All Forum Posts by: Bradley Chapple

@Tarrek El-Saadi

A bank loaning up to 100% of the value of the home would (usually) be too risky. The lender has to take into account a potential drop in home values. This buffer is to provide a “Plan B” if you were to default on the loan and they needed to take possession of the property and sell it. If you were the one loaning your money, you’d probably do the same.

With that being said, I have heard of a couple of lenders who will offer HELOCs of 90 to 100% LTV on a primary residence, because they assume that you'll be less likely to default on a property you need to keep a roof over your own head.

@Phillip S.

I’m no pro, but I have purchased a handful of properties in my lifetime and have seen others (friends and family) do the same and always eager to learn from their mistakes. This has led me to believe that you should ALWAYS have an inspection contingency. Yes, it may put you below those who don’t have one, but I have only seen misery and regret from anyone who’s bought a home without an inspection and an easy way to bail if the inspection report is a hot mess.

Secondly, I get the fact that your GC is trying to make money, but he doesn’t have to be a Richard about it. GCs are trying to put beans on the table just like everyone else, but being disrespectful is a deal breaker. You might try calling around and finding a GC with some people skills who will offer some walk-through estimates for a flat rate (or apply it as a credit if it turns into a project). Bonus points if you can find someone who will walk you through the estimate with them and let you ask questions, so that you can eventually learn enough to do some very rough ballpark estimates of your own without the GC. Consider it a relatively inexpensive education that will save/make you money in the long run. Combine this hands-on knowledge with some books that already exist on the topic and you’ll be off to a great start.

@Greg DeFeyter

We just did the same thing about six months ago. But I’m Colorado, so YMMV.

The only thing we changed was the insurance. Just call your insurance company/agent. They can give you some more specific options for your situation. In our case, our monthly insurance premium was actually cheaper, since we were no longer insuring the contents of the home, only the home itself.

No LLC. We just kept it under our name and used a lease we "borrowed" from a friend of ours and modified it to fit our needs, but we changed very little to be honest.

To list the property, screen tenants (application, credit checks, and background checks) we use Cozy. We also use Cozy to collect payments, which is easy for both parties, as it’s linked to both our bank accounts (tenant and landlord).

I could have even used Cozy to collect the security deposit, but I used a old-fashioned check for that, since I wanted to deposit those funds into a completely separate account, and I couldn’t figure out how to do that through the Cozy setup.

@Brian Garrett

Probably only three or four family-suitable SFRs around here if your shopping the MLS. Three if you're looking for something new-ish that won't require much rehab, if any. Four if you're willing to put in some sweat equity.

Obviously for off-market deals, or properties the banks won’t touch, the sky is the limit.

Thanks, Taylor. I have listened to the Real Estate Rookie podcasts, and they are more my speed, but still hit or miss. Again, I'm not saying there's anything wrong with having a variety of guests who are at different stages of success.

I didn't know about Tony Robinson's podcast, though. I'll have to check that out. Thanks for the tip!

@Lars Hasseler

I love reading stories like yours. Honestly, I have grown tired of the Bigger Pockets podcasts where the guests are millionaires and billionaires, owning hundreds of doors, etc. I know stuff like that is great motivation for a lot of people, but as someone just starting out in REI, who doesn't want to quit their job or make REI a full time career, I can't relate to most of the guests these days.

But that's okay, because BP also has forum posts like yours. Reading about your experience, motivates me. It's just goes to show that even if you don't have a lot to invest, you can jump in, roll with the punches, take some lumps, and still make it work, as long as you keep it all in perspective and remember that REI is a long-game. So, thanks again, Lars.

Have a Happy New Year, everyone.

I wonder if local zoning laws would prohibit putting in a mother-in-law suite and if that would be any different than trying to get a property approved for multi-family. Seems that a MIL suite would attract buyers looking for a space that they could either AirBnB/VRBO, house-hack (off the books, roommate-style), or put a genuine in-law into, depending on what stage of life your buyers are in.

That's awesome, Mark. I can relate. I found myself in a very similar situation not that long ago. We were making good money, but barely living within our means, and not saving any money, except what little I was putting towards my 401k (to get my company match). Heck, we didn't even have anything aside for emergencies! We were, literally, one minor disaster away from ruining our lives.

After realizing how stupid this was, and imagining what retirement was going to look like (if I would be able to retire) on our current trajectory, we decided to buckle down and get very aggressive with saving. It added up quickly... Now we have funds set aside for emergencies, savings for real estate acquisitions (and steadily growing), and a cash-flowing SFR (with six+ months of reserves for that too). This has convinced me that although REI is the door you walk through to get to the next "level", saving money is the key that unlocks it. My only regret is that I didn't figure this out earlier in life.

Keep up the great work.

Good question, Matthew. I have also seen turnkey providers overusing the "A" and "B" neighborhood labels to make a sale. I checked a turnkey provider's properties just the other day, and what they were calling a "B+" neighborhood was in a moderate crime area according to Trulia and using Google Streetview showed mattresses and other garbage dumped on the side of the road right in front of the house and other places along the same street.

Sure, the house was fully rehabbed and looked amazing, but it takes more than a nicely rehabbed house to upgrade a neighborhood. Sadly, not being honest from the start immediately ruins the deal, since trust, I would argue, is THE most important quality to look for in a company that caters to OOS investors trying to invest in an area sight unseen.

Thanks for the input.

I'd be lying if I pretended that the 10% difference wouldn't be huge for me. It would allow me to get into a $200k house in an "A" neighborhood, perhaps even brand new construction, instead of a $100k house in a "C" or "D" neighborhood with nothing left over for (the likely more expensive) rehab.

But, obviously, there would be side benefits to this. As I mentioned, we could visit family in that first year as often as we wanted, while doing some upgrades to attract better tenants and look for more deals in that area. Our jobs allow us to work for extended periods, as long as there's Internet, so it really would be a second home for the first year.

The math not being good the first year. But is the math ever good on a second home? I'm certainly not married to this idea. Just feeling it out to make sure it would be above board from the start if I ever decided to give it a try.