Rent to Retirement?

Los Angeles, CA · Member since 2020 · 2 posts · 10 votes

Does anyone have any experience working with Rent to Retirement? I have been looking into it because they’re a frequent sponsor on the podcasts and wanted to get some feedback. Thanks!

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Zach LemasterBusiness Member

Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes

@Pretty Khare

Great, thanks for sharing. You are 100% correct that the various loan options you use will affect the cash to close needed, but closing costs should not be factored into long term cash flow analysis. Just the first year acquisition analysis. I'm not sure about what is being included in your insurance quote. We run the pro forma at $850, but most quotes we see are $600 to $700. I can send you those insurance providers that quote those amounts if you reach out directly. I think $1,800 if far too high. My personal builds in the area have a $640 annual premium. This is definitely affecting your analysis. I can confirm we can get mngt to do better than 8%. That is the benefit to working with our network where we have negotiation power based on volume. The septic treatment will also be less expensive than quoted. I understand the want to be conservative in running analysis, but it's important to consistently be refining the analysis investigating all areas to lower expenses like with insurance. One other point to look in the first couple of years is property taxes. We show tax amounts above $3k which would reflect a full taxable value. It will likely take 2-3 years to be fully assessed to reflect that tax amount. Your first year the taxes likely will be less than $1k allowing quite a bit more cash flow than projected. The taxes will go up over time, but so will rents so that must be factored in to a proper analysis. Just some things to consider as you run some various analysis on this. Either way your slice it the equity is there to make this a great investment with plenty of options. In my experience it is very difficult to find new construction in a growing market, good neighborhood class that still cash flows & has significant, immediate equity. Side note, we are about to release some TX builds are in high demand. They are completed now, or will be soon. Not as much equity as these, but still cash flow well & obviously TX is one of the hottest places to invest currently. Stay tuned for those. Great discussion here that many people will benefit from reading. Feel free to reach out to me directly if you want to set up a time to go through this in greater detail.

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Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
5y
Hi @Eduardo Barcena jr!
There has been quite a bit of discussion on this topic in the forums. I've posted some threads below that I think will help in answering your question. Please feel free to reach out at any point with any questions you have!
https://www.biggerpockets.com/users/ZacharyCole/references

https://www.biggerpockets.com/forums/92/topics/518583-feedback-on-renttoretirement-and-zach-lemaster

https://www.biggerpockets.com/forums/92/topics/765347-rent-to-retirement-review

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

https://www.biggerpockets.com/co/RentToRetirement

https://www.biggerpockets.com/forums/92/topics/929410-rent-to-retirement-updates?highlight_post=5508807&page=1#p5508807

https://www.biggerpockets.com/forums/92/topics/893621-rent-to-retirement-review?highlight_post=5222888&page=1#p5222888

https://www.biggerpockets.com/forums/311/topics/915728-experience-with-rent-to-retirement-turnkey?page=1#p5345200

https://www.biggerpockets.com/forums/92/topics/808479-rent-to-retirement-experiences
https://www.biggerpockets.com/forums/12/topics/533693-anyone-worked-with-renttoretirement-turnkey
https://www.biggerpockets.com/forums/92/topics/581730-rent-to-retirement-zach

https://www.biggerpockets.com/forums/48/topics/874096-reviews-on-r2r-and-nch?page=1&utm_source=Iterable&utm_medium=email&utm_campaign=Transactional:%20topic_notification&utm_content=Transactional#p5123754

https://www.biggerpockets.com/forums/311/topics/883772-turnkey-investing-renttoretirement-feedback-reviews?highlight_post=5171720&page=1#p5171720
https://www.biggerpockets.com/users/ZacharyCole/references

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Eduardo Barcena jr
OP
Los Angeles, CA · Member since 2020 · 2 posts · 10 votes
5y
@Zach Lemaster thank you!
4 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@Eduardo Barcena jr I am actually starting my first deal with their company right now for one of the new build properties in Cape Coral, FL. So far, the rent to retirement team and the builder they're using have been very responsive and helpful. Scott has been exceptional in his help and advice as well. I will let you know how progress goes as I continue in the process!
16 Reply
Melissa Perez
Rental Property Investor · Northern, NJ · Member since 2019 · 34 posts · 41 votes
5y
@Eduardo Barcena jr I too am going through with my first deal with RTR. So far no major issues and things are going rather smoothly. My advisor, Eric has been great. So far so good!
9 Reply
Hans Baldau
New to Real Estate · Las Vegas, NV · Member since 2020 · 23 posts · 7 votes
5y
@Patrick Bavaro
Smooth sailing still?
0 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@Hans Baldau So far so good. Closed on the lot and have started the process to close on the construction to perm financing. The one "annoyance" I am facing right now, is that I'm being told it will take up to 60 days to close which sounds crazy to me.... but apparently the lender is busy (in todays market I am sure they are). This is not something the R2R team has control over I'm sure, but I wish theyd have more options as I basically was required to use their preferred lender and I'm at the mercy of their timetables. Overall that lender has been good to work with though. Other than that, its looking good!
1 Reply
Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
5y
@Patrick Bavaro
Thanks for the feedback Patrick! Yes, we all wish lenders moved at a quicker speed as they are the bottleneck in the process, and hold us up as well. With the construction to perm loan there are simply not many lenders that offer that loan product, especially at favorable terms. It's a great product, but we are at the mercy of working with the banks that offer those loans & their internal timeline. Hopefully this will stay on track. We look forward to working with you on many future projects as well!
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9 Reply
Kevin Harrison
Middletown, DE · Member since 2017 · 13 posts · 9 votes
5y
@Patrick Bovaro, if you feel comfortable sharing, what kind of terms are you going seeing or being quoted for on this deal as far as your financing is concerned?
1 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@Kevin Harrison sorry for the delay! I didn’t get notified of the tag (spelling error in my name). Anyways, sure! Bought the land for $26.5k cash, closed that in a week. Financing $238.5k and 3.5% right now. I have It on a float but will probably lock It tomorrow as the lender said he was expecting about 60 days to close which would be the length of my rate lock.. trying to gamble the timing to not have to come outve pocket for an extension.
1 Reply
Clint Pearcy
Rental Property Investor · Amarillo, TX · Member since 2021 · 19 posts · 17 votes
5y
@Patrick Bavaro
If it makes you feel any better, we sold my wifes house in Ecuador earlier this year and it took 6 months to close. I thought it was a travesty, everyone else involved felt it was pretty normal. The hold up was also the lender.
3 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@CLINTON PEARCY ooof!!! I’m praying that won’t be the case here lol 🤞🏻🤞🏻 thanks for the words of encouragement. This is only our 2nd investment property
1 Reply
Kevin Harrison
Middletown, DE · Member since 2017 · 13 posts · 9 votes
5y
Those terms (3.5%) seem pretty nice for an investment property! I've just discovered and am considering one of these new builds with RtR. Thanks for sharing and good luck!
1 Reply
Joel Miller
Flipper/Rehabber · Member since 2019 · 39 posts · 14 votes
5y
@Patrick Bavaro
Man...those seem like good terms for a investment property! Do you mind sharing their/your lender or if not DM me?
Thanks,
Joel
2 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@Joel Miller I’m all about transparency on here! The lender I was required to use was Lake Michigan Credit Union and the officers name is Danny Donahue (his first name is Peter but goes by Danny). If you contact him, if you can mention my name It’d great (for relationship building).
I do want to mention that I am using a 2nd home mortgage product which is a bit better than an investment property. There are certain rules that I am required to follow with this property type regarding full year renting, etc.
1 Reply
Joel Miller
Flipper/Rehabber · Member since 2019 · 39 posts · 14 votes
5y
@Patrick Bavaro
Awesome! Thank you
0 Reply
Erica L.
Rental Property Investor · Northeast (NJ DE, PA) · Member since 2018 · 38 posts · 19 votes
5y
@Patrick Bavaro I too, am looking into using the 2nd home loan option for a possible RTR property. What are the rules you’re talking about and how will they affect your deal?

Thanks in advance and congrats on acquiring your second property. 😃
0 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@Erica L. This link should help you!
https://guide.freddiemac.com/app/guide/section/4201.15
Being that the lender works directly with R2R, I am sure they are very aware of intentions of these properties but I am planning to refi in a few months after completion with a higher appraisal (benefit of this crazy market) to hit 20% equity without having to come out of pocket to get there. Maybe @Zach Lemaster can share some insight.
1 Reply
Ofir Weintraub
New to Real Estate · Chicago · Member since 2020 · 7 posts · 7 votes
5y
@Patrick Bavaro Hey Patrick , thank you very much for being so transparent and willing to share! I am actually also looking to get in to the Cape Coral investment. Can you Share and give an Update how is it going as of now? Thanks!
0 Reply
Stetson MillerBusiness Member
Real Estate Broker · Fort Myers, FL · Member since 2019 · 576 posts · 423 votes
5y
@Patrick Bavaro Is it within the R2R process that you have to refinance this deal for it to legally be rented through annual leases? Obviously with the second home mortgage, you would have to occupy the property, or have it available for occupancy (vacant) for over half the year to stay in compliance with the loan you're getting on the property. The lender is aware of the intentions, yes, but they're not the ones required to enforce the compliance, they're only required to provide you all the rules that come with that mortgage type, which you acknowledge at closing.

Those terms sound great at first glance, but I always assumed this was a non-conventional loan. Unless I'm missing something, it looks like you're suggesting this is a Freddie Mac loan. In that case, it would be considered mortgage fraud to rent the property annually, or even have a full-time property manager in place per those loan guidelines

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1 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@Stetson Miller You are absolutely correct! I have a plan in place to abide by the requirements :). I'm still going to be looking for a MFH in the near future as well. I still see the updates and check them out regularly so keep them coming!

@Ofir Weintraub Absolutely. I'm happy to help. Right now I am in "conditional approval to close" with the lender. Basically, I'm just waiting for the underwriter to finalize the file. The appraisal came back much under what R2R suggested it would come back at, but it is what it is. It came out exactly at $265k which is the exact cost of the land plus build cost.
5 Reply
Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
5y
@Patrick Bavaro
Great feedback. Please keep in mind your initial appraisal is just for the construction loan part based on vacant land and build specs. It's not uncommon for these to come back exactly at the purchase price. The value upon build completion should be much higher. We've seen many of these appraisals in the $300k to $330k range upon completion. That is based on today's valuation. We fully expect the values to increase as well in the future as the market continues to have high demand and increase.
[email protected]800-311-6781 Podcast Guest on Show How to Fund Real Estate Deals Right Now
Rent To Retirement5334 Reviews
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8 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
5y
@Zach Lemaster correct! I meant to add that I do expect It to be higher once completed. Thus far, the process has been positive! Thanks Zach.
1 Reply
Zach LemasterBusiness Member
Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes
5y
@Patrick Bavaro

Great to hear! We actually had 7 appraisals come back today all at $320k to $330k. Scott or Eric can send you copies of those if you would like to see them. Just let us know! ; )
[email protected]800-311-6781 Podcast Guest on Show How to Fund Real Estate Deals Right Now
Rent To Retirement5334 Reviews
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8 Reply
Tarcizio GoncalvesPro Member
Rental Property Investor · Palm Beach County, FL · Member since 2016 · 150 posts · 40 votes
5y
@Zach Lemaster been looking through the RtR site for the past couple of days. The numbers for the Cape Coral, FL market look really good. Could you please let me know if these numbers are for short term rentals or long term (year contract). I dont believe these are short term rentals because you have a section showing short term rentals on your website. Just wanted to confirm. Thank you
1 Reply
Harshavardhan Challa
Rental Property Investor · Norfolk, VA · Member since 2019 · 7 posts · 0 votes
5y
@Patrick Bavaro
Hi Patrick. Nice to know you are already working with them. I am also interested to work with them. I will look forward for your experience in the mew builds.
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