I bought my first house near Camp Lejeune, NC about 6 months ago. I am house hacking and have roommates who pay the mortgage. I have a friend who is leaving soon and is willing to sell me their house for $200k when the house is definitely worth more. He has asked that we forgo a realtor but I am unsure. I have enough saved up for a down payment of 20% but that would deplete the majority of my savings. This is my first rental property and I want to do this right.
Are there any other military investors in the area that can talk with me or give me their advice on the situation? Thanks for any assistance in advance.
Sounds like a good deal. What is your question?
Whether to use a Realtor? don't really need one unless you need help going through the process.
Whether to buy it? That's up to your investing goals and comfort depleting your savings. How fast can you replenish your savings between your house hack and this second house?
I'd say this isn't your first rental since you are renting out your current house.
There should be other Marines in Lejeune who are real estate investors. Have you talked with them?
What are you long term goals? When are you due to pcs again?
My advance comes from scar tissue, but I recommend never getting into an investment unless you have the financial foundation to afford the asset. That being said, I have not seen the property nor know anything of it. If your friend wants to sell the property to you, look at the Subject Two strategy. This will allow you to get the home deeded but require you to pay your friend for his mortgage. You can upgrade, rent, collect the equity growth, and take the tax depreciation too.
Listen to this podcast: Real Estate Rookie show Episode 51.
If you are ever looking to connect with like-minded veterans in the REI space DM David Pere. He created a mastermind group with only active and veteran members.
Mastermind Group is called the War Room.
@Joshua McMillion That is definitely a creative way...
I haven't listened to that podcast, but be sure its a good friend or plan to refi sometime in the near future. If anything ever happens, the mortgage is in his name. The lender won't talk to you about it or even let you refi out of it. You would need to get Power of Attorney from your buddy.
Of course, you are on the hook with your buddy since if you default on the mortgage payments, then his credit score is screwed.
I'm not military but I would say you can skip the realtor. You will definitely want an inspection, which is a buyer cost!
Talk to a lender and get a pre-approval letter. If you can afford it, better to just buy your buddy out.
If it is a VA loan your friend should not let you assume his loan.
About using a Realtor, if you have a friend that is a Realtor in the area, maybe they will help with the transaction for a reduced commission. If you guys don't know what you are doing I would suggest having a professional involved in some capacity. You really need to make sure it is done properly.
How much will this place rent for? Does it beat the 1% rule? Can you Airbnb it?
What is the value of the house? If you are insure, this is where a Realtor will be very handy. Does the area appreciate? If you are buyer below market value and it will appreciate, maybe in 6 months or a year you can refinance and get your downpayment back out. But then you will cash flow less because your loan amount will be higher. So many options, real estate is awesome and a lot of fun.
If this is a killer deal, it might be worth taking some risk and spending your money. If it is just an ok deal, maybe it isn't worth putting yourself in a potentially compromised position.
Another random though, can you get a loan? Does your debt to income support it? Do you have leases signed by the people living in your house? If so, some lenders will use the leases to offset your DTI. Talk to a lender!! Sometimes local banks will be able to work with you and make things happen that other banks can't.
If you are a Military member you do not need 20% down just use your VA CE/DD-214 for the 100% VA home financing. If the house is worth more and bigger you can go VA. If you used the VA loan to buy the current home your still okay there are a couple of options to solve the entitlement.
Refinance current home into conventional even take out some cash.
Buying a bigger home is within the VA Cert eligibility.
@Jacob P. Cybulski hey bud- I’m not in that area but I know quite a few people over there. I’d be glad to help you.
I recommend using a realtor as they help remove liability from you on your investment. I would love to help you find a good realtor there.
How does using a Realtor remove any liability?