All Forum Posts by: Phillip Bicker

@Robert Herrera Contacting the owner now to see if they would consider - they are out of the country for the Holidays, so your answer might take a day or two. I'll let you know as soon as I hear back!

I strongly recommend Mike Hogan who is an MBA and an experienced agent with investors. He is one of, if not the very best, Realtor in the area!! 

804-503-0811

There are some excellent tools and resources to use to do your analysis. Try the bigger pockets calculators and check out some of the podcasts. They will intrude you to many "rules of thumb" such as the 2%, 70%, and 50% rules (rents at 2% of asking price, pay 70% of fair market value AFTER the repair costs, and that expenses tend to total about 50% of rents. 

What I personally do is buy properties that can net me at least $200-300 a month AFTER all expenses including debt service (Principal, Interest), Taxes, Insurance, Property Management, 5-10% for general repairs/maintenance, and another 10% or so (depends on property type/price point) for a capex reserve to fix future issues. Hope this helps!

A few off-market deals that I can provide details for if interested. 

(1) $65k. 2 bed, 1 bath, 780 sq ft, 1 car detached garage. $600/month rent. Tenant there for 3 years, now month to month. 

(2) $75k. 3 bed, 1 bath, 1 car detached garage. $700/month rent. 7 years rented, but currently going through eviction. 

(3) $105k. 3 bed, 2 bath no garage. 1,100 sq ft. $800/month rent.Tenant there for 6 months and has 1 year lease.

@Austin Fox

You mentioned that you bought a $300k foreclosure. How did you come up with that $300k figure? Most likely, you used surrounding comps. Here are the ways you can value real estate: 1. comparative market analysis based on "the surrounding houses", 2. the replacement cost, or possibly 3. the income approach. The income approach is typically only used for large multi-unit properties >4 units where you use the market cap rate for the type of property you are valuing. The replacement costs are typically higher than the sales comparison approach or is simply not applicable due to no land being available to purchase near the subject property. 

So why is sales comparison valid? Think about it this way - if there are 4 other similar homes around yours that are selling for $25k less, the buyers will be much more likely to buy those homes and yours would not sell. If there are 4 homes that are all $25k more than your home and then they see yours (as long as its in similar condition), they will likely buy yours after seeing the more expensive properties. So make sure that the "surrounding properties" are similar in size (both square footage and number of beds/baths) and then you can use these to help see the value of your property. You will likely need to make some adjustments to see the value of your home as these homes are likely to be different in some aspect (larger, smaller, more/less beds, corner lot, ect).

Hope this helps

@Cameron Zobrist Unfortunately, yes, this does change being able to get this primary occupancy loan as VA loan rules require the borrower to certify they will use the property as their primary residence. No investment properties or summer homes may be purchased with a VA loan.

I haven't personally helped a client this product yet, but it would be worth talking to a lender about if you would qualify to purchase the property upfront as your primary residence:

A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan.

According to the VA's official site, "The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL, you need only certify that you previously occupied it."

So, if you buy the home intending to live there and later find out that you will need to rent the home, you may be able to refinance through the VA with this IRRRL and still have 0% down. You will need to talk to a lender to find out how long you need to occupy the home to begin with and how the IRRRL works. It looks like the refi would be zero out of pocket - check out the VA's site:

https://www.benefits.va.gov/homeloans/irrrl.asp

Again, the most important items: you need to be able to qualify up front with your income and credit (or a co-signer with VA eligibility), you must originally certify and sign that you are intending to occupy the property, you must occupy the property for some time (ask the lender how long this may be), and then you may be able to refi with this product.... Just thinking outside the box!! Hope this helps

Hope that helps (I double posted and can't delete, but I at least edited it to make it shorter...)

@Cameron Zobrist Congratulations on getting into the AFA! 

I agree that it will be very hard to invest $4,000. However, I just confirmed this with my lender - being an AFA student, you are considered active military and would be qualified for a VA loan that can get you into a single family home with 0% down or even a multi-unit property. There are a few things I should mention: In order to qualify, you would need to have income enough to qualify and good credit. If you do not have enough income to qualify (which I would guess is the case with you being a student), you can use a co-signer IF they are also VA eligible.

Please remember that there are also closing costs and you should have a reserve saved if there are any necessary repairs down the road. Sometimes you can re-negotiate price to have the seller cover the closing costs, but this can be discussed further if you like. 

So the very best scenario would be to buy a multi-unit (duplex, triplex, 4plex) in the Springs with your VA benefits (likely with a VA co-signer), and you would essentially live for free or at least very cheaply by renting out the other units, while building equity in the property and gaining some great landlord experience.

My lender also has a 0 down program for an owner-occupied single family home (not mult-unit) if you have a co-signer but they are not VA eligible. This way, you would be spending about the same every month for housing, but would be spending this money on building your equity as compared to paying a landlord (and while realizing any additional appreciation on the property).

Of course all of this assumes that you would be living off-campus and at the property you are buying. It would be extremely difficult to come by any non owner-occupied loans where you would put down less than 20 or even 25% of the purchase price as downpayment. 

Hope this helps - let me know if you have any questions.

Tenant lease in place through 8/8/2018. Property is in pre-foreclosure, and selling "as is". Property in great condition but does have some potential roof damage due to hail. Please message me for more info or for pictures. 

The BRRR strategy and selling you home to buy a home in a new area both accomplish being able to use your equity as a source of down payment for the next rental. When you refinance with the BRRR strategy, you should remember that you will not be able to get out more than 80% or so of the total market value of the home. If you are able to cash flow with the new mortgage (after PITI, vacancy, capex, and prop mgt fees) and get additional money out, this is a great option. A out of state investments can be difficul to manage, even w good property management, but is definitely possible!

As far as apartment vs house hacking a multiunit- I highly recommend a multiunit. In the Springs (a market I service) you are able to live for free if you purchase a triplex or fourplex and rent out the other units. With the higher price point you also build up more equity over time than you would with an apartment. I am a huge fan of multi units with owner occupied or not as the per unit cost is substantially less and rents do not decrease as much compared to a single condo thereby greatly increasing your roi. 

As for investing in condos, you'll hear people going either way. All condos have HOAs and this comes with some risks of special assessments, power hungry board members, poor management, ect. The HOA also cuts into your returns - however I know investors that focus on condos and/or townhomes that do well. There is less to worry about (no lawn maintenance, worries about roof as long as it's correctly insured, liability with snow removal, ect. I would prefer a single family home to a condo and of course you now know I strongly recommend multi units if your current situation allow some for that.

Colorado Springs is a great market for house hacking / buy and hold investing right now as prices are still MUCH lower than Denver Metro and rental rates are high (and rentals are in high demand, renting quickly!!). Let me know if you need any help!