All Forum Posts by: Andrew Postell

@Lilly Fang people pass in houses often.  Sometimes it makes a difference and sometimes it doesn't.  Sounds like you might know your market well?  Is this why you might be asking?  We certainly have had plenty of examples of priests (and other religious persons) coming to a specific property to bless or "cleanse" it.  Don't be afraid to go that route when sharing that someone has passed.  Then you can explain what you did about it.  That has shown to help depending on the demographic makeup of a market/neighborhood. 

@Steele Kruzel if you are looking for a local plumber, electrician, title company, CPA, etc....then we should check with other investors in our market.  Ask who they use.  It's not foolproof...I mean, nothing is...but if another investor recommends someone because they have already worked with them then that's usually a good place to start. Try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. Eventbrite too. But post locally for this. That’s the best bet.

@Tom Server yes, you are still negative.

Let's try it a different way with a more extreme example.

Let's remove the interest rates entirely.  Let's say you took out a loan and had to pay it back.  Would that make your budget more positive or negative?  Negative, right?  It's easy to see it in that way.  The concept is the same.  Your monthly budget will change because you have a loan.  This will make your monthly outlay larger because you have a payment.

If you want to have some fun, take that loan amount and figure out what the interest you would be paying towards your 401K would be.  Next, just pay your 401K that interest without having a loan.  Your monthly outlay would be larger...your bills are more.  You are still paying yourself in that scenario.  It's the same concept.  

Some other concepts to understand is that inflation is 3% currently.  So, that 4.5% you are earning?  In reality, it's only 1.5%.  Once rates fall, you won't be making 4.5% either.  That is likely to happen towards the end of this year.  What were interest rates for savings account pre-pandemic?  Less than 1%.  That income you are making now, is already being eroded by inflation and will continue to be eroded as rates fall.

The answer to all of our financial problems is cash.  Why not save more?  Why not put more money into my 401k?  Why not buy more properties?  Because we don't have the cash to do so.  Try buying 15 homes and have 9% rates on all of them.  Even if you were paying yourself that would be a HUGE outlay of capital.  It wouldn't be possible.

Maybe some of that makes more sense?  

@John Brown if he doesn't want to pay capital gains this year, then lease it until next year and call it a day.  My suggestion here is for you to not advise home on any tax issues.  But if he wants to not pay them this year, then let's execute next year.  Will that trigger something?  I would advise for you to not get into that discussion frankly.  Just go along with him selling part this year and part next year.  Sound good to me.

@Shahrzad Amin thanks for the post.  Always great to hear from a fellow Texan.

Now, I might say that buying a property in the $400k+ price range really won't be that ideal of a rental later.  We will get significantly higher rents on two $200,000 homes here than one $400,000 home.  Most of the renters live in the lower price range.  That doesn't mean you shouldn't buy a home nor does it mean that you shouldn't rent the home later...just know your numbers won't look as good up there as they do in the lower price ranges.  So, when you ask for "recommended areas with decent rental markets"...I guess it's a little arbitrary.  The "decent" might be up to interpretation.  So, I would suggest to get with a realtor to help you find the specific neighborhoods that might fit your needs.  You can use that "Find an Agent" tab at the top of the page but @John Steffen would be a good person to start with in that part of town.

Hope all of that makes sense.  Thanks!

@Josival Junior have you spoken with your lender on this subject?  We have no idea what type of loan you are receiving nor the downpayment program.  These are certainly questions that your lender needs to address.

@Mohammed Milord hmm, so the answer here is "yes, but.."

So, you can still get a conventional loan but the loan will require you to transfer the property to your personal name at closing. The loan is in your personal name with conventional lending and the property is in your personal name at closing. You can switch the property to your LLC name after closing...but the mortgage will always be in your personal name.

And just to be clear, there are 2 main types of loans for investors: “Conventional” and “Portfolio”

Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names). These loans are all 30 year fixed rate loans. They have the lowest rates we can find and since they are 30 year fixed...they allow us to cash flow better...which helps us qualify for other loans later. The draw back to these loans is that they are more paperwork heavy than the other "portfolio" types of loans...they have more rules...but if you have ever received a loan on your primary home, it's likely that you will go through the same type of paperwork here with conventional lending. Fannie/Freddie money = Fannie/Freddie rules. NOT the bank's own money.  Play by those rules, get better terms on the loan here.  One of the rules here is that the loan and property need to be in your name.

Portfolio - I'll define these loans as loans that come from the bank's own "portfolio" of money. Sometimes referred to as "commercial" loans. These loans are a lot more flexible than "conventional" loans. Bank's money = Bank's rules. If they like you, then maybe they will lend to you. But since there is a limit to how much money the bank has access to....their rate will be higher...and usually with a prepayment penalty. Here there is no such thing as a "Debt to Income" ratio...because your income doesn't matter.  More Flexibility but worse terms on the mortgage.

I hope all of that makes sense but feel free to reach out with any other questions.  Thanks!

@Julia Lockhause Why would you refinance out of the renovation loan? What are we hoping will happen when we refinance?  The questions you are asking here should be directed to your lender.  Any reason why we aren't asking them these things?  Why would you refinance out of the renovation loan?  What are we hoping will happen when we refinance?

@Nick Hulme I read your post and want to clarify on a couple of things.

Saying that the title can be "split" isn't really that accurate.  If you are purchasing the property within a partnership...then the partnership defines what % of ownership the partners have.  But the title of that property would entirely be in the name of the partnership.

Same if you put everyone's individual names on title - it's not split.  Just everyone has an ownership interest in the property.  

I would also say that this is the same if people are co-signing on a loan.  The payments are not split.  Everyone is responsible for 100% of the mortgage payment - and yes, that's if there are co-signors.  The payment will be represented on your (and their) credit with a 100% payment.  The only way to remove someone from a mortgage is to refinance them off.  You can remove people from title pretty easily...but refinance would mean that you would need to qualify without that person.  Otherwise, that mortgage is on their credit until it is removed.

You can certainly be co-signors on someone's real estate when they buy it for themselves...but this almost sounds like the opposite of what your sister wanted?  If she's good with it, you can do it.  Just know that your lender needs to be ok with things.  So, if you do use a living trust...some lenders may not like that.  Just get prequalified with someone first and talk through these things some.  Be aware that the mortgage will be in the sister's name until it is refinanced out.

Hope all of that makes sense.

@Cindy Carriger one of the best wholesaling classes out there!