All Forum Posts by: Travis Hughes

Vinyl plank flooring has come a long way over the last several years.  There are several options that are of very high quality.  Buyers and tenants in many markets are attracted to the aesthetic and ease of maintenance compared to carpet.  Cheap vinyl flooring is still prevalent, but the vinyl plank option doesn't have to look and feel cheap anymore.  I think it's a great option for mid-range value houses, and can even fit well in higher end houses. 

Agreed with the previous posts.  You need an attorney. 

Yes, I took both my Georgia salesperson license coursework and by Georgia brokers license coursework with Real Estate Express.  I was pleased with the courses and the online platform.  

All of the lenders that I've spoken with required reserves, yes.  That being said, they typically allow you to claim funds outside of your cash savings toward the reserves.  Retirement accounts, for example.  Check with your lenders to see what all they might allow you to count toward the reserves.

Once you find a good portfolio lender, be sure to send me a message directly with their contact info.  :) 

@Vincent Townsend there is a significant amount of red tape that goes along with utilizing an IRA for direct real estate purchase or investment. There are plenty of self directed IRA custodians that would help you along that path if you so choose. That being said, you are sort of swimming against the current in order to use the funds from an investment vehicle in a manner for which it was not designed.

I believe that "simplicity is the ultimate sophistication" with regards to tax advantaged investment vehicles.  Plenty of studies and finance professionals (the ones who are not charging you high management fees) reflect that low cost index funds are one of the best investment strategies around.  In the spirit of keeping it simple, my personal strategy is to put all of my tax advantaged retirement accounts into low fee index funds.  Real estate is then purchased outside of any retirement accounts, as real estate has its own tax advantages that can be claimed.  In so doing, it is possible to capture all of the tax advantages available to you as well as diversifying your investments and leveraging the two most effective investment strategies available (stock index funds and direct real estate). 

Just my $0.02. 

Agreed. Maintenance, CapEx, property management should all be factored in. Sure, you can manage and unclog toilets yourself right now, but you need to plan to hire that out in the future. If you don't factor that in on the front end, then you'll be negative cashflow later when you have to make those changes.

Look at the HOA very closely also. Have they had any special assessments in the last few years? Are there any rent restrictions in the neighborhood? What proportion of residents in the neighborhood are renters vs homeowners?

I think really what it boils down to is that you are looking at this with a 10% down payment, which I presume means the $50k list price is full market value.  If you have more equity in the deal, you'll get better cashflow.  That would require a discount from market price and/or a larger down payment. 

You can find a lot of great information from various government agencies (Census, HUD) and industry organizations (Board of Realtors) to help draw a decent conclusion as to where a specific market is today and which way it is heading. Comparing population growth and projections to rental rates in the area and housing starts would be a great place to start, as that gives you a great idea of supply and demand in the area. Metrics to look at include population growth, appreciation rates, unemployment rates, jobs being added to the area, etc. Some great resources include:

http://www.census.gov/topics/population.html

http://us.spindices.com/indices/real-estate/sp-case-shiller-20-city-composite-home-price-index

http://www.bls.gov/home.htm

Too many unknowns to give a good answer in my opinion. Is it listed for sale in the MLS? What is the current condition? (The photos on Zillow might be years old.) If it is habitable, then you could get a conventional loan on it, but if it is not habitable, then you would need to buy with cash or hard money to take title, then try to refinance back out later. If there is $100k+ of equity on the table, it is highly likely that the house is in need of a full rehab. Move in ready homes aren't typically listed on the open market at such deeply discounted prices, especially in this market.

I don't know about rent to value where you are, but here in GA, I would expect a home that rents for $1900 per month to be worth more like $250k - $275k. 

What about the HOA? Are there rent restrictions?

If this is a listed property, why don't you get an agent in the area to assist you? 

Agreed with most of the previous posts here.  If the goal is to continue purchasing more real estate, then you don't want to sink all of your capital into one property to pay down the debt on it, just to cash out refinance.  Get your properties leveraged at a rate that is acceptable to you up front, then make the standard payments each month and take your other capital over to a new property.  Having a mortgage is generally good in terms of taxes (in the USA) and cashflow. 

That having been said, the exception here might be if you are highly debt averse.  Every investor has to make their own decisions as to what levels of leverage that are willing to take on.  I think most people would agree that if you purchase all-cash or only hold one mortgage at a time and pay it off before moving on to another mortgage, your overall returns will be reduced because of a slower velocity of money.  As @Mike Warder said, if that's what helps you sleep at night, by all means please do so.  No one can tell you that it is the "wrong" way to invest. 

@Dien Vo it kind of sounds to me like you need to find a new agent who is more familiar with investment strategies and willing to work with you.  Has she ever represented a buyer who is closing with hard money before?