All Forum Posts by: Tyler Mullen

@Terence Brown

Meet with some smaller banks in your area and share your plans with their in house commercial banker. Ask them what you can do to make it easier to get the LLC qualified as the borrower. I got worse terms than a individual loan sure but starting the long term relationship now is worth it for the future business.

One bonus was the commercial loan had no “seasoning” requirement because I bought the property for cash, then went to them for the loan.

Banks under 5-10B in market value. I found one without too much trouble, my banker actually contacts me all the time to check in with me and asking if I’m ready to do another loan.

Happy to PM deeper details.

@Greg M. To the extent the average annual increase is less than 7% now... this Increases the chance, if LL at all thinks possible for their specific property, that rents will be raised the max annually for fear that future allowable increases will be less.

Politicians will in 3-5 years use the “last 5 years of 7% annual rent increases!” As evidence of gouging from these evil investors, then will call to lower the limit to 3% or less.

@Katie Jewell

Listing errors and listings with incomplete data are quite common. Sometimes people do not understand what they are selling, or don't care. These are the exact kinds of things I look for as my area is relatively high $/sqft. An example, I've seen an MLS listings where the agent input map data indicated the property was 5 miles away on the other side of a major freeway. This meant anyone skimming listings by location instantly thought this property was about $300k overpriced, so obviously it never got an offer. Then I came along.

You want to check the current zoning matches the structure, and/or understand any grandfathering requirements towards your intended purpose after purchase.  Also you need to check with title to see if there are past code violations, maybe there's an issue there.

@Brandon Keene

Concur with previous, I think your best bet is to find a 2-4 Unit to buy and move into 1 of the units.  Then rehab if needed and get them rented.  After some time paying down the mortgage and with possible market growth, you could get equity out for other things.

Also check with the code entity where you want to buy as some locations allow converting detached garages or building new, what is called where I live, an "ADU", Accessory Dwelling Unit. That could let you buy a SFR and then with an added ADU that's effectively a duplex.

@Andrew Jackson

in response to your general investing psychology question:

Assume the LV market declines 20% by May 1.  How would you know that was the bottom, or enough of a decline to make you want to buy?  Or will you then think, "I can't buy now, it's going down, I'll wait for it to go down more."

It's better to find the best thing you can when you're financially ready then make your move.  The chance that you buy the best, most perfect investment of any type, at the best, lowest price, with all the perfect concessions, is not a good use of time as it's basically impossible.

When I finally went "all in" on REI it was during a perfect storm of events & stresses, so it started with the emotional and ended with the practical:

- I was disillusioned and frankly heartbroken by events at a prior employer so I didn't think I could work for someone else ever again.

- I wanted to keep the yield of my labor/ideas, take control of my future, live through my efforts and rise or fall on my own merits.

- REI was the only thing I could start doing right away, which I was also already somewhat familiar and could also provide enough income and growth to secure a financial future.

I sill wouldn't pay the taxes.

To the extent that the online estimators are "off", they are consistently... so you can use all of them over time and average their results to at least track trend and approximate value. I agree with other posters re: not using this when running numbers on a specific deal, but I like to use these free resources on my monthly balance sheet. I don't have a license and would not want to bother my agent with doing a monthly CMA on every property just for my own curiosity.

My understanding is DTI is calculated using gross income, so your net after deductions should not factor in. Review with your lender to confirm.

As a generic answer, I'd have to stretch awfully hard to configure a specific scenario where I would want to pay $11k more in taxes than I could get away with while still getting the "all clear" from my CPA.  Having the additional $11k for down payment or repairs is too valuable.

Tyler Mullen, CFE

Sell your current residence.

Use equity and new VA loan to buy 2, 3 or 4 unit property. Move into a unit, rent the rest out.