All Forum Posts by: Trent V.

 Ok thanks. I talked to a person I trust who I’ve done some investing with. He reccomended getting a real estate attorney to go through the trust and will to make sure we have the rights to it in the first place. 

Ok bit of a complex one here for me. I am listed in a trust as a beneficiary of a house with rental potential. I only have a 1/3 right to it. I would like to evaluate it but I’m having some trouble.

Current zestimate 370,000. House needs work I’m thinking that’s high and I have heard the margin of error on Zillow is plus or minus 7%. Let’s say house is worth 350,000. 
 

Current loan. 196,000 @ 2.25% 

The trust has 25,000 in credit card debt. The only asset remaining in the trust is the house. 

221,000 in liabilities. 

10,000~15,000 in repairs. 

2000-2200 a month rental income. 

What would be the best way to come up with the difference. Approx 97,000. I have thought about offering payments to the other siblings. Basically a balloon at 5 years with the 97000 amatorized over 30. Only other option I can think of is hunting for a hard money lender? 

Also how do I analyze this property to see if it’s going to cashflow. I’m having trouble accounting for that other 97k. 

Where is some good info on subject to. I know it’s a thing but know virtually nothing about it. 

Also I’ve seen quite a few posts on subject to loans in a trust. I’m assuming it won’t trigger the bank wanting full payment because I’m listed as a beneficiary. 

Any advice on any of this would be much appreciated. 

Quote from @Landon Moore:

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $500,000
Cash invested: $27,118

2.5% Interest Rate Subject To VA Loan!

On market property | Turned this into a STR

What made you interested in investing in this type of deal?

Low Entry and low interest rate on the VA loan

How did you find this deal and how did you negotiate it?

On market, Zillow. I called the agent!

How did you finance this deal?

$27,118 was my total wire to purchase the home!!

How did you add value to the deal?

$10,000 in rehab, interior paint, exterior landscaping work. Furnishings!

What was the outcome?

A beautiful STR property located in the Flathead Valley

Lessons learned? Challenges?

Finding reliable contractors ahead of time in rural parts of the USA.

 That’s a good buy. I live near the flathead valley. Air bnb is in a huge boom right now. I hope it does well for you! 

I just updated my insureance to reflect that my current residence will become a rental property. I was a little unsure about certain coverages. Basically they are saying the replacement cost of my house is 270. Current appraisal is 350.

Let’s say a fire comes through the neighborhood which is not that far fetched in our area. Will I just lose out on 80k in equity? They said I could choose an additional coverage and get up to 25% more coverage which still won’t cover the total equity in the place.

So my question is, do I spend the extra 250 Ish a year for the additional coverage? Seems like a small price to pay but let’s be honest the chances of that happening are very low.

Also I’m curious if renters insurance will provide something from the tenant?

Any suggestions on types of coverage would be greatly appreciated.

@Drew Sygit I understand that there is a lot going on with a tenant placement especially if it is requiring quite a bit of advertising. My logical reasons for not wanting to pay it are because I think there could be a bit of a conflict of interest. If a manager gets 500 dollars for a placing a new tenant. I can just see how it would make sense for them to decide to not resign current tenant. Probably not going to happen most of the time but it could.

Then once again just the fact that you have a vacancy now you have to make repairs do cleaning etc. it’s just another cost at the worst timing. I will say I’ve alway understood why there is a lease up fee I just thought it stinks for a vacancy. At the end of the day I wouldn’t want to trip over penny’s to lose dimes. If that was what was the cost of earning Hands off passive income I would definitely be open to it.

Tracy, are there ways I could mitigate them getting their money elsewhere? I assume they would uncharge repairs in some form or fashion. I also know they keep any late fees collected. 

I am about to close on my second house. This means my first house will become my first official rental. I am a little underwhelmed with my knowledge of what I want out of a property manager. I know I definitely want a manager because I am moving out of state. Here are the three options. 

Option 1: Property management with a rate of 10%. No lease up fee. In house maintenance because they manage primarily appartmanet units in the area. Biggest downside for me is the lack of software programs. I would receive my check via snail mail every month. Also means the tenant has to snail mail a handwritten check. This to me is an important enough issue that I really don't want the headache of that but I think their in house maintenance is a huge plus. I want to say they manage around 250 units but its been awhile since I interviewed them. 

Option 2: Property management charging 9% no lease up fee. No in house maintenance. Appears to be a well run portal for tenant and landlord. Biggest concern with them is they have quite a few properties I believe they were nearing 700 units. 

Option 3: Property management company charging 8% with 450 lease up fee. No in house maintenence. They are new and have approximately 55 units that they manage and quite a few of them are their own. Terrific automation in place at all phases. I just really hate lease up fees because its like your bleeding already during turnover and they stick the knife in and twist a little bit. Biggest concern is lease up fee and and very new company with in my estimation not as much experience. 

Would love to hear any input specific or generic. I did find David Greenes book a great resource on talking to out of state property managers but after asking the questions I never felt like there was one that stood out as a home run. Currently leaning towards option 2. 

Real estate is a good investment during inflationary markets. I’m not wholly convinced it’s greatest investment though.

I think we are already seeing inflation hitting the real estate markets. Listening to the recent Joe Rogan podcast with peter Schiff it jogged my memory of one of the reasons real estate is a hedge on inflation.

When you buy a house it typically follows market trends of inflation. Which means that maybe the actual value of that house may not have increased much but the dollar value has. That means that you have dollars growing proportionally with the market. Say you only left the dollars in savings your purchasing power of those dollars has only degraded.

The other cool thing is that you have only agreed to pay your mortgage lender In dollars. Not dollars at inflation levels.

My question is. If we turn the corner and consider a world where the dollar has collapsed it’s going to be ugly. What happens to me with my one rental property. I think there is a chance I’m able to pay the property off early because I only agreed to pay for the house in dollars correct? Is there historical literature on this happening somewhere?

I’m probably just a chicken little but I think we are edging closer and closer to a real downturn here. It’s time for a correction and I look forward to being prepared for it.

@Aden Brust one of the things that may be beneficial is going active duty military. It was one of the best decisions I ever made and it gives you access to the VA loan which allows for no money down.

If military is not an option or something you are not at all interested. Start building credit with a credit card if at all possible. Maybe have your parents put you on their credit card and buy some small things every month and pay it off. You will not have bad credit when you are young it’s just no credit history.

The next thing I would do is get a front desk spot at a good real estate office. Then work on getting your license. I think that would put you right in the mix of all the purchasing options and you will be aware of a lot of deals before they come on the market.

That’s one of the things I’m considering doing in my spare time anyhow. Best of luck to you!

@Thaddeus Skaggs

That is a great point! I hadn’t really thought of that. When I was writing I was really only meaning that I would be capable of getting the loan. The second house is one that will hopefully be a place where we will want to live for long term. Its hard to convince the wife to move time and again while the kids are still in school.

My idea was to get a loan based on the equity in the first house either through cash out refi or HELOC. This money will most likely go towards one or two homes in the Midwest. Hopefully will be a mix of my own saving and equity. Really good point though.