now, I won't even really analyze most properties in poor school areas (1-4 school ratings), even if it looks profitable on paper. 

• Blanket question...what am I missing? To me it looks like a good deal but I am hesitant and assume that I am leaving out some crucial part of the analysis. If it were actually a good deal, wouldn't it have sold a long time ago?

Thank you all for taking the time to read. I'm excited to begin investing but need to get some other eyes on my work and thought processes to make sure I'm not crazy. Please let me know if I can provide additional detail!

Taylor Robinson

@Dan H. Thanks for the great information! When you analyze San Diego's real estate market, what do you use to determine how high or low it is and where you expect it to be in the future? Do you follow local prices and easily get a sense of where they are (relative to where they've been) after having been in the business for so long? Or do you follow more "macro" indicators, like real estate market indices or similar things?

@Justin R. I hadn't thought to use IRR (likely because I haven't come across many books or forums where people discuss it, outside of a corporate finance class), but I like the idea and I'll try to consider it in the future when analyzing projects. What other types of investments are you considering outside of B&H?

Thanks for your observations! Do you expect rent to increase at the same rate of 8% in the near future? Also, thanks for the information on the monthly meetup. Unfortunately I won't be able to make it out to this one, but if your group hosts another one next month I'll definitely do my best to be there! If you have the time I'd be extremely interested to see the code compliance MFR you're working on now. I don't have any experience with code compliance or zoning (or any real estate investing for that matter), so I'm sure that would be an invaluable learning opportunity.

@Casey Murray Thanks for the tip Casey! I recently attended my first local REIA meeting and met a lot of really knowledgeable investors and learned a great deal in the process. I'll definitely be checking out more of them in the future!

Thanks everyone for the valuable input!

Hi @Jill DeWit, thanks for the warm welcome!

Thanks @Andrew P. I'll definitely keep that in mind when searching for deals. Do you know of any good (preferably free) sites for finding foreclosures or other methods that have worked for you?

Sounds good @Kevin Fox I'll shoot you a PM.

Hi @Dan H., thanks for your input! How long have you been investing in San Diego? Are there certain areas that you have found work better than others? I like your view on San Diego's appreciation and rent appreciation providing better returns than through cash flow itself. I've primarily focused on finding cash flowing properties rather than ones I believe may appreciate, but when you live in a place with so much historical evidence supporting strong appreciation I guess it's something that should definitely be considered rather than dismissed as mere speculation. 

Thanks for the analogy @Justin R. Considering the fact that I've never swam before (i.e. newbie investor), it would seem smarter for me to wait to invest, or find someone with much more experience. What would you recommend to someone trying to get started if they live in San Diego? Be patient and wait for prices to drop? Invest out of the area? What strategies have you turned to with San Diego's REI options being limited?

Hey guys! First off I'd like to thank the BiggerPockets community for the wealth of information provided. I am extremely new to real estate investing, but have learned more from this community in the last few months than I ever could have imagined. I am interested in buying and holding SFRs/condos in the San Diego area, but have not been able to find anything that comes anywhere close to the 2% rule of thumb (I realize it's just a quick and easy rule and not the ultimate determinant of profitability), or the 50% rule of thumb (which in my mind is the "rental income must be at least twice the mortgage to cash flow" rule; please correct me if I interpret this rule incorrectly). I primarily use sites like realtor.com, Redfin, and Zillow to find listings. Are there other places I should be looking to find homes that come closer to the rules of thumb? Is anyone having success with buying and holding in San Diego? Thanks in advance for any advice! I'd love to hear your stories! Taylor Robinson

Hey guys! I'm 22 and work as an actuary in San Diego. It wasn't long ago that I was introduced to real estate investing and the mindset of everyone in this business, but now I feel like Neo in the Matrix after taking the red pill - there's no going back. That isn't to say that I hate my job or anything, but after being exposed to the idea of an alternative approach to money it's hard to see myself working at a desk for the remainder of my life.

That being said, what advice would you give on getting started with buying my first rental property? Anyone in San Diego have advice specific to the area? What books have you read that have guided your actions? Thanks for all the help!