All Forum Posts by: Landon Elscott

One thing I've been looking at is doing a refi with another bank to cash out some of the equity if the numbers work.

I know USBank according to their website does fixed rate refis with no money down, no closing costs, and basically no fees beyond paying off the first lien by the originating bank.

Is there a minimum period I need to wait.

Yesterday, I just signed papers to accept a sellers offer of $36900 on a 2Bed/1Bath assessed at $58,000.

Already have the pre-approval, don't foresee any issues with inspections, and should be closed up before May 23rd. Since, I don't foresee any problems, I went ahead and just put a blurb out on a local "Housing Wanted" group on Facebook that I should have a place available sometime near June 1st for $650. I gave a few details, but nothing too specific about the actual property.

And my Facebook has been going nuts with messages. Originally, I wasn't going to allow pets, as the house is in very good condition - the sellers had to renovate after tenants destroyed parts and now they just want out of this particular house 2 hours from their office. Anyways, there is a HUGE demand for rentals that allow pets and since this backyard is completely fenced, people have already expressed interest in paying a premium for welcoming their dog.

So, the numbers:

Value: $58,000 (Assessed at, but probably wouldn't resale at that right now.)

Purchase Price: $36,900

Down Payment: $9225

Mortgage: $29000 (Closing, some repairs, etc.)

Expected Rent: $7800 annually

Probably closer to $8400 with pets

And I sorta think that might be a good niche to fill as if screened right, well behaved pets can be a cash cow.

Annual Mortgage: $2520

Taxes: $1200 annually

Insurance: $500 annually

Anyways, I literally get a new message every 1/2 hour inquiring about this upcoming property, and also have gotten like 15 messages asking if I have other properties available (3Bed or 1 Bed). At this point, I don't mind them thinking I have more than one property when this is my first, because it puts me in a good situation to always have inquiries and potential tenants on new properties. That, and I already set one inquiry up with another landlord and might get $50 referral if he passes. I'm sure that landlord has just as many queries, and maybe he doesn't need my referral at all - but if advertised a referral fee I'll see about taking advantage of that.

i will add though, from talking to the banker, she made this seem like a fixed rate balloon. I'll verify before its absolutely final. I can still see about changing it if it'll hurt me big time.

That's an in house commercial loan with a credit score of 720. Seems pretty typical from the various banks I've talked to. 5% for 20 year fixed rates and 6% in house balloon. Even prior to running credit scores, the banker said they usually around 6% in house, maybe lower if secondary market. My 30 year mortgage on my house is 3.625%.

I went with the commercial loan because it keeps it in house, I work directly with the lenders and its fast turn around. Seller demans closing within the next couple weeks and it couldnt happen that fast without staying in house - . Lastly, up front costs were estimated cheaper.

yea, and that's exactly the mindset I had to take.

Sometime I'll get back in one, but for now I'm just ready to take the plunge into investing. Hopefully in 10-20 years I'll look back and see a huge portfolio benefitting my family thanks to sacrificing some horsepower.

Well, that didn't pan out. The commercial lender I was working with really got my hopes up. The end result was denial. He was actually surprised because he wanted to just ref I immediately against the value of $60k if I was purchasing for $38000. Oh well.

But all is not lost, as quite opposite! I ended selling my Cobra Mustang for $15,000. Within the last month, the home I originally made an accepted offer on at $38000 dropped to $37000 listed. I've taken the money from the sell of my sports car to fund 25% down.

I've already got approval with a bank for 20 year amortization, 5 year balloon and 6%. Not only that, but the day before they accepted they had an open house and cleaned up the yard.

Should hopefully have it closed by June 1st or before AND just from a small blurb I put out on a local Looking For Rent Facebook group, I've already got a couple potentials lined up at $650 per month.

I don't know about Medford, but here in Central Iowa I know of 4 properties rented by the room.

These properties are part of a community housing program that a local mental health program has. The individuals living in the house have assistance needs, so they have a staff on site 24 hours. That said, each client has their own room at $250 but share a main bathroom, kitchen, and living room. Clients each have labelled kitchen cabinets and their own linen closet shelf.

Not only is is legal, but its highly profitable for the landlord the company leases their housing from. Its much easier to squeeze an extra $25 per room from 4 people than $100 from one family.

Thanks for all the responses.

To clarify, my parents aren't necessarily struggling financially. Well, let me rephrase that, around where we live they make well over the average income. My mother does some part time work and my dad is still employed full time. Based upon their income, they do not qualify for the vast majority of subsidized medical care or bill pay assistance. They also did not just choose to not purchase flood insurance, it was to their understanding not available to them because their community was not part of some flood protection program, but I really don't know the details.

To say my dad is not successful would be completely false, as he is very successful in comparison to the vast majority of our local population and I lived I privileged child hood - so it's not a matter specifically of my potential of earning for more income. Income wise they do very well, and had these medical issues never arose and had the flood never occurred they actually would have had a very good little nest egg. They still have a substantial retirement through the company he's employed by, but it appears it would not be advantageous to cash a chunk of it out to turn around and buy a house.

Also Jon, you're exactly right in terms of interest being money gone forever just as rent. I'm not exactly sure how much equity they had in their property, so I just threw a substantial number out there considering they've been home owners for 20 or so years.

Regardless, it's just an odd position for me to be in at 25 years old working on trying to secure a second house while meanwhile my parents are coping with losing their own. Granted, my objective is to better my life and it's not like I'm just purchasing the home because I can and because I enjoy excess in my life, but I can just sense a certain amount of depression when my dad comes to the realization that the home he worked so hard to build and save for is gone forever and he won't own a home for a few years while his son is - not literally, but seemingly in his mind - just buying up homes left and right.

That said, as sympathetic as I am to my parents feeling, I know they want me to succeed and at my core this is a business decision to better my finances! I know my deep down my dad understands that I'm not just buying a house because I can and he can't at the moment, but I do think that sounds like a really good idea to get him involved and make him feel like he's in this adventure with me.

Thanks again for all your replies!

Let me begin by stating I know deep down inside my dad is ridiculously proud of me and wants me to reach my dreams and potentials, but in light of a freak flood last summer that destroyed their home I can't help but feel guilty.

I've been wanting to buy rental property for 3 years or so, and finally found myself in a position it might just all work out. But in November my parents lost their home through "Deed in Lieu" after a freak flood created immense damages. Unfortunately, they didn't have flood insurance because at the time the community was not part of the national flood insurance program or something like that and the chance of flooding was considered very, very rare - not 7' worth in the basement!

Unfortunately, he's also been dealing with a brain tumor and after adding it all up, it just was not feasible to fix it all and they let the house go. It'll be another 3 years to qualify for USDA and they don't have 20% to buy much earlier because of medical bills.

Originally, I saw an opportunity to become a "straw buyer" and purchase a small house under rent to own contract until they could buy it off me, but my dad just didn't feel comfortable having his son responsible for his home and that I couldn't afford one of their needs anyways in the area even after I suggested selling my Cobra to fund the down payment - but then he felt guilty about me sacrificing my car.

Anyways, right now their having trouble processing the idea that they lost over $100,000 in payments from this foreclosure, that their going to be without a home of their own for awhile, and any home they buy is going to be a fraction of what they used to own based upon wanting it paid off before retirement. The only silver lining is that with less home maintenance yo attend to his health is improving - he's 53.

Meanwhile, I'm 25, own a home and in the midst of this am attempting to secure a second home. I know he understands I don't intend this as a slap in the face, but amidst their struggles I can't help but feel guilty for trying to achieve more...

I love my dad and I think I'm the man he wants me to be. I want to just pull the trigger on a good deal, manage the risk and perhaps succeed and not regret never trying, but in light of their situation i get the sense its emotionally a bad time but financially a good one for me.

Just wanted to get that off my chest. Anybody sympathize?

So, recently my wife and I made an offer on our first income producing property. It was something that we had been wanting to do for a long period of time, but in April of 2013 we had a baby and between medical bills, furniture, and all these "must have" toys, our down payment money was quickly eaten up and our dreams of purchasing a rental house seemed to be temporarily on hold. Don't get me wrong, having a daughter has been an overwhelming joy and I felt blessed my wife wasn't stereotypically suggesting for me to sell my beloved Mustang Cobra!

Then in November 2013, we drove by this cute little home and once again all these dreams of real estate investing came flooding back into my mind and I convinced myself I was simply going to sell my Mustang once spring rolled around to fund a down payment. But by February of 2014, with the cute little home still available and dropping in price, I decided to just contact a local banker and explain the situation.

To my amazement, the banker (he himself a landlord of 5 properties) was completely on board with the idea of going $0 money down, so long as I could get it for below 75% LTV. Ultimately, he said it'd have to pass an approval process beyond him, but based upon my existing net worth (roughly $25,000 at age 25 between our personal home equity, cars, etc) he wouldn't be surprised if it did work out.

Maybe this doesn't come to a surprise for some of you, but from what the real estate agent said, once they accepted our offer of 70% LTV ($38,500), and I told him my objective was to go no money down, he said the bank would probably just laugh at me - "they just don't do that stuff these days!" But as I explained, it was quite the opposite and the US Bank Small Business Loan Officer was actually very engaged and interested in my cash flow analysis, seemed extremely pleased with the purchase price, and said he thought it seemed like a pretty sound investment for me. Perhaps what surprised me most was that it wasn't just some small community bank or credit union humoring me.

Anyways, I submitted all my tax information and other paperwork today and should hear back sometime next week. Will keep you all informed.