All Forum Posts by: Zach Westerfield

Im not certain what the specific guidelines are, but i have done several FHA and VA loans. The banks writing these loans rely on the Appraisers to assess the condition and stipulate what needed to be repaired to qualify. I had an appraiser explain it to me this way - the property must be inhabitable, which to FHA means all major systems in working order, and all major appliances in working order (not including washer and dryer). Obviously, what entails "inhabitable" can be very subjective. In one case, an appraiser required small things such pressure washing a porch and painting door trim before he would sign off. In another case, I bought a house with incomplete wiring, termite damage, and leaking plumbing.

My recommendation if you do not have much cash is to start the FHA process and see what the appraiser says. Any issues they point out will need to be addressed before closing, by a qualified contractor. However, in the second example I listed, the appraiser did not require any of this, and I was able to move in and complete the repairs myself for a fraction of the price. I have looked into 203K loans and they are a burdensome process, and may not be work it if repairs are small. Furthermore, you will most likely still need cash for a 203K loan. The bank holds the repair funds in escrow, and only pays a draw once an inspector has been sent to verify the work is completed. This can take time, and most contractors want to be paid immediately upon completion. To keep the contractor happy (and performing well) you may have to pay him out of pocket and have the bank reimburse you. If you have the ability to come up with the repair money elsewhere i would recommend that first. Depending on your credit, 0% interest credit cards can be a great option.

You cant go wrong either way. Its personal preference. If you want to take the risk and jump start your real estate career by a few years, house hacking is one of the best ways to get started. Look for a good property in a good area. Make sure values in the area are increasing. If you do that, in a few years you will have equity that you can leverage to buy more properties, all while completing your education. Good luck!

I wish I would have been able to house hack in grad school, but i couldnt come close to affording a property in that area. 

Use several of the methods above to get an estimation on value. Document what you do and put together a package to support your estimation. If you go through with the deal, give that to the appraiser when you refinance. With a lack of comps, a lot of times appraisers will just take a stab in the dark. Most times they will not take the time to research like you will. So if you give them a case supporting a higher value they are very likely to appraise closer to that value. 

As far as licensing its area dependent. There are both state and local codes. i would encourage you to call your local building/zoning or code enforcement and talk to them, ask what their requirements are for licensing on certain projects. In my areas, if you are not a licensed GC you can pull a permit if you are working on your own residence. For an investment property that you do not live in you must be a licensed GC. I invest in florida, down there they are very strict about permits for windows and doors due to hurricanes. In Georgia, not as much, but it all depends on the local market. 

Which team members are you looking for specifically? Sounds like you are specifically are asking about GCs. I you figure out how to find a good GC, you have solved the great mystery of real estate investing. 

On a serious note, I assume you will be starting your investing journey in an area you know. Ask anyone you can for references, even if they are not investors. The local meetups can be a great place as well. References from a known sources is the best route I have found. I would make a list of 5-10 names. Once you get a project, call each one and ask to meet at the property for a walk through. Try to have a rough draft of a scope of work with you. David Green's book, Long Distance Real Estate Investing, as well as Jay Scotts The Book on Estimating Rehab Costs are good resources to read before you start. 

In my experience, if you call 10 contractors, 5 will call you back. 3 of those will show up to meet you, and hopefully 2 will submit bids. Maybe others have had better experience. In my areas, there are a ton of houses being built. Ive had multiple, good General Contractors tell me they arent interested in doing rehabs as long as they can make money building houses. They survived 2008, and they know the housing boom wont last forever so they are trying to make money while they can. A good GC can make a much higher profit margin on new construction vs the average 8-10%. 

Sorry, posted too early

Rents are higher than that of most of the rest of the region due to the base. There is also a good, steady clientele for renters. Plenty of affordable properties if you are looking for turn key. Just learn the area as there are some areas to avoid as well

@Andrew Hyder Warner Robins is a much better area. Rents are higher than the rat of th

@Andrew Hyder definitely read the threads above, Macon is a high risk market. I would strongly discourage from investing unless you intimately know the area or partner with someone who does. Just look up the murder rate there. Pay attention to what @Lee Taylor said in the thread, there is a big difference between Houston county and Macon-Bibb county. While the downtown has been on the path to revitalization, the city is on the verge of bankruptcy and long term growth prospects are unknown.

you can shop around and see if you can get a better rate, but 3% is pretty good. See what rate you get, and what fees you will need to pay to get that rate. Then amortized the fees over how long you think you will be there. compare that cost to what you pay now, as well as what a HELOC would cost. However for those loan amounts and such low rates, you may not find much of a difference. Its a great spot to be in, good luck!

I have done it, bought a triplex with an FHA, renovated and lived in one unit, then refinanced out of the PMI when the value increased. If you are looking to refi out of the FHA in a year, the new loan shouldnt care that you currently have an FHA. It wont make a difference.