Making connections in East Texas
Rental Property Investor · Jacksonville, TX · Member since 2018 · 55 posts · 15 votes
Hey Brett,
My first was pretty easy... I did a lot of research first... lots of it! And I read Brandon's books on buying and on leasing rentals before jumping in and that was super super helpful!
I already knew the mortgage person because we were already friends before... She already had real estate that she owned and leased and I asked her all sorts of questions to ease my mind going in. When I found the property I did a quick analysis and also I called her immediately and after I told her the location her response was "Buy it! Make an offer now! Don't wait or it will be gone!" Well, it was... I had found it offered for $40k and needing a lot of rehab. But a few months later it was offered for sale again... it was a flip. So I called my friend again and got the exact same response... so I make an offer on it and we negotiated briefly and I bought it. Probably for a little more than I was as comfortable with, however it was extremely well done and has options that were above average for the location. I had a rental appraisal done for it for additional cost during the process and the results were good enough so that 70% of that number covered my Principal, interest and insurance and property tax payments with a little left over.
I have rented it for nearly $200 more a month than the appraisal said was the max it would get the entire time I've had it.
So all I really met were the title company that we used to close with and that was the seller's choice.... I met the seller who does the occasional flip.... good to keep her number handy in case I am looking for something in the future... and apparently her dad has a small construction company, so thats handy if I need to possibly get a price on some repairs or remodelling that I don't want to tackle myself.
I met an inspector inthe process because while I was looking for something, I made an offer on a duplex and I had an inspector check it out and I was there at the time and I was able to ask all sorts of questions and he pointed out many things to look for that I could look at before paying a pro to come check next time.
I had just the month before closed on the house I am living in, using the same mortgage company, so I got really familiar with the process and all the documents needed, so this time I was told that I was so efficient with all that that the loan processor would not need to do anything if all the customers were like me. So learning what the mortgage companies want to see is a big thing on your first one... like that they want to see a savings to offset 3 or 6 months of payments in case the place doesn't rent immediately...
I met no contractors because I am a little familiar with construction as I was a residential electrician for years a while back, and I have also done a little framing in the past, and I deal with commercial construction some with my current day job, so being a general contractor isn't a scary thing to me at this point if necessary.
I learned that if you have a ROTH IRA, you can remove all the money you contributed without penalty and without being taxed on it as income as long as you don't remove any of the interest that has been earned on it... That makes it very liquid for doing down payments and closing costs.
I learned that lenders do not like any money showing up in your accounts that do not have a paper trail... and making all this easy on the lender will help you get the loan done faster and easier, so no gifts from family or anyone within several month before you start looking to get a mortgage loan. If you do get gifts be prepared to get a letter from the giver formatted to make the lender happy that explains that it was a gift and is not something that has to be paid back. They do not like to see anything that may turn into a loan situation that they are not including in their decision making.
The most difficult part for this one was that the seller was wanting to close in 30 days and 45 is considered fast these days and 60 is normal if everything goes right... but my lender agreed to it and I had to act very fast each time the lender needed something in order to help make that happen. The seller had a legitimate reason for wanting to close that fast.... she was adopting a child and needed the money quickly to facilitate that. So the lender knew about it and everyone worked together to help her make that happen... and it did and they are a happy little family now.
The second most difficult thing was that I had to trust what I had read and trust the numbers on the spreadsheet I had put together as a calculator to show that this would be a cash flowing deal in the end... And trust all that with no previous experience. That was really hard for me. But once I did it and everything did work out... actually better than my numbers showed because the lender was able to lock in a lower interest rate when there was a dip because it was closing faster, so my payment was lower meaning a larger spread available for profits... once I saw that this all does actually work... and pretty much exactly textbook from those books from Brandon on here... It really gives you a ton of confidence moving forward, that you can actually do this and that there really is no massive secret to it. After reading the books I was thinking that it seemed too easy.. that there had to be so much more to it... but like my friend was telling me, you just have to jump in and things tend to work themselves out in the process.
Be as prepared as you can but then go for it. And you have to have a certain amount of trust but then you have to switch from research and calculating to doing it.
I hope that was helpful
Good to know. Yes, I'm planning on attending the next one. I'm loving real estate!
On a different topic, I was sad this AM when at Lowe's, they didn't have seed one for winter gardens. I thought this was the gardening center of TX?
thanks for the input!
Hi all. I would like some help on what you would do if you were in my situation. So here goes:
looking to find very first SF or MF deal.
primary home has a 2.65% rate and approximately 7-8 years left to pay on it. Worth approximately $110k.
The monthly payment is maxing us out but working a 2nd job to save up $$ for the rental property, but that's going to take approximately 1-2 years before i can save up enough for down payment + rehab costs.
Family of 6, so house hacking in a duplex, etc., is not really an option.
Thinking about refinancing to get a lower payment, or cash out refi or Home equity loan which would free up more cash to speed up the process and use that money for a down payment. To make it a little more complicated, in the next 3-4 years, we'd like to move to Central America for mission work. The plan is to only go for about 1 year.
My thought is that I would like to have about 3 houses rented when we move to Central America, but some say refinancing out of such a low interest mortgage is not a good option... but that's why I'm posting to get your thoughts.
Great to see so many East Texans here!
Hi all. I would like some help on what you would do if you were in my situation. So here goes:
looking to find very first SF or MF deal.
primary home has a 2.65% rate and approximately 7-8 years left to pay on it. Worth approximately $110k.
The monthly payment is maxing us out but working a 2nd job to save up $$ for the rental property, but that's going to take approximately 1-2 years before i can save up enough for down payment + rehab costs.
Family of 6, so house hacking in a duplex, etc., is not really an option.
Thinking about refinancing to get a lower payment, or cash out refi or Home equity loan which would free up more cash to speed up the process and use that money for a down payment. To make it a little more complicated, in the next 3-4 years, we'd like to move to Central America for mission work. The plan is to only go for about 1 year.
My thought is that I would like to have about 3 houses rented when we move to Central America, but some say refinancing out of such a low interest mortgage is not a good option... but that's why I'm posting to get your thoughts.
Great to see so many East Texans here!
Have you thought about a 3 bedroom duplex? You could probably get an FHA loan with low down, move into it and rent out your current house. It would only be for a few years.
I have thought about that, but I probably can't rent my house out for more than my current mortgage payment, hence the reason i was interested in refinancing. But after some thought I don't think its wise for me to refinance my house simply because the interest rate is sooo low and making more than 2.65% on my money is going to be a lot easier than if I refi'd.
Thanks for the feedback!
@Tom Keith I'd be interested in attending myself! What time do y'all meet and have you moved to Jason's?
@James Call
I would be interested in checking into those lenders! I've spoken to a few lenders in Tyler, however I'd be interested in talking to someone who does more on the line of investments.
i deaigned my own spreadsheet for analyzing zing based on a few others I had seen. It changed over time to something that worked for me and I made different versions of it depending on whether I was looking to flip or make a rental. I downloaded one the other day from here at bigger pockets for free when I couldn’t locate mine on the computer I was using and I modified it slightly so I could see it the way I was familiar with seeing the results.
You can (and probably should) account for all of the little things that the analyzers have on there, but when you do, the numbers may get very thin. My friend who invests goes on less numbers and analysis and I need to see all of that to be comfortable. But she convinced me to back off of putting aside money each month on the analyzers for every little thing. Basically I just look to find a positive cash flow monthly of at least $300 and I would much rather that number be $500. My intention at that point is that if the place needs maintenance and capital repairs then that will have to come out of the cash flow numbers. Because in a very general way, that is what happens anyway. You will get into a place and get a renter in there and whether you are accounting for $100/ month for capital repairs and $50/month for maintenance, etc then a cash flow of $300... or you are looking at $450 of positive cash flow a month without accounting for those things, you are actually at the same place.
I do try and put back a significant amount of my positive cash flow until I’ve built up a comfortable savings before I allow myself to absorb he cash flow into my spendable money. And if I can live without it, I will put all of it back.
I have been pretty lucky I think so far in that costly repairs have been few and far between but I have built a cushion using the money from rents so I feel safe now that a repair would not (hopefully) end up digging into personal savings or turning into debt.
As for interest rates, I ask my lender friend what the current rates are and I buffet that a little just in case. Also, if you are planning a purchase where you will move in because you want to pay a lower down payment, the rate is lower for owner occupied loans... so if you are planning to turn it into a rental fast then you will be putting 20% down and paying a higher rate. So be sure and account for that.
Guessing rental rates is tricky. I do some research online. And if there are any rentals close by, I will call and inquire to get the best idea. Also Zillow let’s you look for properties as rentals and they have a rent estimate that you can go by roughly.
Rehab costs are difficult. If you are capable of doing work yourself then you likely have an idea of what is involved in the rehabbing process. There is a book available from bigger pockets that is about estimating rehab costs. It is very concise and helps you look at things you might not think about. I also got a book on doing home inspections so I could filollow along and kind of have an idea of what inspectors look at. Also helpful to know.
The book on buying rentals is very good. I have it as an audiobook and I listen to it repeatedly because each time I do, I see something new.
Hope that was helpful.
Hi all. I would like some help on what you would do if you were in my situation. So here goes:
looking to find very first SF or MF deal.
primary home has a 2.65% rate and approximately 7-8 years left to pay on it. Worth approximately $110k.
The monthly payment is maxing us out but working a 2nd job to save up $$ for the rental property, but that's going to take approximately 1-2 years before i can save up enough for down payment + rehab costs.
Family of 6, so house hacking in a duplex, etc., is not really an option.
Thinking about refinancing to get a lower payment, or cash out refi or Home equity loan which would free up more cash to speed up the process and use that money for a down payment. To make it a little more complicated, in the next 3-4 years, we'd like to move to Central America for mission work. The plan is to only go for about 1 year.
My thought is that I would like to have about 3 houses rented when we move to Central America, but some say refinancing out of such a low interest mortgage is not a good option... but that's why I'm posting to get your thoughts.
Great to see so many East Texans here!
I think that you would be in a good position to do a refinance to get your payment down to the point where you could rent your house out and the rent would give you a positive cash flow.
You would get a higher interest rate, but think about this - your renters will be making your house payment as well as paying you the positive cash flow, so the higher rate won’t really be a worry at that point.
Additionally depending on your equity, you could cash out on the refi some of your equity and possibly get enough to cover the down payment and closing and possibly repairs for the next one.... especially if you are planning to move in and house hack because you will be renting your current place.
Just wanted to throw that out there Incase you have not looked at it like that yet.
I’m here with my friend that does the mortgages and she agrees that , depending on your equity, this might be a good way to get you some cash to get going.
@Tom Keith I'd be interested in attending myself! What time do y'all meet and have you moved to Jason's?
@Tom Keith Tom correct me if I am wrong but the next one is the 12th of this month on Monday.
@Mike Reynolds Hey Mike, we meet on the 3rd Monday evening and usually meet at Golden Corral but we are looking around and trying Cotton Patch out this next Monday 19th. Cotton Patch is on McCann Road North of Hwy 80. Would be great to see You!
@Mike Reynolds Hey Mike, we meet on the 3rd Monday evening and usually meet at Golden Corral but we are looking around and trying Cotton Patch out this next Monday 19th. Cotton Patch is on McCann Road North of Hwy 80. Would be great to see You!
Ok, got it now. The third Monday. At 7pm right?
What was the book you have regarding home inspectIons? Thats rIght down my alley. A good home inspector can definitely be an asset to buying a home but there are some things to look for if you do your own walk-thru on a property. Feel free to call with any questions. I'd be more than happy to help. Curious if you found your deals on MLS or other ways.
I will have to look when I get home to find the Home Inspection book that I have. I can't find it from google searching. I believe it was mentioned in another book I had read but again, I am not having luck finding it from here.
I did like the information in "The Book on Estimating Rehab Costs" which was a bonus book that came with "The Book on Flipping Houses", written by active real estate fix-and-flipper J Scott, available here on biggerpockets.com (http://get.biggerpockets.com/flippingbook/) .
I did find one of my deals on zillow which was an MLS listing, and the other one I found also advertised on zillow but it was a FSBO and that was actually being sold by someone who was flipping it, so it had been completely redone and was ready to rent aside from a few touches I wanted to add myself.
Howdy everyone. I am new to REI from the Whitehouse, Tyler area. I am looking to use a HELOC to purchase a property outright and do the BRRRR strategy. I am also interested in using the HELOC as a down payment on a turn-key property as long as the cash flow makes sense. Currently reading Brandon Turners book on REI properties and working to build credit back up. I am interested in networking with more investors in the area for advice on my first investment. Thanks!
Welcome Matthew. Good to have you join us East Texans. There's quite a few people on this thread that would be great resources for you. I am a Professional Home Inspector so if there's anything I can do for you, feel free to reach out.
Blessings.