All Forum Posts by: Erin N.

@Aundrea Newbern I'm not in the Destin market, but I have vacation rentals in Florida. You'll definitely want to check into local laws and zoning regarding rentals. Florida has prohibited any new local regulations that ban vacation rentals, but they can still pass new laws regulating them and any existing prohibitions are grandfathered in. With it being a condo, you'll also want to read the condo regulations to see if there are prohibitions or other limitations. Of course, also check into HOA fees. Sometimes the price is very low but HOA fees are prohibitive. Insurance will be different than regular homeowner's insurance so you'll want to price that. You can check rental comps on VRBO and Airbnb as a starting point. I always assume 50% occupancy rate when running my analysis on VR deals (although in my market, I'm at 95% or better. I'm just cautious when analyzing deals.

@Andrew Halbert ah, I see.  The good news is that once you have 2 years of tax returns that show you're making money with your rental properties, you don't have to have 2 years of history with your subsequent properties.  You just have to show a track record as a buy and hold investor.

@Andrew Halbert how long have you owned rental properties?  You should be able to find a lender that will count rental payments from day 1 as long as you have a 2 year+ history OVERALL of renting out property and showing that income on your federal tax return.

@Andrew Halbert I just finished refinancing a BRRRR, and I have some lessons learned that I can share. First of all, I had gotten a private interest only loan with 12 month terms. Because of that, I had to refi within 12 months and could only get a loan for 70% of my purchase price + reno. I had paid $150k and put in $25k. The appraisal came back at $242k. If I had a 15 or 18 month loan, I could have refi'd after 12 mos at 70% of the appraised value. Having a longer term is the one thing I would have done differently and will do differently next time. Not having the extra $60k in hand means that my cash on cash return is a lot less, and I still have $63k of my own cash tied up in the property.

Something I think I did well, and I recommend that you do - I had a loan payoff plan in case I couldn't refi. I borrowed only 50% of the purchase price. I paid the rest in cash and also paid cash for the reno. If I couldn't have gotten the refi within 12 mos, I had enough cash on hand to pay off the $75k loan. I also have a $100k HELOC on one of my properties that I could have tapped into to pay off the loan. I think it is too risky to depend solely on appreciation/ability to refi as your plan to pay off a loan with a balloon payment.

I do have a question about your DTI. You say you're at the max right now, but won't you have income from the new property once you complete the 2nd R? When I refi'd mine, they took the $2700/mo in rent as income and counted it toward my DTI. Perhaps not the entire $2700, but at least a portion. My new PITI is only $950ish/mo. The rent more than covers it.

I'm game.

@Vanessa PetersI have successfully purchased 2 properties on auction sites.  One was on homesearch.com and one was on hubzu.com.  I have not purchased on auction.com, but I can tell you about my experience on the other 2 sites.  Both the sites I purchased property from were nearly identical in their process.  Also, both of the properties I purchased came with title insurance provided by the seller, so having to do a big investigation into the title was not necessary.  

I'm really not certain what others are referring to about some of the issues they have had with auction sites.  Both on homesearch.com and hubzu.com,  if you have met the reserve price and are the winning bidder, it's binding on the seller.  They can't get out of it (unless you don't meet the terms outlined for the buyer, of course.)  Just like with Ebay, if you don't meet the reserve price, it's not a sale.  That's just basic auction process.  

As far as shills and sketchy sellers, you have no control over that.  You also have no control over buyer's premiums and other requirements of the auction site or the seller.  You cannot negotiate any of these items, and you can't ask for any contingencies.  You have to evaluate the property, the fees, and the terms and decide if it's something you want to do.  

For my first property, which is my current primary residence, I paid $380k which included the buyer's premium. I put $75k renovation into it and it appraised 1 year ago for $721k. I took that appraisal and got a $100k HELOC that I used to buy another property.

The second property I bought on auction is a duplex that I paid $153k for on hubzu.  I put $25k into renovations.  I'm refinancing it now, and the appraisal just came back at $245k. I rent that property out for $3100/mo.  

My advice to you is to learn the auction process, thoroughly read and understand all the terms and conditions, and don't allow the opening bid price or the behavior of other bidders determine what price you would pay for the property.  On my second property, I would have gone as high as $180k, but I would have walked away if it went higher.  

Learn how to analyze a deal to see if it will make money.  Figure out what cash on cash return is minimum for you to do a deal.  For me, I have to get 20% annual cash on cash return minimum.  

Auctions are a great place to get a deal. The problem I see is that most people who dabble in auctions are looking for a steal, not a deal, and get disappointed.  

Is the attic full ceiling height all the way around? If not it will affect the sqft when they do the appraisal.  Also, if the 2nd floor shower height and height above the toilet don't conform to ANSI standards, the appraiser may not count it as a bathroom.

I have created additional living spaces in SFRs to rent out.  Make sure there is a door between the 2nd floor and your living area - even if it's permanently locked with a deadbolt.  If you create a solid wall, it will most likely violate building codes.  I also suggest stopping short of building a full kitchen but rather put in a kitchenette with a counter top convection oven and a 1 or 2 burner cook top.  Codes again.  You could potentially get shut down for trying to create a duplex by the local building inspector.  That's what happens sometimes where I live, but YMMV since you're in a different state with different laws.  However, a lot of the local and state laws are based on certain national standards so many of them are the same.

@Jerry PadillaI appreciate the insight into your process.  I have asked before, when I have submitted my documents, if we can order the appraisal right away because it does seem to be the biggest factor in delaying the timeline.  I'll ask for the screen shot.  Good idea!

@Mindy JensenI hit refresh, I opened a different browser, I tried it on 2 computers and my phone.  There was simply an issue.  Just FYI.  Might want to look into it.  I wasn't the only one.

In the past 3 years or so I've gotten 3 conventional loans, applied for another 2 conventional loans, and helped my parents navigate the process on their loan.  I keep having the same issue come up every time.  The bank has me pay for an appraisal and they tell me it's been ordered.  They usually say it will be back in a week.  I put a calendar reminder to ask about it in a week.  They say it's not back yet.  I give them another 3 days.  Still not back yet.  I dig deeper.  Oh guess what?  They forgot to order it.  IT HAPPENED EVERY SINGLE TIME on 6 loans.  Different banks, different appraisers.  What gives?  And what can I do to verify that the appraisal has in fact been ordered.  The banks get testy when I dig and ask them for documentation that shows the appraisal has been ordered.  It drives me crazy because it adds 15-20 days to the loan process.  This should be completely avoidable.