All Forum Posts by: Andy Fritz

Hi Jonathan, buy and hold investors' bread and butter comes from being in popular/growing areas where they see appreciation of property/rent and demand of housing. The rent tenants pay above the cost of acquisition (cash flow) is what makes you wealthy. They pay for your rental. 

For repairs, most lenders have rehab loans available for something you already own. If you are purchasing something, there are loan products that lend you the money for the purchase AND the renovations. 

What are your goals in investing and what are you looking to accomplish? Good luck and let me know how it goes!

I would say prepare to buy homes is going out of style. Prepare to fire on all cylinders, so if your life gets buys you'll be ready. If not, so what? Having a plan and proper preparedness is 90% of the battle.

Learn about foreclosure proceeding, sheriff sales and auctions. Some deals might be a steal while others have several layers of liens waiting hidden. Know the pitfalls of each type of situation, this helps especially if you're not the only investor after a property.

"WHO YA GONNA CALL?" - Get a list of trusted contractors/repairmen ready for when you do find something you like that may need fixed. If you get 3-4 deals all at once you're going to need some help!

Keep targeting areas/housing plans you love with hand addressed/signed letters in addition to other marketing efforts. That's a great idea.

"Show me the money!" Get your finances in order. Know what you can afford by talking to a lender. They will check credit, income, debts to see what your options (traditionally or not) and how fast you can get 8/10/12 properties and steps involved. You may want to pull together your tax returns, pay info, driver's license, bank statements, or at the very least know where everything is.

Refine your tenant management system so that it can run flawlessly without you. Companies like Cozi and others offer easy screening and payment options that allows you to not have to juggle as much (and stay focused on your goals)

Cash is King, always in demand. Traditional ideas are seller financing, finding a trusted partner, HELOC on primary residence, working side jobs to make a little bit of extra cash, and asking family and friends to pool money for a low cost loan.

Some thing people overlook is buying something as a primary residence, fixing it up and living there for a year, then turning it into a rental after you buy another place. The minimum down payments are 3-5% down on a conventional loan versus 25% down on investment property. This would save you hundreds of thousands over your lifetime. Good Luck!

Depending on your market, that multi-unit property may not be available in 4-6 months when we get the green light on the economy. In Pittsburgh we are seeing 4-7 offers on properties just because there is such a shortage in affordable housing nationwide. Even still with the shutdown there are still offers being made. 

My thoughts are that if you are able to use other people's money, I would sincerely do so at current mortgage rates. In general, rates are the lowest they've been since the early 1970s, so now is a great time to use very cheap leverage to amplify your returns. 

Here's the basic math behind it. One route - You could have 2-3 properties paid in all cash - fully cash flowing say $1200/each immediately. You would only have roughly $300k in worth of those houses. Rather you could spread that $300k on 10-15 cash flowing $500/each with leverage. This way you are building equity with other people paying your bills on roughly $1.5M. You're doing MORE with LESS money. You would obviously want a rainy day fund for expenses, but if you buy 3 units and someone rips one completely apart, you're ruined, versus buying 10 and the rest can support you as you fix the others.

Here's the other positive few consider. If you have the cash for down payments you can go from 1 MFH to 10 in a HURRY. Down payments are usually the biggest hurdle as most lenders require 25% down on MFHS. Once you have a signed lease agreement though, you can use that projected tenant income as qualifying income, rather than counting the debt of rentals against you (debt limits), you can use this to your advantage. This means that even though you may have $1.2M in leverage you are not counted against any of that debt since it is included in that lease agreement.

Holler if you have any questions, this is my passion!

Chris is 100% correct. Fannie/Freddie require 15% down on a SFR investment property or 25% on 2+ units. HELOCs and HE-Loans are always an option if you have another property. Seller financing is an option too if they are open to terms, but not always likely. Can't hurt to ask right?

If you refinance within 6 months though depending on how you do it, you may only be able to pull out 75% of your initial investment, so ask lots of questions before you do that. I would wait until the loan has seasoned/improvements made before going that route. Then you can pull 75% of the appraised value out in a refinance (80% on a primary res). 

Cash is king! Good luck!

College properties usually struggle as investments unless you are a marketing king to keep tenants or fill quickly after they leave. Also, remember that most students are poor, so the higher priced properties are usually the last to fill. Tenants move out after each year and sometimes semester so you have to be able to weather the storm financially. Add in the additionalflood of advertising and significant price competition EVERY year. Also potential vacancies, disturbances, violations of rent, and damage of college life (parties/rowdiness/etc.). Usually the college only towns are directly related to the school itself, so depending on the trajectory of the school a lot can happen, especially those that are private. My suggestion would be to pursue more family oriented areas of town so that the risk (transient use) is mitigated

Conventional, USDA, FHA and non-QM (portfolio or non-traditional) loans are the main types of loans available. All of them have very different features and nuances about them once you go below skin deep. Usually a lender suggests walkign through the scenario of what you are looking for and then they can tailor a program around what your approach is to best fit you. Some primary residence programs through state programs can be very advantageous/inexpensive. Most loans have a repair or renovation modification.

Main tips: Compare rates and especially fees with as many lenders (3 minimum) as possible. Talk with someone who has 10+ years of experience and stay away from Quicken/close fast companies. Costs way more than normal. Compare title company fees especially. Most will only charge for the required services if you ask them to waive fees (shop again).

Feel free to share your plans and I can help walk you through some ideas! Good luck

Hi Jeremy, I am a loan officer in PA, but the main standards still apply that you must be actively employed to be able to 'close' on a loan even if you have assurances that you will be hired back (those are based on Fannie/Freddie guides). 

You may be able to qualify at a portfolio lender based on asset depletion calculations, but VERY few lenders are extending money for 'risk on portfolio loans'. Now, that doesn't exclude you from starting on the process of getting a loan. If you find a seller willing to 'wait it out' before you purchase, you may be able to work with a lender to get everything ready so that when you are back to work, they can close within 3 days or so. However, your rate would likely be the market rate which could fluctuate wildly over the next few months. Long story short is that it would be a distinct challenge, but once you are back to work it would be incredibly easy.

 I think you have a great start with your cash hoard and I applaud you for that. You are in the 1% of 1% of all homebuyers we see. From the virus we forsee significant economic damage and ulitmately in 10-12 months foreclosures will likely be high and people with cash deals will benefit greatly. Cash deals also save you roughly 70% of the expenses of acquisition cost. Good luck and holler if you have any questions.

Hi Rebecca, I am a lender in Pennsylvania. Currently all appraisals inside of houses are on hold due to the dangers of the virus which comes from the top - the appraiser's oversight group. Fannie Mae and Freddie Mac (they purchase 95% of the loans on the market) still require in home appraisals. Since appraisers are not allowed to complete this without updated guidance from Fannie/Freddie it's currently a staring match. If you still want to lower your rate, ask your lender about a rate and term refinance (which is just lowering the rate). This may be an option if you are able to qualify for an appraisal waiver (based on amount owed divided by value of home). Best of luck!

As a lender, I think this is such a great way to accumulate property quickly. My best friend just completed what you did and here's the basics. You can only have one FHA loan at a time. Your next purchase will have to be a traditional Conventional loan, but you can put as little as 5% down as long as it is your primary residence. Investment property is usually a 20-25% down requirement. By using the property you're buying as a primary residence, you are saving potentially hundreds of thousands of dollars over your lifetime. Also, when you go to move out of your duplex, you can offset debt used in qualifying formulas by using the duplex rental income as a source of income for qualifying. This means that you can add debt VERY FAST without having to qualify off of your traditional income. This let's you stack 6-10 properties quickly as long as you can afford the down payment. Good luck!