All Forum Posts by: James Mc Ree

The interest is tax deductible if invested back into the properties where it came from and documentation exists showing that. Th interest paid on any portion used to buy more properties, boats, stocks, bitcoin, etc is not tax deductible.

You still use comps, just like a listed property. A realtor looks at comps, recommends a price and the seller sets the price with a listing. The same applies off market, but replace "realtor" with "buyer" and "seller". Since buyer and seller may be not be professionally involved in real estate, there may be more quality issues and negotiation volatility than with realtors due to their inexperience and emotions getting more involved with the direct negotiations.

As to the price, you may find off market deals that are lower than market or higher. I recently talked with someone who knew prices had skyrocketed, he had an awesome property, so he was pricing it much higher. He's entitled to his opinion and will wait on it while an endless stream of realtors call him to "help".

The idea that off market deals are cheaper comes from the lack of commission as you mentioned and finding sellers who are unaware of their property's actual value. The lack of commission can cut both ways. What happens when buyer and seller both think they are going to capture that 5% - 6%? With Zillow and other services actively pushing property valuations every day, it's much harder to find the clueless seller, but they are out there.

The buyer and seller always have exclusivity as they can only deal with each other. It is usually a bad deal for the seller as the most efficient market exposes the property to the maximum number of buyers to solicit the best price. Limiting that can only hurt the seller, but may be offset by commission savings.

I invest in 3BR SFRs in a couple of zip codes. I focus specifically on those areas for listings, sales and rentals.

A data service that would provide some search criteria like {zip code, town, area}, # bedrooms, age and maybe a few other ordinary screening criteria which then produced a trended report of active comps for sale and rent, as well as sold properties would be very nice. Adding onto that to show a range would be ideal. For example, there might be 20 comps in a range, but seeing they cluster around a much smaller price range with a couple of outliers would help quickly understand the data.

It looks like either way you are refinancing later, so whatever "later" brings is what you will have. That is likely higher rates. I've never heard of a minimum down payment requirement of 30% in general, but lenders do give better rates with larger down payments.

This is really a math problem for you. If you buy for $165k cash + $40k rehab + closing costs >= $205k. You will save on appraisal cost, lender fees and interest. If you finance with 25% down, you invest ~$46k + $40k + lender fees and closing costs >= $86k. That leaves you with about $100k in your pocket pre-refinance. Your refinance either way will cost about the same. You may be able to save on title insurance if your rehab is a short duration and your insurer is willing to keep the insurance open during that time.

The other consideration is opportunity cost. Think about what plans you have for that $100k that won't happen in this timeframe if you buy with cash.

The risk you take with stock and bond market investments is the risk of loss due to volatility. Those market investments can be good if you are OK with possibly losing 5% - 10% of your principle. Keep some in cash for your EMD as you will need a few days to turn your investments into cash.

Cash is your most fluid and safe investment. Those 3% or so teaser rates are great for this kind of use since you may only have the cash available for a few months and the teaser rate may only last that long. The teasers usually come with a requirement to pour in some direct deposits, so you have to be comfortable with doing that and whatever else they require.

My real estate investment reserve is invested in diversified stock mutual fund ETFs. I expect to use about 25% of it for an investment in the next few months, about 50% for 2 more investments next year and the remaining 25% to show the bank I have the required reserve for mortgages, taxes and insurance. I am OK with taking the volatility risk if only because it seems to be generally favorable for now. That may change if we see the market tanking, but I can't get those losses back quickly. It could cost me a property investment, but I take the chance with the hope for favorable returns or at least only minimal losses. I also don't want to pay the taxes on my gains.

You could offer the property for sale or rent, but you wrote the property no longer meets your investment criteria, so I'm not sure why you would want to keep renting it. Don't disclose the death if your local regulations don't require it.

Make sure the condition code in the appraisal matches the condition of the property. I had a problem like this in a refi when an appraiser assigned the property a C4, couldn't find any comparably poor quality properties in the area and produced an appraisal comparing my 3BR to 2BR low quality properties. The C4 was wrong for my property and the comparisons absurd.

Ask to see bank statements showing the cash deposits mapped to tenant payments.

Assume "Yes", versus finding out when your local building official issues you fines. Contact your local government zoning office and they can help you understand what is permitted to be built there and the permits you require.

The sign-up page asks which bank you want to open your account with, so it seems you do end up with a bank account. I didn't see any content for how charges to the security deposit are handled. I think that would be important to understand.