All Forum Posts by: James Elden

I'm not claiming to know the future or to be certain of anything but I have followed the stock / bond markets for a while and believe that yields will continue to rise and that this could lead to a housing crash, I realize others may have different opinions and that's fine and you may end up being more correct with your predictions than me, it is just that at the moment all my thoughts around getting into real estate investing are with this scenario in mind. Despite this, I do still want to get into real estate investing and this is actually a very good time for me to do it as far as my personal situation as I have a job now where I'm able to work remotely. Because I am trying to hedge against a housing market crash one option I have been looking into is that of buying very cheap houses ($60k and under) as these usually don't gain or lose much appreciation so, from my analysis, I wouldn't lose as much value if the overall market crashed. Although I have some cash to buy one, maybe two of these outright, I don't want to get stuck in a situation where I can't easily pull money back out with a refi and, from my research and attempts to contact lenders so far (including some smaller banks, credit unions) they don't like to deal with houses in this range.

I'm wondering if there are other types of real estate investing I should consider looking at where I would have more financing options available to me but I wouldn't be as exposed to a potential crash? My overall goal is cash flow, I already do trading in the stock and bond markets so, as much as possible, I don't want to be doing anything resembling a trade with real estate investments which is what investing for appreciation "feels like" to me so basically am hoping to figure out some more options for real estate investments I can make for cash flow that are more sheltered from appreciation / depreciation (I'm fine with giving up future appreciation potential if it also protects me from depreciation).

I'm looking to get started in real estate investing, I have ballpark net worth of $150k, basically no debt at the moment, and have been trying to figure out the best way to make a first investment with the longterm goal of acquiring more properties and eventually making this my main source of income (currently I have a full time job), these would be buy and hold investments for cash flow primarily. I had been looking at buying very low cost properties with cash (under $50k) and then trying to do cash out refi's to pull cash out to buy more properties but the more I talk with lenders the more difficult this route seems. So now I am also thinking about buying at a higher price point using a loan. Ideally I would like to do everything through an LLC so am trying to figure out what is the ideal price point for a property where I could secure a loan through an LLC that I own (I have good personal credit so my understanding is that I can use this initially until my LLC has it's own credit rating). Would I be wanting to look at houses around $75k? Higher? Also, if it were $75k this would be in an area where houses around that price range are common. These would be houses that need minimal work, so move in ready or possibly ones that already have tenants in place. Any info is greatly appreciated.

@Kevin Romines thanks, from some research my understanding is that I would need a non-QM loan or some credit unions could do a regular QM loan for this amount?

@Jason Shackleton ok thanks, I have come across one lender so far also who had this as their lowest amount, interesting. One other question that this led me to have is would something like a portfolio loan ever be an option if, for example, I bought 2 or 3 $40k houses so the total value of the three of them combined was over $100k? This may be a possibility for me as well. Thanks.

@Jaron Walling ok thanks I will look more into private money lenders. In my case, the house may be livable when I buy it, so I wouldn't be putting that much money into it or raising the ARV by much, I do have cash reserves to complete any repairs that would be needed though. The house value would likely never rise much above $40,000, I'm buying this purely for long-term rental income, so per my understanding a conventional refi may never be possible unless I'm misunderstanding something. The houses I'm looking at are ones that have never really had a history of appreciation.

I am looking into investing in a single family home that would be under $40k which I would buy in cash in an area where this can rent for  approximately $800 a month. I intend to do this for more than one house over time but ideally would start with one house. It wouldn't be much of a rehab, rather just fixing whatever needs to be fixed (maybe a new AC unit, heater, things like that), cosmetic improvements (probably new paint, maybe carpet, etc) so this wouldn't significantly raise the value of the house above the purchase price. 

I would then want to do a cash our refi to get at least some of the money out (maybe as low as 50% even would be worthwhile for me or as high as 80%). I would then be holding the house longterm for rental income. My understanding is that this isn't exactly an attractive loan to most banks / credit unions so I have been researching a bit about real estate investment bankers and am wondering if this is likely my best option or would it be worth trying to talk to some local banks or credit unions? My concern around this is that I wouldn't be living in the area, although I will be out there sometimes so I could meet with them in person with no issues but I still wouldn't be a full-time resident of the area. Any advice is greatly appreciated.

I would like to do this for the rest of my life, I have a decent enough idea what I'm in for so I'm not overly worried about it being rough at first. I'm in my mid 30s and currently work remotely for my job so I feel it's the perfect time. I've done some home refurbs before so I have a bit of knowledge about home repair etc as well but I do realize I have lots I'll still need to learn.

The state I am looking in is Arkansas but I figure people from similar markets would have an idea on this as well. I've only purchased properties so far that are more expensive, in other states, so had never thought about this until now as it seems less realtors would be interested in dealing with properties in that range. I should be fine without one if needed but I also realize that a good realtor can definitely add value so wanted to get some perspective on whether I should be reaching out to them or not. These would be all cash purchases as well in case that factors in. Thanks

@Ray this is music to my ears, glad to hear that!

Thanks for the info, the area where the investment properties would be is Arkansas.