All Forum Posts by: Cassi Justiz

Your contingency will really depend on how the offer is written. Typically what I see is that a VA appraiser will say something like appraised value is x amount and contingent upon the following repairs being completed. The loan can not fund until appraisal required repairs are completed and the appraiser goes back out to verify.

I've seen them call out roof repairs, foundation repairs, broken windows, chipping exterior paint, wood rot, etc. In your scenario, I'd expect them to require roof repairs, siding repairs, and possibly window repairs/replacement. They typically will not look under the floor boards or in attics or dig too far into mechanical stuff as long as the systems are functioning. 

I would say it's a pretty standard question from any seller regardless of off market or on market. Most people want to know where earnest money will be held and if they will be entitled to it should the buyer back out. In my area, we almost always have earnest money deposited at a title company. I'm sure there are more details, but it sounds like he just wants to make sure everything is legit. There is a big difference from a title company holding earnest money funds in a secured account vs an individual person holding those funds. 

A better way to answer his question may have been something like this "Once our contract is executed with the end buyer, their earnest money funds will be deposited with the title company and held in their escrow account." In our area, it's common for the wholesaler to start title work as soon as the contract is executed and have a specific title branch that they use. 

Hey @Account Closed, 

Congratulations on saving up 100k and joining BP! Those are both great places to start!

There are a ton of options for your first investment property. I think the easiest way to get started is a  turn-key property. There are plenty of markets in the Midwest where you can pick up sub 200k properties that are move in ready and will provide positive cashflow. With a conventional loan, you should be able to net at least a couple hundred dollars a month after all expenses. 

Since you are in the construction industry, you may be a good fit for BRRR type deals. For BRRR deals, I'd recommend staying closer to home rather than trying to coordinate that from out of state. It's possible to do this from out of state, but not the easiest process.

While you are learning about the different options, try to get plugged in with your local investor community. Find out what other investors are doing and get advice from them. You can see what works/what doesn't work and most investors are happy to share their resources. 

Good luck! 

I have a clause in my lease that after the first 2 weeks, tenants are responsible for additional pest control. If it's a one off request, I might send someone out but I do not do regular sprayings. Does your lease have any provisions about pest control? You are bound by whatever your lease states, but if it doesn't have specifics then you have a little bit of flexibility. 

If I were in that situation (and you are in an area with high rental demand) I'd lay out the facts and what I was willing to do. If that isn't acceptable to them, I'd let the tenants out of their lease. I would tell the tenants exactly what the pest control company reported. I'd let them know what you will/won't do for pest control (quarterly or semi-annual treatment, but no in between sprayings, etc) and what they are welcome to do at their own expense (monthly sprayings, bi-weekly sprayings, etc). If that's not acceptable to them, I would tell them that they are welcome to break their lease at no additional cost to find a home that is a better fit for them. Once you set the expectations and put some ownership back on them, they'll either calm down or take up your offer to leave. 

Hey @Adrian Gatlin, 
Do you have much equity in the first home that you bought with the VA loan? If so, you might be able to refinance or do a HELOC.

30k is a good start for a down payment on a lower price point property. I'm not sure if there are areas near you with 120k properties, but if so you could get a conventional loan. Until you figure out what direction you want to go, just keep saving and building reserves. Congratulations on the second house! That's a big accomplishment. 

I just stayed in an Airbnb that was ran as a B&B. It was kind of the best of both worlds. They still offered homemade breakfast, it was just at your leisure and stocked in your room. The room had a mini fridge, coffee maker, toaster and microwave. They had frozen waffles in the freezer, quiche in the fridge, muffins, fruit, cereal, oatmeal, milk and juice, butter, jam, etc. It was a great spread and was a little something extra that made me choose to stay there vs a traditional STR.

I looked into Pen Fed as they were one of the few national lenders that would do a HELOC and take a second lien position on an investment property. They were only willing to loan up to 70% of appraised value including current mortgage amounts. I ended up not doing the HELOC because the loan amount wasn't going to be worthwhile.

I can't tell you if it's worthwhile or not, but I can give you a bit of info. 

- Most lenders will not allow a HELOC on a property that needs substantial work. If you plan to use a loan for the rehab portion, it would likely need to be a personal loan and not tied to this specific house.
-6 months is pretty standard for seasoning for a cash out refinance. Some lenders require as long as a year. Commercial lenders will have different policies but it's always good to plan on a 6 month seasoning period.

How confident are you in your rehab numbers and ARV? If you can legitimately get $400/month with only leaving $5k in the deal, that is solid. But that seems like a really low price on a 70k ARV property that only needs 20k of work.

Would it make sense to add your mother to the loan as an owner occupant? It may be a win/win situation for both of you. You would be able to qualify for a lower downpayment amount and lower interest rate if someone on the loan is occupying the property. She could pay her rent portion to you and you would be responsible to make the payments and carry insurance. 

I've had to walk tenants through some basic home maintenance situations as well. Many of these tenants (especially in student housing). I do know of some landlords that do a "tenant talk" when new people move in that cover basic home maintenance items. I've played around with the idea of adopting this for some of my less experienced renters.