Find a good agent who invests in RE so they know what you're after. Closing my first two properties tomo. One we toured 45 mins after it went on the MLS. We made a full price offer right then and made it good for 12 hours so the felt a little pressure. The other was a pocket listing. Both met the 1% rule and will cash flow. This isn't the time to look for a deal and think about it for a few days. You need to know what you want and be ready to pounce. I live in CA and these are in Arkansas. Things are starting to cool there slightly, so the deals may get a little easier to find.
Hey @Grant Doyle ! I’m learning a bit myself, and even recently purchased/closed on my first investment property. But I was able to land it through a 30-year conventional loan with 20% down (of course). I’d be happy to introduce you to my mortgage guy, if you’d like to inquire. They’re very helpful and smart.
@Grant Doyle I had a simmilar situation where my previous landlord wants me to buy her house as my investment prior to her listing it. Someone suggest that I ask her to raise her asking to how much she really wants to sell to help lower my down payment. She agreed and I started the loan process but the it didnt go through because my debt to income ratio is high and need a co borrower but i can’t find ine at that time.
Find a mortgage broker, plenty do 25% down on a 30 years.
I know united wholesale mortgage does, loan Depot, etc
There is really no way around the capital needed to buy investment properties right now unless you can get seller financing.
But given the value the market brings seller financing is rarely an attractive option for a seller at the moment.
There’s subject two
House hack it with an owner occupied loan. You lived in it previously and now you can relive your college days. Just bring back the same roommates and all the natty light you can drink.
This company below will lend 80% LTV on a 30 yr fixed. I have not worked with them yet but did speak with them the other day.
@Grant Doyle can you afford to live in it for a while on a FHA loan? You only need to put 3-5% down I think. House hacking is not my thing but I'm sure you can do that
@Grant Doyle I bet you made the mistake of telling the lender that you were going to do do student housing banks are allergic to short term rentals and student rentals. And they gave you a commercial loan.. Tell them it's gonna be a straight rental and look up the market rent for a 12 month term rental and that's how you can get better terms.
This is a lender in all 50 States that knows how to do rental loans. Swbc.com
If S WBC falls through for you to qualify for a Fanny loan then go to finance of america.com and look into their DS or DSCR 30 year rental loan.
By the way you should've never sold that rentle because a distance just learn how to remote manage a distance rental. It's not as difficult as you think there is books on out of state investing. To all don't sell good rentals if you're in good locations but just too far away. Just learn how to manage at distance.
20% is the standard for single family rental properties. But honestly, in this market if you're not paying cash it's hard to compete for properties on the MLS. For turnkey properties you're competing against home buyers. What @Paul Kubin said about finding an agent with connections is true. I got good deal in Indianapolis because my agent knew a wholesaler. The wholesaler gave us the first look at the property before he sent it to his buyers list. That property on the MLS would have been gone the day it listed, and probably would have ended up in a bidding war selling for more than I'd be willing to pay.
Originally posted by @Grant Doyle :
@Anna Watkins Thank you for the only sensible reply. This property is a great deal, the main reason I am so interested in it. The price is at 365,000 and it rents for $3600 a month. At a 5% down payment, I would be looking at 1200-1300 in profit a month. I have close to the amount needed for a 20% down payment but I don't want to throw my entire savings into the property and not be able to help the tenants if something is in need of repair. She still has a mortgage on the property so I will look into your suggestion on taking over payments.
You need much more than the 20% down. There are the loan fees, prepaids, and other closing costs, utilities, substantial reserves for vacancies, etc. If you have just the 20% down the lender may not even give you the loan, because they know there are many additional expenses.
We still have 1% rule properties in c areas, 2% in D areas, 11.1% appreciation this past year, landlord friendly, BRRRR friendly, great infrastructure. Louisville, KY.
@Grant Doyle You May be too emotionally tied to this particular property. Depending on your investment strategy, this may not be a good deal even if it brings in $3600 a month. A few people suggested a couple of financing options that were valid. You may want to look into those options.
For what is is worth, when we want a property more than the seller wants to sell us the property, a lot of times the seller gets a much better deal than us.
So far this year we have purchased 17 properties. All of them have been under market value which has allowed us to get them with putting little of our own money into them. Most of them would not be considered properties that are great or desirable. But the numbers work.
The more I try to force a deal or the more emotionally connected I am to a deal, the worse the deal usually ends up. It is the difference between the professional and the amateur.
If the deal is good and you run (and document) the numbers accurately, you can get the money for it. It's one thing to say to prospective investors, friends and family included, "I have a great RE deal but can't afford the down payment.".
It's entirely another to say, "I have a great opportunity to make an almost guaranteed 13% annualized return, regardless of what stocks, crypto, or lumber does over the next year."
You mean don't sell without a 1031 exchange?
I hear many successful small to medium volume people say an exchange is generally not worth it.
What's your thoughts?
Shouldn't the new primary be every two years to avoid taxes. I guess if using exchange it wouldn't matter.
I invest in student rentals and it is a little different than regular long term rentals which may give you an advantage in the numbers if you market works like ours. I would be happy to talk with you. Also, do you have a local REIA with other student rental Investors in that area perhaps looking to partner?
I have clients who have sold property to exchange into other property, or leverage the equity in existing properties to buy other property - and lots who can put 25% down. Commercial loans will be less down but lower amoritization and terms......
Two things, sounds like you are a bit emotionally attached to the property because you lived in it in college. Not a great thing to be emotionally attached. Do the numbers work? Does it need work, or is it in good condition and you are paying top dollar?
If you can qualify for conventional, there are still a few lenders that will do 15% down on an investment property. Boxhomeloan.com is one of them. Check them out to see if it is a possibility.
@Todd Powell I keep hearing this as a great option for both parties. How would you recommend approaching this conversation with the seller? Are there specific terms that can sweeten the deal one way or another?
If you find a deal that you like find and shop around for the best terms a lender can give you. Look for more lenders, it seems like you are limiting yourself to one lender. Change that and you’ll be able to change the terms.
These are great strategies all around!
100% agree with you. 50% is better than nothing.
@Grant Doyle Have you considered asset-based lending? A hard money loan to secure the property then refinance into a conventional loan via another lender or bank. A hard money loan will carry a down-payment, higher interest rates and sometimes 1-3 points, and a shorter terms, but this would be the point of refinancing and the hard money loan only as an initial point of entry into securing the property. It may work if the cash in vs cash out numbers make sense. Otherwise, perhaps consider wholesaling as a means to generate capital for investment down-payments.
@Marcos Izquierdo asking enough questions to understand the sellers hot buttons. I was lucky on 4 different properties that I bought and held to find run down 4 plexes and making the deals with each seller. They were all old and all owned outright. It was about presenting the right down payments, Interest rates, and letting them see the TOTAL interest they would make! I ran the numbers and made a very easy visual presentation, all of which were options that worked for me.
I also did this with a flip on three houses owned by the same old woman, and got her to carry a balance for 4 months interest free while I rehabbed to sell it. The first deal was all cash, and she got to see what I did. Then I worked the deal for better leverage on the next house. Its all about trust and finding win-win solutions. I have negotiated my whole life in my occupation so this comes very easy and natural to me but its really about common sense.