All Forum Posts by: NA Ken

Great story Jake.  I am also looking for an investment property.  Let us know how you plan on getting the next property.  I'd like to learn from others how they will be getting there next property financed.

Also, can you give some advice about what locations in Jacksonville are good?  I'm researching long distance real estate investing and can't be there to view the neighborhood.

There are really inexpensive houses in Jacksonville, but from my experience, those are the ones to stay away from.  Would you recommend anything near Downtown Jacksonville?

I agree with a lot of posters that there is not enough content for beginners.  We don't have the same level of motivation, income, or time as everyone else.  I'm struggling to find a deal right now.  I'm currently house hacking an hour away from San Francisco.  But because of life events, i can't rent it out at fair market value.  I can't ask my mother to leave or pay more.  Family is more impotant than money, so evicting her is never going to happen.

And all this marketing about the brrr strategy is all good, but in order to even start, you have to find a good deal.  Then when someone asks if something is a good deal, there's this generic answer "It depends.  What's your strategy?, etc..."  If we knew, we wouldn't be asking.

I think the question every new person is asking is:

 1. Is this a good deal compared to other properties around me.  I think it is and that's why I'm asking.  No matter what strategy I use - brrr, fix and flip, buy and hold, i need to know if it is a good deal.  If it's a good deal, any strategy will work.  If you mess up during the strategy, like taking too long to get it rented, then that's your own fault and not because of the strategy.  What is the best strategy for a beginner?  

2. Will this proprty cash flow positive.  If I'm going to rent it, out will it be cash flow positive.  I'm new, I'm afraid I cannot rent it out and make any money.  Help me ease my fears or validate it.  Help me validate the numbers.

3.  I am afraid to jump in because this is my entire life savings that I'm gambling with.  What can you suggest to ease my fears?

I don't have analysis paralysis, I'm just afraid to lose my entire life savings.

So my suggestion to make bp better is to have something to help beginners.  The beginner can bring in a deal and get others to answer any questions they have.  Like a chat group with specific topics.  Forums are not interactive enough and meetups are on a schedule that is only once a month.

There could be a room for general questions, new deal questions, fix and flip questions.

Oh and one more thing, put your money where your mouth is.  If you're going to suggest to someone to partner up to get into a deal, offer to partner with them.  We are beginners we don't know to even ask, or are afraid to ask for fear of rejection.  That includes David Green and Brandon Turner.  I challenge any person to take a newbie under their wings.  Stop being a hypocrite by suggesting to others that they need to find an experienced mentor or coach, but then don't offer this to a beginner.  I'm not suggesting they do everything for the beginner, but rather to be there to answer any questions.

The next person who makes a suggestion about how they should do this or that needs to stick with that person until the end.  This would really be helpful.

For example, I can't get another loan because my debt to income ratio is too high.  I posted this issue on a forum and they suggested I go to a credit union.  I got rejected again.  Because my post is so old, nobody is reading it so I'm back to figuring things out myself.  

Forums are great, but it gets lost and after a while all of the answers are the same.  Now that I can't get a loan, I'm looking into seller financing.  I searched the forums and nothing is helpful.  I can post a question, but I'm afraid it will get lost with all of the other posts.  There's no specific forum for seller financing questions, and no moderator to check if questions are being answered.  Now I just go to google to find my answers.  I'm looking for an actual seller finance contract and want to find out how to keep from getting ripped off.  And also to find out if I'm getting a good deal.  I know the neighborhood and rental rates, but I just need a second opinion.

It would be great to have a place to post this issue knowing someone will help along the way.  Almost like a vrtual coach or tutor, or just someone to provide specific answers.

The property listings also need to be updated.  I found several properties in fresno that are still for sale after 1 year.

The biggest lesson I learned from bigger pockets is knowing how to recognize a good deal.  That's the same lesson for doing any business.  Used car dealers get their car deals at auctions.  They would have a very low profit margin or no profits if they bought the cars at market value.  Once you've got a great deal, you will have to get it rented out as fast as you can becase that's your income.  If you take too much time, you're losing income.

Had you not done any reasearch, you would not know if the property was a good deal or not.

i went to Golden 1 Credit Union and was denied because my debt to income ratio was too high.  I have to bring my income up by at least $1,000 per month, or find a partner with a low debt to income ratio.

Right now my debt to income ratio is at 40%.  The lender said if I add more debt, it would bring it up too much to qualify for another property.  Their lowest loan amount is $68,000.  So i could buy a house for 85,000.  That would be 68,000 loan + 17,000 (20%) down = 85,000.

I have more than 17,000 to put down towards the down payment.  But, because they will not loan less than 68,000, i cannot get a loan.

Thanks Stephanie.

I was looking at a house that does not need any rehab.  It's worth 140,000 in move in condition.  I told them that it would be an investment property so they wanted 25% down.  Then it was another excuse - that I don't have enough reserves.  I showed them my 401k account and my wifes bank account and another excuse came up.

Anyways, I'm going to keep trying.  I missed out on the last housing crash and I vowed not to do it again.

Thank you for the insight Corby.  I will try with my local credit union.

One of the things I have to learn is to be persistent.  

I was denied a loan to purchase an investment property using quicken loans.  They said the property value must be greater than the loan amount, have a low income to debt ratio, and have enough reserves.

The property is worth 140,000, I have the 25% down payment, which is 35,000.  They calculated that the house must be worth 200,000 and have 25% as a down payment.  I don't understand what this means.  I've always thought that the lower the loan amount, the easier it is to qualify for a loan.

I think what they are doing is calculating the amount from a different point of view.  They are calculating it based on a property that I already own and want to finance it to pull equity out - the last part of the buy, rehab, refinance strategy. 

If I was using the brr strategy, it would make sense to only lend on a property that has a higher value than what I am financing it for.  

For example, if I paid 140,000 cash, rehabbed it, now it's worth 200,000.  Now I would qualify for the 140,000 financing with 35,000 down.  75% of 200,000 is 140,000.  So they are only going to finance 70% of the value of the property.

Is my assumption correct?  Or is the lender just tightening their lending standards?   Or is it both?  Or is it something else?