All Forum Posts by: Leigh Ann Smith

Hi @Tim Mangold , my husband and I are also newbies. We recently shelled out $300 for an LLC, and I think it was the next day that I read on the forums that it was probably an unnecessary expense, at least initially.

The problem is that if you put a property under the ownership of an LLC, a bank won't loan you money on it (initial mortgage or refinance). Supposedly, your LLC hasn't established credit yet, so the bank won't loan it money. I haven't yet researched how exactly the LLC would go about establishing credit.

An alternate suggestion I saw was to carry a large umbrella insurance policy (perhaps $5 million) to protect your assets from lawsuits.

Also, I know it's different in each state, but in my state (Texas), it would have been a total waste of money to pay an attorney or a legal website to set up the LLC. It's just an application form that you fill out on the state's website and give them your credit card # to pay for it. What you do once you have the LLC is another matter, of course, and expert advice could be very beneficial!

@Account Closed , if a title search is all that is required, why do I hear on BP that buying at auction is risky and not for beginners?  Would doing a title search clear up any potential problems?

When buying at auction, how can you be sure that there are not title problems or other liens on a property?  Is there any way to protect yourself?

I have been reading about the HomePath investor loans and went to their website today to learn more.  Under "more information" for investors, I found this:

"Benefits to you, the investor:

• Up to 20 financed 1- to 4-unit properties
• Individual and LLC borrowers eligible
• Loan to value max 70%
• No lender-requested appraisal
• Flexible mortgage terms (fixed-rate, adjustable rate)"

I would presume that the purchase price would be considered the "value"; is that correct? If so, then 10% down would give you a 90% LTV. Have HomePath's terms for investors changed, or am I misunderstanding how the 10% down relates to the 70% LTV?

On another thread, I read this link which was very informative, but does not address this financing issue:

http://www.lvrealestatehelp.com/blog/force-fannie-mae-to-behave-responsibly-or-shut-them-down

Thanks, @Chris T. I tried the Amerisave site and was interested to find that they "do not currently offer any loan products to fit your loan criteria." I even tried plugging a 50% LTV, and it wouldn't give me anything! I do not already have a lender. I was making assumptions (always a bad idea) that we could buy the property, rehab it, then do a cash-out refi to recoup some of our initial cash outlay since that seems to be a common strategy among BPers. Am I missing something?

@Shaun Weekes , we did a cash-out refi on our personal residence in Texas about 10 years ago.  Have the laws changed or has there been some other change that is causing banks not to offer this anymore?

My husband and I are newbie investors in Houston looking for our first buy and hold property.  It was either on a podcast or here in the forum that I heard that sometimes you have to estimate expenses, but when an available number is out there (property taxes, for instance), you should track it down and use it in your deal analysis.  That's what I'm trying to do.

I understand that closing costs vary.  Nevertheless, the most specific info I have been able to find is that closing costs on a cash-out refi can be "hundreds to thousands of dollars."  I'd really like to use a better number than that.

Can anyone give me any kind of a rough estimate on this example?

Home value - $100,000

1st Mortgage loan amount - $50,000

Cash out 80% of home value - $80,000

Pay off 1st mortgage and net $30,000 cash out

Thanks for your help!

Just a reminder that @Charles Nguyen and @Brian Nguyen have set up a meetup for Houston folks tomorrow evening, July 10th, at:

http://mongooseversuscobra.com/

1011 McGowen Road, Houston, TX 77002

My husband and I are planning to attend and look forward to meeting some of you there!

Hi @Wendell Allen , it's great to have you join us!  Even if you don't post much in the forums, you can read and learn.  If someone posts something helpful, click the "vote" at the top right of their post.

We are a month or two ahead of you in the newbie process, so I'll tell you what has been most helpful to us.

• BiggerPockets podcasts - really, REALLY helpful, and also entertaining! This is a fast way to learn a lot.  (Click the "Learn" tab above)
• The BiggerPockets Ultimate Beginner's Guide to Real Estate Investing - it's free and you can download it (Click the "Resources" tab above , then "REI Resources")

We are discovering that this isn't the best time to be entering real estate investing.  It's hard to make a profit on a flip when foreclosures are very low right in the Houston area and people are getting more than their asking price when they sell their homes.

My personal opinion (which I think is shared by many BiggerPockets members) is that you do NOT need to pay money to any of those people who are sending you advertisements.  Search the forum for the word "guru" and you'll see what I mean.  Every bit of that info is available right here for free!

Good luck on your new venture!

@Sharon Tzib , I used HAR.com. There are probably 10 neighborhoods in the area, and there are some rentals in some of the other ones, but still probably only 10-15 or so. I did a quick cross-check with Zillow of those 2 neighborhoods to see if there were rentals listed there that are not on HAR, but there weren't any. HAR would presumably not list any rentals that aren't on MLS, but I don't know how to access info about those.

I have been using HAR to gather statistics on a couple of neighborhoods we're interested in. Does anyone know if there are any formulas out there that would help to determine whether a neighborhood is a good one in which to invest in rental properties?

Example - 2 adjacent subdivisions in which we are looking have a combined total of 2927 single family homes that are 35-50 years old. In the past 2 years, there have been 256 homes sold (8.7%). Currently, there are 56 homes on the market (1.9%) and exactly 1 home for lease. Median home price is $110,000. (This is in the Houston area.) Zillow ranks the high school as a 5 out of possible 10. Taxes are high (2.9%) and flood insurance MAY be needed. There are so few rentals that it isn't easy to find a good number, but they appear to rent for $1,100 - $1,300. 

Is the low number of rental homes is a good thing or a bad thing?  Does it indicate that investors aren't getting a good enough spread to make buy and holds feasible?  I would love to find some kind of "rule" to help us decide whether to focus on this area or to move on.