All Forum Posts by: Patti Robertson

Some feedback - I wouldn't add sky lights. 200SF kitchen seems really small for a house of that size.  If you are making an open floor plan, you should probably expand the kitchen.  My guess is that this will end up at around $45K.

I agee with everything said above.  I LOVE SEC 8.  I buy for cash return and long term income, not appreciation, and I maximize these in low end neighborhoods where it is easier to find a SEC 8 tenant than a non-SEC 8 with three times my rent with a reliable income. I like that if I get a judgment and notify the case worker the tenant cannot have their voucher reissued.  This ensures we are more likely to get paid for tenant created repairs than with a low income non-SEC 8 tenant.  I like that the length of lease is longer than a non-SEC 8.  I love that if my tenant gets laid off or fired, their rent still gets paid!

In my experience landlords who stick their nose up at SEC 8 have never participated, have not participated in this decade, or have done a poor job os screening and holding the tenants accountable.  

This seems risky to me.  If the builder is financially sound, why can't they get financing from a bank?  You didn't mention if the purchase price is discounted, but it seems to me in Nashville, TN, investors must be getting a much better return than a $1950 rent for a $260K investment. Personally, I wouldn't touch this with a 10 foot pole.

@Dmitriy Fomichenko - I don't have any trouble getting checks from my custodian.  We send up a check request, and they send back a check.  I always order checks in advance of having any work done on my properties so we have it waiting when the vendor completes the job.  The same could be done to prepare for an auction.  

I'm hoping I'm not reading this right.  Basically you are saying you are planning to lie on your loan application, saying you are purchasing a property to live in, but in reality you are going to really live someplace else and fake living there. What you are describing is loan fraud and is a criminal offense.  And you are publishing you intentions on a public forum. YIKES!

Regarding SEC 8, you can't do room rents to SEC 8 tenants.  They have to use their vouchers to rent an entire property.  

Sorry to be the bearer of bad news on both accounts, but it is far better you learn this info here so you can chalk it up to education and not make a serious real life mistake.

@Jay G. - Negative. You don't need to do a withdrawal. If your self-directed IRA is already set up, you just need to submit a check request - or two - or three. I'd probably break it up into several denominations so you have downpayment options based on what the purchase price will be. If you don't use them, just send them back. My IRA custodian - MidAtlantic IRA - charges $5/check, as long as I don't need to put a rush request on it.

@Kevin Walker - You can get below market deals in the MLS, but you are right, it is MUCH harder to wholesale a property you picked up from the MLS than a house no one in your market has seen before yet.

Ok. One more question. Once you put a house under contract, do you intend to close on it, or is your intention only to wholesale it? If you can/will not close on it, you need to have a legal way out in your contract. You can do that with an inspection contingency, although the contingency period typically isn't very long for inspections. You can also do it by buying an option. In my market most of our agents require buyers to use the MLS contract, which, if unchanged, do not allow the contract to be assigned.

Now on the sell side of the wholesale, you should as an agent if your local MLS allows them to list for a "contract owner." In my MLS, Contract Owner is one of the standard disclosure items on our pick list. That doesn't mean agents understand what it means, but if you find an investor friendly agent, it is doable to wholesale through MLS. If you end up with an owner occupant buyer who is getting an FHA loan, you won't be able to "assign" the contract. What you can do instead is have your Seller agree to a "contract cancelation" and they will pay you a fee equal to what you would have gotten as an assignment. Then the Seller will contract with your Buyer. FHA will pay a contract cancelation fee.

I hope this wasn't to complex an answer. Feel free to ask questions if I made it "clear as mud!"

@Michelle Fischer - I'd love to have a copy of your one page sheet of how to keep utilities down if you are willing to share!

$15K seems pretty low for a rehab unless it just needs paint and carpet.  You said it is "outdated" which generally indicates it needs a kitchen/bath(s)/possible floor plan alteration.  If it needs exterior work - siding/paint/roof/windows, you could end up spending $40K+.

Some items you are missing are...

- Insurance & taxes (I don't know your market but $2K would be too low for both closing and holding costs in my market.)

- The cost of money if you are borrowing

- Staging cost if you plan to do that.  (We stage all our flips.)

- Buyer closing cost assistance - $0-6%.  I use 3% in my budget.

I'd suggest finding an experienced flipper in your market and asking them to review your budget.