All Forum Posts by: Bryant Jaske-Moser

@Terrance Teague thank you for the advice, and yes I agree. Make sure it cash flows. 

We've rented it out as a mid term for almost a year before choose to switch to long term. Things have been SUPER smooth for several months. 

#lovinrealestate. 

@Joe Villeneuve my suggestion is not irresponsible. But maybe I misunderstood the terms of the deal. 
#1. I'm under the impression Grandma offered to lend 100% of the purchase price.  If I misunderstood and grandma is ONLY lending the down payment, then I agree with Joe. That's irresponsible, don't do it because that is over leveraging. 

If I understood correctly, and Grandma is offering to finance 100% of the cost, then as I said ... get people in with a lease ... track all income/expenses and claim it on you taxes (which is a must), then go to a bank after 2 years or more of tax returns to get a loan that pays off grandma's loan.  My suggestion is to get around the W-2 issue. 

#2- have you heard of DSCR loans? They look at your credit and the potential income of the property instead of your W-2. Instead of borrowing from grandma you could look at this as an option. Or you can borrow some from grandma to help with DP, but I don't recommend it. I only recommend accepting the loan if it's for 100% of property cost (minus your down payment), so you have 1 loan to manage at a time, you can more easily pay down the principal, and at the end of the loan term you can get that first bank loan to take care of the balloon payment to grandma.

#3 do you know how to financially plan for expenses?  "Rule of thumb" changes based on property type (new vs old vs rhab). If it's a new build, keep 1% of purchase price is cash reserves, account for monthly principle/interest payments (aka PI), 30% of the monthly rent should be added to your cash reserves to cover future expenses/problems/taxes/property management. 
Some people might say 20% to cash reserves, but instead of PI, they account for PITI which is principle/interet/taxes/insurance.
If you buy an older home, assume you need a lot more in cash reserves. Being young (and I assume inexperienced in construction/rehabs) I would suggest looking for a deal on a new build. 

Whatever you do Ethan, don't over borrow or over leverage the property.  Whatever you save, before signing a contract or paying a DP, ensure you keep a certain amount of money in cash reserves to cover unexpected expenses. 

***I may be new at real estate, but I am not new to investments/risk management. Everyone has different risk tolerances, but there is a difference between risk and irresponsibility; which is what I assume Joe was getting at.  So don't over leverage, and keep cash reserves.  Some people say keep more cash reserves that my recommendation. I feel my recommendation is very conservative for a new build. 

@Joe Villeneuve

Thank you for your feed back. I was not saying it's easy. I was not saying it was the best thing to do. I said it was RISKY.  However, Ethan expressed concern that he won't have the 2 years of W-2 income because he has been working odd jobs. Having tenants on a lease over 2 or more years counts for history of income just like a W-2. I know because I've done it. 

@Bruce Lynn

We are torn. Not sure if we want to buy new or a rehab from R2R. 
Or just buy a new home on the out skirts of DFW and lease it on our own.  

I'm leaning toward working with an agent who can help us get a tenant in there right after buying. 

We have down payment ready, waiting to save a little more cash for reserves, and we are pre-qualified with a Leander (est apr 7.25% with a credit score of 800). 
I'm also pretty conservative with my numbers (maybe too conservative) and thinking I need to hold about 30% of rent for Cap-X, gen. maintenance and taxes then pay PI.

Budget: less than $300k purchase price, 25% down, and approved for more but going higher would slow my ability to scale. 

Hi Ethan,

I'm a total noobie. I get how you don't want to take advantage of a family member, and I get not wanting to fail. BUT 

If you are going to rent out the property, make sure you have a lease (short term, mid term, or long term), and ensure your balloon payment is about 3 years or more after the start of the lease.  This helps ensure you have cash flow to pay down the principle. With 2 years or more of renters on leases you would claim that on your tax returns which will count the same as W-2 income  

At the end of the lease, you can refinance and take the cash out to pay off your grandmother. It's like the BRRR method, but it's riskier because you are banking on regular appreciation instead of forced appreciation. This is also a little more passive, and requires you to buy in an area likely to grow so look at job growth, unemployment rates, etc.

just my thoughts hope it helps. 

Hello all!  I'm a long-time listener to the Real Estate Rookie Podcast and YouTube channel. For about 4-5 years, I've been trying to convince my wife that we needed to move (so we could rent out our house) and we finally did it.  We have that one rental that gives us easy cash flow  and we are looking to buy another rental.  We just keep getting stuck in analysis paralysis.  I'm super busy with my work, and my wife is a stay at home mom and manages our single unit rental property.  I hear about "the mid west" being a great place to buy, but we also see great deals on houses here in Dallas (though property taxes are steep). 

I'm curious to know where others are investing and how you selected your market to invest.  Any/All help would be SO appreciated!