All Forum Posts by: Zane Cress

Sounds like you need to find a multi family property to live in and rent out, or something with a finished basement or in-law suite.

The odds of this getting called is highly unlikely in any situation, but if it's within the LLC it shouldn't matter.

Short answer - Start house hacking

Find something you can get at a low down payment and make it work for a year, maybe build some sweat equity on a fixxer upper, learn how to fix things on google and youtube. Grab a duplex if you can, are you stuck in your current market or do you have mobility to a more affordable market? Could you find something to buy that has an ADU already? Live in the ADU and rent out the house? Find a split level with a separate basement apartment to buy and live in, you see how that works already. Without kids there are so many options in front of you. Start small and understand key concepts, then start snowballing. In 3-4 years you could have multiple houses that you got into for 5% down, tax benefits from all, rent from all, freedom to plan a bigger move.

Do you have equity in other properties? You could find a lender that would roll multiple properties together and use your equity as the down payment, no cash out of pocket. You could also find a DSCR loan product that might give you 10-15% down option, but those are harder to find these days, and the property needs strong cash flow. There are multiple ways to get a loan, start exploring and don't accept the idea that you need 20% down on a conventional loan from a lender. These are the times you need to get creative and do some research.

If you targeted out of town property owners who bought years ago and have a lot of equity, plus might be older, you should expect a few motivated sellers. If you sent out a 1000 random post cards you might get nothing. What were the parameters of your mailing list?

Sounds like that guy has a problem property and thinks you are going to give him a bunch of money that it definitely isn't worth. Be cautious and offer low. Let him get offended but don't commit until you see the property in person and know what the issues are.

Is there a good duplex or triplex in your area for sale that would use that 70k profit as a down payment and cashflow better? Would you rather have appreciation and equity in single family or cash flow from multi family? A 4.6% interest rate is hard to let go of but if you can't raise the rent and a major repair wipes out your cash flow for a year or two then it's hard to justify not selling it and moving on. 

Yeah seller pays the commissions so as a Buyer you don't have to pay, best you could negotiate would be the seller paying maximum closing costs and buying points I guess. The seller can also work up documents and fill in the info, basically treating you as a customer or dual agent if the broker allows that. But that is all way more complicated than finding a buyers agent and having them do it for you, and having them look at the documents and deal as well. 

You should delve into the financials of the HOA if you undertake this. This feels like a lot of delayed maintenance or a very large project is going on that caused them to raise dues this high on a low value property. If they are providing trash, water, and cable I could see the expenses being a little higher. Cable isn't cheap and could easily be 20% of that HOA cost, I wonder if it's internet as well or if the tenant needs to pay separately for that.

Regardless, if you did a cash out refi at 80% LTV based on ARV with a rate of 8% (that might be high but we should be conservative looking into the future) I see you around $1700+/month on the mortgage. Add in HOA and it's a loss each month. Plus you have to pay back the Heloc and it's interest rate.

Exactly like that. If they don't appraise for the value you agreed to pay then the term extends another xx years, or until the properties do appraise at the value of the outstanding debt. If part of your payment is going towards the principle then this really shouldn't happen unless there is a steep decline in value over the next few years.