All Forum Posts by: Bill Devola

@Lelith Walker makes some good points about the difficulties going out of state.  I've had similar experiences with people knowing we are out of state and not giving us a fair shake.  Even the utility companies!  Our water bills and electric bills always end up being really high, and no one can explain it!  LOL.  

CA is the number one state when it comes to "out of state" investors, and from my experience its not even close.  I think its a reasonable and justified response, but its a lot of work to get set up across state lines.  You have to learn the market, find a realtor, and find contractors.  But the markets will be better.  Everyone wants to invest here in the NYC area and in Cali, and there's big money to boot.  But some of the stuff off the beaten path will give a nice return (but ALWAYS comes with risks all its own). 

Lastly, in regards to finance, I would stay away from hard money if you have that much down.  I figure at "typical rates" hard money costs about 10% of the acquisition price + repair costs for a 6-8 month hold.  So at a $700K purchase and $100K rehab, hard money costs about $80K.  Thats just too much of the profit.  My guess is you're trying to make about $60K-$80K.  Why should a money partner make as much as you when you're brining about 30% to the table (what I figure you roughly need to get a hard money loan when all is said and done with fees, points, escrows, etc).  

I would go for a conventional loan.  Look to put down in the 35% range and keep the balance for repairs and finance the repairs yourself.  Figure to pay (and I have done the math on this, just ballparking) about 2%-3% of acquisition cost on loan fees and interest.  So on a $700K house thats like $15K-$20K.  Hopefully that $60K you save makes more deals workable.  But from what I've seen southern CA is a monster to try to invest in due to the competition.  

Hate to say it Chris, but sometimes peoples goals and ideas just don't match up.  The entrepreneurial mindset is a different one.  My suggestion in this situation would have been to show her a deal on paper and walk her through and see if that changed her mind.  But you've already bought a house and are in the thick of it.  

Is she not a numbers person?  I've seen people post to go so far as loosing the girl friend is she's not board with investing.  Thats extreme.  But the truth is, one of you will have to change your life outlook.  The world you are and want to be involved in is too intrusive to be something you and her disagree on in principle.   If its your collection of model train sets, you work around it.  If your life goals include hundred thousand dollar purchases and tens of thousands in repair, both people have to be on board.  Thats not a small disagreement over whether or not you like lime in your guacamole.   Its serious. 

Wish I had actual advice and strategies.  Only thing I can think of as a positive constructive step is sitting down and doing math.  Like, "hey honey, I was just thinking about money, and what I/you earn in salary versus the rent from (pick some house/unit/bldg) and its interesting because when I add up our...".   Maybe you've tried this to no success already, but sometimes people need to hear the same thing presented in different ways or multiple times in a VERY NON CONFRONTATIONAL or argumentative manner.  

Other than making a typo, screwing something up, and needing to take months of your life to correct it?  No.   LOL

Its not engineering a defense system.  It can be done by a lay person.  I've done it before.  But for $150 bucks I'm sure you can find a title company to draft one for you.  I'd have questions about the rest of your deal.  

Also, each county has its own rules on which stamps, affidavits, and other documents might be needed to record the deed.  Leave one of these out, and you'll get rejected at recording.  You can call up the recorders office and ask what they require.  One thing you have going for you:  you're not paying for the property, so the owner can't exactly dupe you out of money!

@Lilly S.  You ask a difficult question that is a little like looking into a crystal ball.  Hoboken is hot now.  So are many areas in Jersey City.  But from my point of view, Hoboken is more "mature", meaning its not revitalizing.  Its value will appreciate, and probably commensurate with supply/demand in manhattan.  Basically, I wouldn't bet on values going up by 20% over then next 5 years.  

That said, I think most people that hold real estate long term look back on the decision and say it was a good one.  Not like 1-2-3 years, but 10 years +.  This is a condo, so you know maintenance will be low.  Its Hoboken so you'll get a good class of renter/tenant. 

My only advice is if you're going to rent it and lose that $400/mo, don't go in with the expectation of huge appreciation.  If/When it comes, its a bonus.  

@Chris Clothier takes a very strong and non-nuanced stance!  LOL.  I like the forcefullness of the post.  

I agree with the general sentiment of this post, but I think he's a bit black and white in analysis.  We can speak like adults and say that is hard for a $30K investment in a SF (even harder for a MF) home to be good, for almost any strategy.  Even if its a flip your facing issues right from the jump at that price level.  

As a rental you've still got negatives right off the bat (which I won't go into).  But I think there are potential positives as well.  Your monthly return being one of them.  Do the positives outweigh the negatives?  For most people in most situations, I doubt it.  But I know for certain that there are areas and people (usually people that live in the those areas) that have great investments they made for $30K.  

But if you're in the UK, you're gonna have a hard time navigating the ins and outs of $30K investments to make shrewd investments.  Even most in the US would.  So overall, I'm with Chris.  Just not as decisively.  Haha.  

Its not kosher.  More so not kosher for the worker than for you.  But its not kosher for either of you.   

Its like if your friend goes on a date with a girl and on the way out introduces you to her.  Your friend and her never go out again, but you start dating her.  It happens frequently, can cause some bad feelings, but ultimately no one involved committed a felony level offense.  

I know people that do this all the time.  Hire one of the "big guys", then make side deals with the workers to moonlight.   If the worker has his license and is openly soliciting work, he's too ambitious and qualified for his boss to keep him as an employee for long anyway.  Just depends on how you feel about meeting him the way you did.  No one can take you to task  you for working with him.  His boss wont like it though, and rightfully so. 

The risks are the same with any other contractor you hire.   Actually, a little less since you've seen his work first hand.  

@Russell Brazil sounds like he just gave you valuable advice in terms of tightening the value range on your condo.  I thought I would make a couple of other points that are important in a general sense, not just for this specifically:

To begin with, if this is a buy and hold (ie cash flowing) I wouldn't emphasize the ARV too much. Its nice to throw in and matters to a certain extent, but the monthly income generated is paramount. If on the other hand, its a potential flip you have, you can't price it without knowing the ARV. In this scenario, the rental cash flow is nice to know, but the ARV is the only thing that drives the acquisition price and your wholesale price.

Lastly, I'm not sure who made, or where the arbitrary "6 month" time frame came from, but as a RE Investor, you (should) know your market.  If its been stable the past 12 months or so, have your agent go back a little further to dig for comps.  If the market has increased 5% in the last 18 months, go back 18 months and do some rough math to get an idea of value.  But Russ is right:  don't comp condos to townhomes to multifam to .... etc.    Your asking for trouble doing that.  Going back further in time and extrapolating present day values is orders of magnitude easier and more reliable than comparing townhomes to condos.  

Sorry Peter, this is going to be a little harsh.  If you want good answers, you have to form a good post.  This is not a quality post.  You need to provide more info.  

To take some stabs at this, yes, you can purchase a property as a rental right from the get-go.  Alternatively, if you said this was going to be purchased as a primary residence, then rented it out, you won't have been the 1st person in the world to mislead a lender with regards to owner occupancy status, but this strategy has its risks.  

To decide between the two options, the following things matter:

your credit

condition of the house

your down payment

if you have a principal residence already

number of units in the house

In short, no one can offer you quality guidance without knowing these things. 

Hard money lenders usually loan for 6-12 month periods, so they aren't good for rentals.   If you don't have a mortgage in your name already, you can say its your personal residence then play your hand from there.  Portfolio lenders are another option, but you need a minimum of units and loan amount.  

Also, its difficult to guide you because your post is not very clear and doesn't contain alot of info.  Also, are you sure you're looking for creative financing?  Not sure I see that in the scenario.   

Answers from people in your state are probably going to be more helpful than mine as state to state varies so much in the process and legal nuance.  Nothing unexpected in that statement.  But here, I believe it has been made illegal to do something like this.  Its call "air hunting" I believe.  Its actually, as far as I know, only for tax certificate foreclosures.  

The point I'm making is this may not be legal.  It may very well be, but I'd guess that this behavior is recognized as undesirable for lienholders because no one will bid the properties at the auction because this sort of behavior discourages it.   But I'm speculating.  

Another avenue is to attend the sales, find someone who is clearly seasoned, strike up a convo, and see how they deal with the issue.