All Forum Posts by: Cassi Justiz

One thing to keep in mind is that most 1031 exchanges are pretty strict on occupancy requirements. You generally are not allowed to live in a property if you purchased it using a 1031 exchange. 

Is that $50k considering closing costs and/or Realtor fees? Also, is the house you are in going to cashflow when you move out of it? I personally would rather keep a cashflowing (or future cashflowing) house that is building up equity that quickly than try to cash out after a few months. 

With that much equity, could you pull out a HELOC or other line of credit to fund some of the next purchase?

A lot of things can change over a few years. I wouldn't buy in a college area based off your daughter's intent to go there until she's actually accepted into the school. There are a lot of pros to buying in a college town, but you need to make sure it would make sense regardless of your daughter's college choice. Do you want to self manage or have a property manager? Would you invest in the area if your daughter had NO desire to move there?

Look into the actual returns in the area. Generally speaking, college rentals require a little more hand holding than traditional single family rentals. You also have more turn-over and can have more maintenance. You also need to consider HOA dues and requirements. Keep digging and asking questions to see if this is the right fit!

If you purchase a home in cash, you have a lot of options. Delayed financing is a good one, but generally the interest rates are a bit higher and the loan/value limits are a bit lower. My experience has been that you have a fairly short window (I don't remember the specifics) to get this done. 

There are also HELOCS or cash out refinancing options. Definitely talk to some lenders to clarify what options are available to you. Generally, as long as you can qualify for the loans, you should be able to take a mortgage out anytime! 

FHA offers are absolutely weaker than a conventional offer. FHA is more picky about the general condition of the home and if anything comes back as a required appraisal requirement, the seller has to make the repairs. It's usually not a big deal, but in a market with cash and conventional offers it's an extra step that many sellers (and listing agents) try to avoid.

Check with your local lenders to see if there are any conventional 3% down programs in your area. We have a few local lenders in my area that have 3% conventional programs. 

Generally sellers are not as concerned about the down payment amount as they are with ability to close and total net.  If comparing two conventional offers a 305k offer with 5% down is usually more competitive than a 300k offer with 15% down (assuming similar terms). If you are willing to do appraisal gap coverage and show proof of funds to cover an appraisal shortage, then the actual down payment amount shouldn't matter to most sellers. 

I'm seeing a lot of 1031 exchanges coming into the Midwest. If you end up trying to sell, I would look for a market that has more favorable returns than the market you are selling in.  (Or even switching it up to a more favorable asset class, neighborhood, etc). 

It's definitely a daunting timeline, but totally do-able as long as you are prepared and actively trying. On the agent side, I make sure that I know the deadline dates and start making offers on day 1 to get properties locked up. When I have a buyer in a 1031 deadline, we're offering on multiple properties a week (sometimes per day) until we have the appropriate number in escrow. Most of my buyers have pretty tight criteria, so anything that comes on the market that meets the criteria gets an offer. An "inflated" 200k turn-key property in the Midwest is usually still going to cashflow better than some of the crazy prices that you see condos/townhouses on the coasts. 

What are your long term goals?  

The market in OKC right now is tough to find rehab deals with equity unless you are doing your own marketing. 

When you say the home in SC is minimal cashflow, what kind of returns are you currently getting? I would evaluate it based on what the returns in that market provide vs what you could get in OKC (or another similar market). If it's low maintenance and cashflowing, it may be worth keeping as a good first investment. I had a similar situation with my former primary residence when I moved to OKC. After selling I'd have about 30-40k of equity. After evaluating ALL the options, I decided to keep it as a rental and use it as a starting point for my portfolio. 

I'd recommend checking into some different coaches and their strategies. A lot of people still cold call, but it's never been a strategy that I was interested in. Some people also do really well with open houses. My brokerage focuses more on building relationships and sphere of influence for lead gen.

There are a million gurus that will sell you on a coaching method, but you can learn plenty from podcasts/youtube and books. You can also look into stuff like The Millionaire Real Estate Agent. 

One thing that is important to realize about being a realtor is that you will be considered "self-employed." That means that you will not be able to qualify for a conventional loan again for at least 2-3 years depending on your real estate income. 

I'd recommend taking the cash that you are accumulating to buy a primary and as many rentals as you can with conventional financing while you have the W2 job. 

Getting a license in Oklahoma is pretty painless. If you think you might want to be a realtor, I'd recommend getting the license while you are still working your W2. Most agents don't break the 30k mark for at least a year in the business, so it could take a while to build up to your income level again.

You'd probably be better off getting a commercial loan rather than a stated income loan. Also if you have an IRA or 401k, you could pull from that at potentially a better rate and be able to do an "all cash" offer on the 2nd property as well.

Do you already have the new property under contract? If so, it might make sense to really focus your efforts on finding a second property in the same general area. That will allow you to utilize the same property manager, title co, etc and it can be a little more efficient. I'm not sure which suburb of OKC you are looking in, but most of the 'burbs around here have really strong rental markets. 

Thank you @Tracy Streich!