Real Estate Consultant · Atlanta, GA · Member since 2015 · 173 posts · 46 votes
Hello All,
My 66yr old grandmother inherited a house from the man she took care of for 5 years. He passes and left her the home. She can not afford to care for the home so she gave it to me. She currently lives in the home. I want to fix it up a little for her and pay for the taxes, gas, electric, and water. It should total approximately $350 a month. I am thinking of fixing it up enough and doing a refinance on an use the money to invest in other properties. Im trying to 1. Figure out whats best for my grandma. 2. Be able to pay the basic needs for this home. 3. Use the home to build a real estate career. The home is in Rome, Georgia. My aim is to get 3 more investment properties in the same area. Any suggestions on what you guys would do? If you need more information please just as. I got an estimate of 114k on the Internet but im sure that's not right. Maybe its worth 50k in its current condition. Thanks in advance .
Investor · Naperville, IL · Member since 2010 · 105 posts · 52 votes
10y
Congratulations!
Keep in mind that pulling out a mortgage against the house comes with a payment--so add that to your monthly expenses. And the mortgage company will want to be sure that you can pay the expenses plus the mortgage. Let's call these "expense group A"
When you go to use that money to invest in another property ("property B"), the mortgage company will then want to be sure you can pay THAT mortgage on top of "expense group A". But once you have that property rented out and it shows up on 2 tax returns, the bankers no longer hold you accountable for that mortgage. So if you buy another place in the summer and get it rented out in the fall of 2016, you'll file taxes in early 2017 and it will be on your tax returns even though it wasn't rented the full year. If you're quick to file your 2017 taxes in, let's say, 2018, then the minute your taxes are filed--boom, you now have 2 tax returns on "property B" and the loan underwriters will now consider it "self-supporting"... meaning you are no longer held responsible for paying "expense group A" AND "property B". You are just back to "expense group A". That opens you back up to more borrowing ability.
Be mindful of having all of your properties in the same location. People differ in opinion on this--some are for it, some spread out a bit so that if something bad happens in that town or area, you're not hit all at once.
Last... SET MONEY ASIDE FOR RESERVES. The last thing you want to do is come into this great position and spread yourself thin enough to lose it all!
Good luck! Be sure to use the search function here--you will find every last thing you could possibly want to know!
Flipper/Rehabber · Atlanta, GA · Member since 2009 · 352 posts · 25 votes
10y
Hi Shaniqua sounds like a good opportunity and definitely something to gain leverage for future deals. I specialize in off market discounted properties. Let me know if I can assist you anytime