All Forum Posts by: David T.

I have already read that.  I am just looking for advice on what more experienced investors would do.

My personal story is that I just purchased my first home the beginning of this year. I bought a duplex via a VA no money down loan. Out of pocket I had about $1000 for earnest money and inspections. My realtor wrote the offer such that I got money back on close. I was unable to receive all of the money back I would have gotten legally so I ended up buying my rate down 1 point. After that I got about $3,000 back in checks.

My current goal is to wait until I have been here a little over a year. This will establish the experience in property management required to use the VA loan to buy a 3 or 4 unit home.

I will then use my second tier entitlement VA loan to purchase said 3 or 4 unit with again no money down.

After I have lived there a year or so I intend on using an FHA 3.5% loan to purchase the single family home I want to live in for good. Obviously the goal is to ensure the rents from the first 2 homes will cover all 3 mortgages.

Once that was done I would bank enough of my cash flow to cover expenditures that may arise and then use the excess to pay down the homes 1 by 1.  Once I had enough equity I would take out an equity line of credit to start in on commercial investments.  I have a buddy who does 2-3 flips a year and I could buy in to his deals and have the money work for me until I had enough experience and then I figured I would trade the first 2 homes in for a small 18-30 unit apartment. 

However with the possibility of $150,000 cash at the start I am trying to broaden my view to other possible endeavors.  If I were to get the money today I would probably just invest with my buddy for awhile and take it from there.

From my readings on this site it is clear that the main goal is to position yourself into using other peoples money to become a real estate mogul.

I'm just curious what strategy you would recommend if you came into $150,000 tax free cash?

For the sake of argument you have no debt to pay off other than a single mortgage?

Would you pay off that mortgage and use an equity line of credit to build off of?  Keep the mortgage as you are writing off interest?

Use it all for flipping?  Get into commercial properties by finding an apartment?

@Colleen F.  The garage is detached.  There is currently a button they can press as they walk out of the garage to close it, and also a keypad with a 4 digit code to open/close it inside the house as they leave/come in by the door.   I think the issue is they dont want to get out of their car when leaving to close it, though they leave it open when they pull in and park as well.

I will look into intuit payment.  Is that separate from Quickbooks?

Thank you for your input.

@Lee L.

It is possible that is why.  However there are 3 of them.  Not one of them is "assigned" to the garage spot and it appears to be a first come first server mentality in whatever arrangement they have with each other.  I am currently awaiting the new (3rd) tenants contact information to draw up a new month to month lease for them.  With that I was going to add an addendum for an additional deposit if they would like an actual opener and offer the ability for 3 openers to combat that.

I will look into self locking/closing doors.

As for the parking rights.  The lease states they have 1 garage spot, but currently does not specify the driveway, so I will make sure to add that in as well to the new lease. 

The lease reads that rent is due in full and no partial rents are accepted.  Which is what brought up my concern.  I had initially thought they would do 1 payment.  But as it is coming in 3rds I don't want to end up screwed if 1 decides not to pay.

I am looking into a few of the apps such as Cozy.co to switch them to that for payment.

Thank you for the response.

I appreciate the replies.

Not really stressing.  I'm not having any issues "getting along" with them.  I just feel it is a security issue for them leaving doors unlocked and the garage door open.  As for the parking other than when they left their friends car blocking the drive it isn't really an issue.  I am just curious as to any recourse I may have.  Do I need a lease addendum stating cars will be towed if no one is there to move them?

Like I said these are "quasi" issues.  Nothing I am really concerned about.  Just want to cover my bases.

@Devin Scott Thaks.  Typically if I didn't own the building I would call the landlord.  Which is now me lol.

@Franklin Romine  I am constantly looking.  =)

@Kevin Siedlecki I appreciate the reply.  I am aware that these are issues you deal with as a landlord.  I am soliciting advice and comments from those who have dealt with it.  If the advice is to just deal with it until it is an actual problem that's fine.  But to say I am not cut out for "house-hacking" because I am seeking input from experienced landlords seems a bit crass.  I have lived in shared housing/apartments the majority of my life.  I am aware that things like this occur.  Typically I would go to the landlord and request he/she handle it.  As I am now the landlord I am just looking for advice and guidance.  I am not complaining about it. 

1.) With 1+ year(s) of experience in property management the banks will.

2.) Get a good realtor. My buddies wife wrote the offer with closings costs and 4% concessions written in. Some sellers may not accept that offer. But once the offer is accepted you can work with your loan officer on the disbursement of those concessions. The VA reviewer can help the underwriter/loan officer figure it out.

3.) You should consider getting a VA rating. Anything that happened in service can be claimed. If you hurt your knee or whatever. Just get it all document and get rated at 0% so if in the future anything from service gives you problems you are covered for it.

5.) Actually I believe the rule is that the second loan must be OVER $144,000.  I do not believe the initial loan is of any consequence other than figuring out your remaining eligibility.  But I don't have a lot of experience with it.  My brothers first home was a new construction for $98,000.  His second tier was used on a ~20 year old home for $235,000.

So I just purchased my first home in April and it is a duplex.  The tenants have thus far paid on time.  However they have been quasi-problem tenants.  So I am just looking for some thoughts/advice from the seasoned pro's here at BP.

1.) The NEVER lock the common entrance door despite numerous requests and a sticky note left on the garage door opener that they do so.

2.) The garage door didn't close when I purchased the home.  The driveway is tight and I am guessing the previous tenants hit the track/wall and knocked it out of whack.  I have since fixed it and replaced the opener.  They consistently leave the garage door open all day when they leave despite repeated request to keep it closed when they are not parking or leaving.  And also left the aforementioned sticky note.

3.) Parking is an issue in my area.  Some houses don't have drives.  Most are single car.  My place fits 2 cars in the garage.  However if a 3rd car is in the drive its a game of shuffle.  They have "friends" leave their car in the drive.  As of yet it hasn't been an issue other than blocking my getting into the garage with my car.  But if it happens when my car is in the garage what is my recourse?  Can I have it towed or do I need some sort of lease addendum specifying this is not acceptable?

4.) The unit is a 3 bedroom.  I inherited the tenants with 1 month left on their lease.  1 of the girls moved out at the end of the lease.  The other 2 stayed and paid the full rent for 2 months on their own and have now found a 3rd roommate.  Thus far it hasn't been an issue however they requested to maintain the same payment arrangement as the previous landlord which is via paypal.  My concern is that the rent comes in at different times.  ie 1 will pay on the 1st another the 2nd.  Should I force them to give me a lump sum? 

Thanks in advance for any insight.

Just a couple of points/thoughts on your plan.

1.) It may be lender specific, but I was told the VA won't allow you to count the rental incomes of the 3 other units towards how much you can afford without 1+ years of documented property management experience. Also for anything over a 2 unit multi-family you will be required to have 6 months worth of expenses in the bank for approval.

2.) 0% down is true.  However you will still have expenses.  Earnest Money.  Home Inspections(Seller\Bank must pay Pest inspection).  Any money out of your pocket however can be recouped at closing.

3.) If you have a VA disability rating you can have the funding fee waived.

4.) The VA allows the seller to pay all closing costs and up to 4% in additional "concessions". These concessions can be paid directly to you for any cash you already put in. Above the cash you put in you cannot receive it directly. However it can be used to pay off student loans/credit cards/car loans paid directly to the creditor. And I believe there is a way to have things like new appliances covered as well.

5.) Why are you refinancing property 1? VA Loans have something called Second Tier Entitlement. Lets say you are purchasing in a county where the VA cap is $417,000. You buy your first home which is a duplex for $125,000. After that you can buy a second home for up to the difference. So you rack up your 1+ year of property management experience while living in the duplex and having the other unit pay the mortgage. Maybe banking a little extra for future REI. After that year you go find a 4-plex for up to $291,000. You can again do a no money down loan. Use 75% of the current duplex as well as 75% of the proposed 4-plex rental as qualifying income. You should have been able to save up the 6 months expenses for both by not having to pay rent for that year. And you now have 2 multi-family investments with close to 0 out of pocket under VA loans.

6.) After another year to 18 months you can then use an FHA loan with 3.5% down to buy a 3rd property.

I wish I had known about the paying off of credit card debt when I purchased my home.  My realtor got me more back in concessions they I could actually get back.  I ended up using some of it to buy down my rate.  I would have much rather the 2k paid off CC then buying points.  However it is my understanding that I can write those points off on my taxes.  So once I do that Ill use the refund to pay off said cc.

Congrats!! I wish I would have known about this myself. I just used a VA loan to buy my first home. I purchased a duplex. I did not have a funding fee as I qualified to have that waved. And my realtor was amazing in getting me the 4% in closing costs. However the mortgage company told me that I couldn't get any money back that I didn't put in. So I was told outside of my earnest money I would have to buy my rate down or give the money back. I wish I would have known about the debt relief because I would have totally used it for that instead.

Now I know for when I use my second tier VA entitlement to upgrade to a 3/4 suite unit to use it in this manner.