All Forum Posts by: Andrew Davis

@Zoran M. that's really great, thanks for sharing.

@Zoran M. 

This is great, thanks for sharing this!  I'm hoping to start my own deal diary soon.

It sound's like you've cultivated a great mentor relationship, how did you meet your mentor?  What sorts of things did you do to establish a good relationship with him?

It seems like there a lot of newbies out there trying to go it alone, and I think we could all benefit from spending some time working under experienced investors.

Can't wait to see more pictures and updates!

@Justin Glass 

Keep it, I'll bring my 12 gauge and do some hunting!  It sounds like a great project, and you've definitely added value which means you sir are a savvy investor.

To @Bill Wallace 's point, it depends on what you plan to do once you sell the property.  I'm guessing you paid cash for it, in which case your return on equity is around 3.3%, not great!  Your cash on cash return is decent at around 10%.  

If you have another investment in mind, say a flip or rental unit(s), figure out what your return will be on those and make the best financial decision.

Another idea would be to refinance the property at 70% loan to value.  You would get 105k cash out to invest, and still passively cash flow on the land.

Your payment would be around $500 a month, and with little to no capital expenses you would still cash flow, and your return on equity would actually improve.  2000 year cash flow / 45k equity = 4.4%

Keep us updated!

@Stephen Schaefer 

I would not be so quick to assume that he wouldn't be able to use his VA loan. I think you can make a case for owner occupancy since he intends to occupy the property when he is not at work. I am not a mortgage broker, and I would certainly do your due diligence, but I imagine your son is not the only active service member in this situation.

FHA has a program that will lend you money for the rehab as well, it's called 203k and you only need 3.5% down. The mortgage insurance for these loans was just cut in half, so this could be a great strategy as well.

Either way, you would rent out one side full time, and rent the other side on a shorter-term basis.  

Hope that helps!

Welcome @Travis Hamilton !

Good luck on the move, and please reach out if you need anything.

Hey @Kimberly Gillock 

These are the things normally included in closing costs:

• A fee for running your credit report.
• A loan origination fee, which lenders charge for processing the loan paperwork for you.
• Attorney’s fees.
• Charges for any inspection required or requested by the lender or you.
• Discount points, which are fees you pay in exchange for a lower interest rate.
• Appraisal fee.
• Survey fee, which covers the cost of verifying property lines.
• Title insurance, which protects the lender in case the title isn’t clean.
• Title search fees, which pay for a background check on the title to make sure there aren't things such as unpaid mortgages or tax liens on the property.
• Escrow deposit, which may pay for a couple months' property taxes and private mortgage insurance.
• Pest inspection fee.
• Recording fee, which is paid to a city or county in exchange for recording the new land records.
• Underwriting fee, which covers the cost of evaluating a mortgage loan application.

I crossed out the items which you shouldn't have to pay for if you are doing straight seller financing.  

Here are a couple threads on the topic that may be helpful:

http://www.biggerpockets.com/forums/519/topics/148...

http://www.biggerpockets.com/forums/50/topics/1398...

Good luck Kimberly!

@Andrew Kniffin 

That's fantastic!  Thanks for the update.  I really hope this deal works out for you.

@Kevin Reynolds 

Welcome to BP and welcome back to the USA!

You will learn a ton on Bigger Pockets, here's a few resources to get you started on your journey.

http://www.biggerpockets.com/starthere - If you just go through this you will have learned a ton, and have a great idea of how to take full advantage of Bigger Pockets.

http://www.biggerpockets.com/real-estate-investing - The Ultimate Beginners Guide is a must read for any investor.  It has helped me tremendously.

Deus Abençoe Kevin!

Feel free to reach out anytime.

@Gina Gee 

My first deal was a complete disaster!  I found a distressed SF on a large lot zoned for up to 5 units.  I tried to utilize the 203k program to convert it to a 4-plex.  I was going to live in one unit and sit back and collect the cash from my renters, it was a brilliant plan with a few minor issues:

- I chose a mortgage broker who represented himself well, but had no experience with a 203k loan.  It was the blind leading the blind.

- For a project of that scope, there were many costs that I knew nothing about, and that my mortgage broker either didn't know about or didn't tell me about.  The mandated 203k consultant, who you have to pay 1% of the total project cost up front (in my case $4k).  Surveys, engineers, architect to put together plans to submit to the bank in order for them to underwrite the loan (about 10k).

- Time, we had a 60 day contract, but it became apparent that we needed more like 120 days to get this thing done.  In order to secure contract extensions and keep the sellers from backing out I released all the escrow money (4.5K).

- When the bank went to evaluate the loan, which my broker had assured me was already a done deal, it turned out that my income, even with the projected rents from the other 3 units was insufficient to qualify.  I had assumed that the rents would be used to offset the monthly payment, but they were lumped in my overall income, and the mortage payment exceeded the 29% Mortgage Debt to Income ratio that the banks love.

I know the post title is first successful deal, and I actually (3 years later) consider this deal a huge success.  I learned a TON by losing twenty thousand dollars, and I'm still actively investing in RE and loving it.  

I'm currently working on rental rehab that will give a COC return of 30%+ and negotiating on a flip in a great area with fantastic numbers. Never. Give. Up.

@Bryan Henry that sounds like an awesome deal, well done sir!

@Jeremy Tillotson also sounds like a fantastic deal, how did you find it?

@Joseph Ball what would we ever do without the gurus telling us that we can't do it without them and their secret sauce?

Welcome @Terry Janney , your friend did you a solid!