All Forum Posts by: Bill Hamilton

There is a lot of good info in here but having worked for a wholesale lender and being a mortgage broker in the past, you need to find a really good mortgage broker. There are a ton of variables along with different programs. For instance with Fannie and Freddie (at least in the past) as the number of houses you own goes up, the amount of cash reserves you need also goes up. And these requirements change sometimes and could be subject to what are called "overlays" by the individual banks (i.e. the bank can have their own limitations on what they want/need). A good mortgage broker can help you through those things. Also if you build a relationship with some banks, they will sometimes do a "blanket loan" which is really more of a commercial loan. But it is still backed by the properties. It just consolidates the liens for multiple properties into one note but can sometimes be done in an LLC name rather than a personal note. This may allow you to acquire more properties under Fannie etc.

At this point John, I wouldn't even be at all certain that you are actually the owner. Your only real  indication that you might be is the arrest citations you received. Do a title search through a title company. Make sure what liens are on the house. How did Andy get funding without you signing loan docs? That makes no sense if you are the only owner of the property. Again, get a title company involved.  Not sure about Georgia but every other state I have done real estate in requires the title company to be owned by a licensed attorney. They have more experience with transactions than anybody else. Talk to them and they can at least give you good info about your situation. Also Marie and Micki have valid points. If there is actually insurance, you (if the property is free and clear) will be on the declaration page. If there is a primary lien holder then they will be the primary payee. This will tell you a lot about where you stand.  P.S if there is/was actually insurance in place, why would this not have paid for the theft of the wiring etc? If there was not insurance in place and you have proof that Andy indicated there was, then he is guilty of fraud. Recover your funds by going after him. If he has assets, he owes them to you at this point. Sorry this is a bit of a rant but....... I did see that someone managed to get your court date extended a month or so. Hopefully that is a good sign that continues.

Erika Croonenberghs I would guess that rents will continue to rise. For a while. The level of growth in rent prices is unsustainable in the long run. Salaries are not rising at anywhere near that level so at some point it will stop. I would also guess that at some point you will see a California style property/rental market crash. The hard part is to predict how far away that is and how severe it will be. I think the Denver market has become very similar to the S. California markets. People really seem to want to live here and make immense sacrifices to do so. Although much of this may be due to the recent change in our marijuana laws. As some other states make the same transition (which I think is inevitable) this may diminish as a motivating factor. But any time you see this type of rise in prices in such a short time, there is always a drop later. That doesn't mean that buying is a bad thing. But I would try and make sure you have enough reserves to survive a multi year bad stretch where rents plummet. That may not happen and the market may instead find equilibrium and just stabilize. But I would not be willing to bet on that. Use at least some of the cash flow to build a reserve fund. Both for the possibility of a downturn and against repairs and the occasional unrented room.

Others have talked about the utilities. Keep those costs in mind and verify with Xcel energy. It will affect your bottom line. Based on the (admittedly crappy) Zillow comps map, it would seem that you are potentially buying the white elephant in the neighborhood. Never buy the most expensive house in the area. Buy the way cheaper house and upgrade to make it fit the market. And yet while saying that...... this is a very old house and looks like (at least from a pulling permits POV) the upgrades and renovations are far in the past. If you intend to do upgrades, the second you open a wall or ceiling, that area is no longer grandfathered and must be brought to code. Upgrading the house, just from the standpoint of electrical outlets etc can run many, many thousands or 10's of thousands to complete. Bring in a good contractor and get firm estimates prior to closing this transaction.

Also keep in mind that while the realtor may be competent and honest in her evaluation of this being a good deal, she stands to make a $12,000 commission upon the deal closing so she is not a disinterested 3rd party. She definitely has a financial motive to want you to purchase this property.

Your desired rental price after renovation seems high....simply based on the percentage increase from where it currently stands. Look at Craigslist etc and see where similar rooms are renting in the area. That may be totally reasonable with updates but generally, the neighborhood and amount of square footage is going to be a huge factor in what you can get for it.