All Forum Posts by: David Dachtera

@Christopher Pearson,

Purely my opinion ...

You'd be better of getting educated yourself. Another poster mentioned $3K / mo. That would pay for your education in just over seven months, and probably save you ten or more times that by knowing how to avoid newbie mistakes.

Then, when you go to REIAs and other investor groups you'll be equipped to recognize who is doing it right and who is attending the School of Hard Knocks (most expensive education there is).

My $0.02 ...

Hello,

Ok, I'm familiar with DSCR - Debt Service Coverage Ratio - as a lending criterion. It now seems to also be a new type of loan product.

Can you provide a description of a DSCR loan and how it differs from other loan products? From what you posted, it looks like it's based on the property's income rather than the owner's income.

I'm thinking it's a way of saying, "Cash offers only" without saying as much. If it doesn't appraise, a lender might balk. 

I'd probably see about adding a replacement contingency stating that if the property doesn't appraise for the asking or offer price (which ever is less), the offer is automatically lowered to match the appraisal.

My $0.02 ...

Remember that Home ("Mortgage") Loans have "shopping windows" - multiple hard pulls within 30 days (I believe) are "deduplicated" to a single inquiry. 

@Dan H.,

You seem to have contradicted yourself.

"the trend of appreciating markets out performing cash flow markets goes back decades, but it does not imply this trend will continue going forward"

Does that contradict or match the definition of "speculation"?

@Greg Scott,

Going after appreciation is not investing - it's speculating (gambling).

@Ross Kline,

For people starting out with no REI education, yes - losses are quite common. Even some BP Podcasters tell stories about the money they lost on their first deals. Some of them could have paid for their education four or five times with their financial losses and not only could have avoided those losses but could actually have profited enough to pay off their education with their first deal.

"Learn by doing" and "School of Hard Knocks" are by far the most expensive education out there.

My $0.02...

Hire an attorney to find out how it can be done where the property is.

Basically, there are two primary ways:

- You take title. The seller carries the note on the property and records the lien. Done properly, the seller can cash that note out by selling it on the secondary market. I know of at least two note buyers.

- Contract for Deed - you make payments to the seller as spelled out in the contract. Seller retains title until the terms of the contract are fulfilled.

Any good Real Estate attorney can help you with either, or suggest other possible options. 

Another possibility might be Lease Option. However, some states are cracking down on that thanx to the CFPB.

My $0.02 ...

Should be a no-brainer - ask the code inspector to review it.

@Shannon Smith,

I have to go with those who say to hang on to your cash reserves.

My suggestion would be to explore rent arbitrage - that is, rent the house from the current owner with the understanding that you will be STR-ing it out. Then, use your cash for furnishings (much less then $75,000).

It's important to understand that STR is not real estate investing, it's the hospitality industry and while real estate is a major component, your primary focus will be on your guests and their experience while staying in your property. It helps to have experience in hotel / motel management and housekeeping / sanitation. It's a 24x7 job unless you can afford to hire out (delegate) some responsibilities.

My upstairs neighbor is STR-ing his portion of a 2 bedroom, 1 bath split-level house which has been duplexed. I live in the lower level. He's learning some hard lessons about the business as you read this. He is also doing rent arbitrage - he has the same landlord (property manager) I have.

My $0.02 ...