All Forum Posts by: Vijaianand Thirunageswaram

@Jay Hinrichs valid point. I will continue to approach my banks and see how far I get. 

BTW, I like what you when investors wants to chat and pick your brain :-) I do similar think asking them to donate to my charity instead of going out for coffee or lunch. Some understand but not many.. They feel coffee is cheaper than donating to charity :-) 

@Jay Hinrichs Haha!! You are right, they do look for credit and personal guarantee tooo even with LLC 2 year tax return.

Are those banks in your state only or they do anywhere? I am trying with my local banks.. So far good response but lots of paper work.

@Huy Thai Good question and I was in your boat exactly last year. We bought a property with 65 year old exemption from wholesaler. They were doing the tax proration with exemption so I get less credit on the 10 month tax. I was worried about it exactly you were now. So I told them to calculate it without exemption but the seller don't agree it. In that case wholesaler jumped on said, exemption won't change at this time of the period where the tax notice will go out. I still persisted and said I want without exemption. Finally, wholesaler ended up pitching in the difference with the caveat that I will need to pay them back if they don't change. 

I got the tax notices and I paid as per exemption and they didn't change it. I also ended up paying the difference back to the wholesaler.

Long story short, it didn't happen for me in Fort Bend county, may be it's because of the end of the year. But I do remember Harris county do catch up on the tax even after you paid with exemption.

Hope this helps. 

@Jay Hinrichs rightly said sir. New build subs don't have to know the art of making the old house look good. It's just playing with the plan and getting it nailed out. Its' much easier than rehabs and that's why I like it. As I said new builds is way to make good short term profit if you have it going.. Our 3 home construction project would be our 2nd big one to start if we get the replat approved by Houston city this month. 

Yes, I agree with loan. HML don't care whether the guy has experience or not, they just want the money out and worst case they will take the property and sell it out. I am trying to get banks to loan for my new construction which is not that easy.

@Saud Alduweesh  Being a long time investor and BP contributor, I have seen people share their comments and thoughts from their experience and some just share without much experience because they feel so.. 

In my perspective, @Ryan Johnson comment is valid one. Do not put all your cash into one property. If you don't want to deal with mortgage, it does make sense you want to buy all cash. But try to stick with atleast 1% rule to break even. It's not about the purchase price of the price, it all about what's rent which you can make and atleast break even if you are looking for appreciation. If you are looking for cash flow, then you need to make more like 1.25% of sales price.  

You might be lucky to find house under 200k inner loop, possibly condo or townhome. You can easily get house in suburb for that cash. 

I would suggest, first decide what's your goal short or long term on investment and make the call accordingly. Don't just throw your cash away. We pay almost 6% to our private lenders for just giving us cash without doing nothing. 

@Alex Scotte I have around 5 rentals with conventional loan and working on acquiring one more rental this month. I work my lender who is my wife who works for mortgage broker. If you have lease, I think they consider 100% of rental income most of time and reduce with the expense and as long it's wash, your DTI will stay the same. If your DTI was 25% before you purchased it, your rental property expenses are washed by the income, your DTI most likely will stay the same and you can keep buying it which is what I been doing.

@Chris Hopper  You are right, you cannot do new construction as much quickly like flips or rehabs. We are not doing new construction as the only strategy. It's one of the short gain strategies we are implementing with our cash and eventually leverage lender to finance it. We do rehabs and remodels to keep my contractor busy. My CE who works with us on the New construction project handles our project so my contractors not much involved in it. 

@Tushar P.  My CE who is also builder who does our new construction projects been doing it for a while and he warranties our new builds and takes care of it. 

Howdy Investors,

Hope all going well. It's been some time since I posted last one and so I thought this story would make it an interesting discussion. 

If you are following me or my post in BP, in my last update, I mentioned about our first New SFH Construction project began this year. I am happy to share that we successfully completed and closed it last month. Check it out below,

https://www.har.com/homedetail/8412-knox-st-houston-tx-77088/13869082?sid=3921465

I was so happy with the outcome and return as well even though it took longer than we expected due to the weather and few other things. 

Here are the numbers,

Sales Price - $195,000

Purchase & Construction Cost - $125,293.32

Sale Expenses - $14727.71

Tax Prorate = $308.85

Holding Cost Utilities (Electric & Water) - $1006.09

Total Sale Expense - $16042.65

Final Profit- $53,664.03 - 42% Split between 2 partners for 9 months. 

I am sure everyone would be like, that's great ROI. Yes, that's true, New construction has very good margin which many investors new. We all now how much money new builders are making on their sale and willing to give away all types of incentives to real in the buyers. But it's not easy work, it's hard work. As they say, Hard work pays off.

Anyway, coming back to the topic, this question has been asked by many of investor friends and clients. Do you like FLIP or New Construction?

My answer, it depends. Both has it's PRO's and CONS's. New construction is somewhat of a smooth ride after you pass the lot clearing stage compared to FLIP which is like box of chocolate. You don't what's going to come next. 

For ex: We started a FLIP in May 2019 and planned to put in Market in Jun and got delayed to Jul. We spent almost 50k closing pool and everything. We priced bit higher expecting to push the comps which we usually do and it works. Buy end of summer, we couldn't' get any buyers. At that point,we become desperate and reduced price to the market rate, we got few offers but couldn't agree to it. Now it's almost 6 months and we are seeing some foundation cracks. Ended up getting foundation report done and had to jump to our exit strategy to pay off our lenders. So it's not easy ride but it keeps the life interesting and exciting.  

Will we do it again!  Again it depends on the deal. Every deal is different. We are learning lesson on every deal but are we using those lesson learned from previous experience. That's key question. Sometimes we just forget about when we see an attractive price and jump on to it and hoping to get out good. One big lesson we learned few times already, it doesn't matter the location, if it's over 175k, it's going top take time so plan accordingly with investors.  

I would New constructions if fun too but not as challenging as flips. 

Currently, we are on the next construction project. Found lot 3 months ago and purchased it and we are re-platting/subdividing to put 3 SFH around 1500 sqft. Hoping to start construction in NOV if the re-platting completes on time.

We also have another quick flip going on which is below $150k and hope to get out quick. Let's see how it goes...

If it's easy to make money, every one will do it right :-)   Don't forget to challenge yourself and keep chugging along...   

What I don't like is, writing check to Uncle SAM on the short term capital gains :-(

Happy investing folks!!! 

I like your title "Parent Hacking".  You basically buying property and putting your parents there and having them pay the rent and account it as rental property. It's good start and for mortgage loan purposes, yes legal lease agreement is important and more important you need to show your deposit and first rent check deposited in your account. They will ask those proof as well. You don't have to create a separate bank account actually. Just showing monthly deposits would do.  Don't do zelle or online transfers...  I assume they are paying from their pocket for rent. If you are paying them and asking them to pay back, mortgage company can catch by asking you for bank statements for 6 months.. Try to plan and show that it's legitimate rental transaction.

@Parteek G. You can but why? You will be wasting lot of money in closing cost. Even if you do want to, they can only lend for 65-70% of the ARV. If the numbers work, they don't care as long they make money.