All Forum Posts by: Becca F.

@Cyrus Hernandez

After buying homes as primary residences and investment properties several times, I would recommend a mortgage broker, as Clayton Silva said. They can give you different options. When I was uninformed, I went with the lender my realtor recommended. They don't find you the best options and in some cases recommend paying for points to buy the interest rate down. In my opinion it's best to have zero points or use the fewest points possible unless absolutely necessary (e.g. you need the lower rate to bring your debt-to-income ratio down to qualify for the loan). If I'm going to refinance in the next year, if rates go down, I wouldn't put extra money to buy down the rate. 

For my last cash out refinance of a rental property, I talked to 5 lenders. Some takeaways:

- they should not charge you any type of application or cancellation fee. One tried to charge me a $295 cancellation fee when I went with another lender. This is illegal under RESPA and I could have reported her to Consumer Protection Financial Bureau (I didn't report her to CPFB but I did speak with her supervisor). You have to right to cancel the loan up until you sign the closing documents. I was charged a $400 application fee a few years ago on a different loan. 

- Be wary of lenders offering you rates significantly below current rates. One lender claimed to be able to get me under 6% on an investment property. When he sent the loan estimate it was $23,000 to buy the rate down to 5.625% (this was around late November 2022). That is excessively high, not even sure if it's legal to charge that many points (4.59% points). When I pointed this out to him, he ignored any emails or voicemails I left for him. A primary home buyer can't even get that rate let alone an investor. 

- One lender gave me a rate then said they would give me a better rate if I showed him loan estimates from other lenders. This was extremely annoying since I felt like I was haggling with a car dealer. It was too much back and forth. 

The lenders who did these shady things were direct lenders. I'm not trying to disparage all direct lenders but that's been my experience - I'm sure there are great lenders out there. I'm in underwriting with a mortgage broker for another rental property I'm buying right now. Good luck!

@Raushanah Glinton

I'm investing out-of-state and after doing a major local renovation (which went over budget), the thought of renovating a property thousands of miles away sounded really stressful to me. I have a demanding W2 job and and to me it's not worth the time or stress to do a BRRRR although I know I'm not getting the equity. If you have the time to BRRRR it seems like the way to go - I might consider this for the future. I looked into purchasing with a turnkey company,one specifically that I interviewed. Another investor who bought with them said they were very happy.

I wound up putting an offer on a move-in ready home recently with a realtor who works with 80% investor clients. She gave me tons of information, much more than a turnkey company would.  I wrote a very aggressive offer, seller countered, and I countered and it was accepted. I'm not sure if I'd be writing aggressive offers with a turnkey company. 

I'm wondering the same thing, where are people getting 5% for conventional on investment property? I'm getting quotes for 7.125% with 2 points but my loan amount isn't very large. I just put in an offer on a SFH and trying to find a lower rate.

I've looked in Indiana, Ohio (Cincinnati), Tennessee (primarily Memphis). Memphis has a large rental market and price points are lower than Nashville. Nashville is a hot area and has appreciated quite a bit - I've visited Franklin and Brentwood. If you're considering Cincinnati, I could connect you with a realtor that I talked to. I'm putting in offers in Indianapolis metro area - I know that area very well since I have a SFH rental there. I'm still going with Indiana since it would take my quite a lot of time to research the other areas to consider making an offer.

That house looks amazing! Is the $50,000 was invested including all that renovation? I'm in California and I'm a buy and hold investor but considering flipping to acquire more capital to fund more purchases for long term rentals. I did a major rehab in San Francisco Bay Area that put me $100,000 over budget (all new electrical wiring) - I'm renting out the house now. I'm afraid of doing renovation out of state since I wouldn't be on site.

I have a SFH rental in Hamilton County that I bought 10 years ago - love Carmel, Westfield, Noblesville and the appreciation but I'm looking at Marion County now. I put in an offer on a house in Indy with my realtor recently but there was another buyer and I didn't even have a chance to counter. I'm looking at move in ready but I know I would get the equity if I was willing to do a rehab. I looked at the properties you fix and flipped and wondering how you got those impressive numbers. If a fix and flip sits on the market, is there an exit strategy to turn it into a rental?

Thanks for the advice. I asked my property manager for his opinion. He thinks the property's potential rents are overinflated, the $900-$1000 for the main house and $575-$750 for the ADU and that buying in areas with high crime areas will invite lower quality tenants. Higher quality tenants won't want to live in areas with problems. He manages my SFH rental in Hamilton County, great tenants but I bought that house almost 10 years ago. Spending $300,000 or more wasn't in my plan. After doing a crime data search with zip codes (46218, 46201 so far) that pretty much eliminates most of the East side. Isn't it street by street on the East Side as far crime? With Class C properties, thoughts about tenants? Are those landlords having problems vs. landlords of Class A/B properties?

So now I'm widening my search to Lawrence, Washington, Pike and Wayne Townships. I'm seeing several of these homes go pending quickly. If I'm looking at $150,000 to $200,000 is my rent ratio going to be at least 0.7%? This is frustrating.

I'm planning to make an offer on a SFH in Indianapolis, possibly 2 SFHs in Class C areas. Both are move in ready. The first one is $119,000. It's 2 bedroom/1 bath on a quiet street in an area with growth. Great house with built-ins. Potential rent is $1000, could ask $1100. My estimated mortgage payment is $824 (PITI). I asked my realtor about making a cash offer of $118,000 or doing financing at list price and asking for seller's concession of 2%. It's been on the market for 5 days. One lender said if I paid cash I could do a delayed financing 6 months after and cash out about 80% of the appraised value.

The second one is $120,000, main house has 4 bedrooms, 1 bath and ADU/carriage house in the converted garage has 2 bedrooms/1 bath. Potential rent is $900-$1000 for main house and $575-$750 for the ADU. My estimated mortgage is $827 month. My hesitation is it's on a busy street and the dining room in the main house has a sloping floor. It's been on the market for 46 days. The seller's agent said the sloping floor has been the reason that it's been on the market for so long. Their inspection don't reveal any foundation issues but they said I'm free to do my own inspection but property is being sold as is. My realtor did a video tour of both properties and she couldn't see why the floor was sloping. She said a contractor could fix the sloping floor for around $15,000 to $20,000. It was built in 1910.

To add to my choices the investor for property #2 owns a 2 bedroom/1 bath house next door, listed for $100,000. He said he'd give me a deal if I bought both properties for $210,000 so $5000 off each one. Realtor hasn't looked at this one. The investor mentioned this property after my realtor viewed the other one. This would be convenient for my property manager since both properties are right next door. 

My other properties (California and one Indianapolis suburban) are Class A but prices are much higher with Class A and my rent ratio wouldn't be as good if I try to buy Class A in Indy. I'm not sure if I should try to pay cash for the first one and if Property #2 I should consider with sloping floor. It has good income potential with 2 rents. Or try to finance 2 properties? With property #2 and #3 I don't think there's a rush to make an offer since it's been on the market for a while. If you DM me, I can send the listings. Thanks for any advice. 

@Thomas O'Donnell

I'm in the San Francisco Bay Area and have a SFH rental in the Indianapolis area (suburban Class A neighborhood but I bought it almost 10 years ago when prices and interest rates were lower) - that was the best purchase I've ever made. I'm primarily looking at SFH that are move-in ready, mostly Class C, $110,000 to $160,000 and making an offer soon. The prices for a rehab are a great value (under $100,000) but I don't have time or mental energy to do a BRRRR (did a renovation in California and doing a rehab out of state doesn't sound appealing to me). If I was willing to do a major rehab, I did find a duplex, triplex and quadplex for in the $110,000 to $120,000 - I saw three of them so far fewer than SFH. I think that Indianapolis offers great rent ratios. I also have an agent who is investor friendly. I can DM you her information if you'd like.

@Amy Mitchell

Yes, I'm only looking for LTR. I may consider MTR since I could see travel nurses and professionals being a potential market. As far as STRs the subdivision I have my SFH in the Indianapolis area has banned any rentals of 30 days or less. Some cities are putting in restrictions with STRs. I view STRs as more like the hospitality industry and to me it seems like a lot of maintenance although your gross rents would higher than LTR. With my LTR, with proper tenant screening and a property manager, I rarely hear from my tenants, which is a good thing. I paid for a window repair 10 months ago and so far it's been low maintenance. If you find the right market with STR it would work.

@Amy Mitchell

I'm in California (Bay Area) and it's really difficult to buy here at these price points and cash flow positive (more like negative) now so I'm focusing out-of-state. I have a SFH in the Indianapolis metro area (suburb in class A neighborhood) but I bought it almost 10 years ago (used to live there). Depending on what county you're looking at, Hamilton County property tax rates are much higher for investors than primary home owners, 2.771% vs. 1.08%. I really like Carmel, Westfield, Noblesville and Fishers from an appreciation perspective, nice suburbs with good schools, but the prices are high now. My property taxes went up significantly which reduced my cash flow but my tenants are paying down my mortgage and I bought it for low price and low interest rate so I'm keeping the house

I'm looking in Indianapolis (Marion County) but I'm trying to narrow down the areas - I'm communicating with an investor friendly realtor. Being inside the 465 circle and the East side usually has lower priced homes than the West and North sides. I considered the Fountain Square area. I'm looking for SFH or duplexes (which seem to be rare), heavily leaning towards turn key or something with minor rehab (cosmetic work). I have a partial team in place for Indy: property manager, handyman, painter, roofing company in place, no contractor (yet). I'm also looking at Cincinnati.