All Forum Posts by: John Humphries

@Chris Mason Thanks for that idea, I didn't realize that a 95% LTV would be possible so soon after buying my first property! Is that only possible for an SFR, or could I do another multiunit at 95% LTV after my year is up?

Scott Harper Hey scott! I actually brought this deal to my lender (Caliber Home Loans, highly recommend!) when I found it. I applied for an FHA loan for the amount of the asking price. It was not until that point that I submitted my first offer. It is worth noting that Caliber allowed me to use 75% of the gross rents that this house was bringing in with its two rented units to help me qualify for the loan. It is my understanding that most lenders like to see two years of landlording experience before they will include rents in your income. I only had to put 3.5% down. I did have house hacking in mind from the very beginning, which is part of why it took so long to find the right deal. I needed something that was close to my job, and 3-4 units, partially rented, and under $150,000. That is a tall order in my area. Mindy Jensen I do intend to occupy one unit for at least a year per FHA guidelines, and was only speaking of what my numbers should look like after that time. Thank you for checking, though! I noticed that no one explicitly mentioned that during my purchase. If not for BP I probably wouldn't have known about this requirement!

Hello, BP! I closed on my first property yesterday, and it never would have happened without this site. To give you some background on myself, when I was 17 my grandfather passed away and left me a decent chunk of money. It was enough to buy my first car (a nice used Volvo), send me to college, and have money left over to put towards a house "someday." The catch is that it is all held in trust until I turn 25, and I have to ask to use any of it. Once I make a request, a committee has to review it to see if it aligns with the wishes and conditions my grandpa outligned in his will. The only other caveat is that the committee won't release more than 10% of the balance of the trust for anything (other than college) because they dont want "all the eggs in one basket." I knew that 10% of the trust wouldn't even cover all my closing costs, let alone a downpayment on anything, so I thought my only option was to twiddle my thumbs until I turned 25, get a conventional mortage and "someday" hopefully be able to start buying rentals. Rental property has been my end goal since I was about 10 years old. My dad had a few properties at that time and I was fascinated by the concept. I always thought it would happen much later in life. Then I stumbled upon biggerpockets last year and the glass was shattered, my brain lit on fire, and I realized "holy s#@!, I can do this right now!" I was working for a contractor at the time, and he was paying me cash off the books so I had zero verfiable income from a lender's perspective. I knew I couldn't get anywhere that way so I got a job delivering foreign car parts to auto shops in the area. They pay me extremely well, and I had about six hours per workday do listen to the BP Podcast. Win-win! After about six months on the job, lenders were finally willing to talk to me. I had a few false starts, but finally got approved for an FHA loan. I looked at every multifamily property on the market for months until finally this triplex popped up. It had two units rented, one vacant, and was listed at $100,000. The two rented units bring in $1,225 per month and the vacant one usually rented for $600, for a total gross rent of $1,825. Damn close to the 2% rule, right?? I viewed it the third day it was on the market and offered $80,000 two days later. After quite a bit of haggling, we settled on $90,000 with 5k of closing cost assistance from the seller. After the home inspection revealed a long list of repairs, we settled at $82,500 with $4,900 in closing assistance. The house appraised for $100,000 and the FHA only required a new porch light and to have some chipped paint repaired before going to closing. It all sounds so easy on paper, but there were so many hiccups along the way and there were a handful of times when I thought it was all going to fall through, but somehow we made it to the closing table yesterday. After all inspections, the appraisal, and my share of the closing costs, I got into this property for just over $5,000 of my own money, $3,000 of which came from the trust. My mortgage is only $590 per month including taxes and insurance, so even with only two units rented we are beating the 50% rule. I've run the numbers a couple thousand times, and I expect to have a net cashflow of a little over $500 per month when it is fully rented. For now, I'm just looking forward to house hacking for the first year and rehabbing my unit gradually over that time. It still doesn't seem real, but I'm picking up my very first rent checks today! Thanks to the entire BP community, without whom I may never have been able to buy my first property.

@John Arendsen and @Jean Nelsen thanks for the tips!! Mobiles are truly different animals altogether. 

I'm supposed to walk through this thing tomorrow, but the seller has stopped responding to messages. Maybe it's for the best... 

Sorry, didn't see the comments in between there.  thanks @John Arendsen and @Thomas S. for chiming in as well. I will probably end up flipping after all. Not sure about park procedures yet. 

What are some good things to check on during my walkthrough? Red flags? I'm pretty good at getting a feel for a house due to my contracting background, but I'm not familiar with mobiles. 

Thanks for the input, @Account Closed. What I'm trying to figure out is how much to set aside for CapX and maintenance in relation to a typical stick built home. Is maintaining a mobile typically more, less, or equally expensive than a typical stick built home? In what ways are they similar? In what ways are they different? 

Are there any quick and dirty tips to evaluate mobile home deals in which the mobile in question sits on a park? It's a $5k trailer with $400 lot rent. To me, that seems like putting 5k down on a SFH and paying a $400/mo mortgage. It should rent for somewhere in the 800-1000 range after rehab. To help estimate expenses and project a return, should I use the same formula I use on a stick built sfh or are there different rules of thumb with mobiles?

@Thomas Clancy I have a lead on a triplex in Frederica. Probably needs to be ripped down to the studs. Needs a roof and it needs to be jacked up but nothing you couldn't handle with a construction background. Let me know if you want to talk more about it. 

Peter Shade with Burns and Ellis is one that I like. He has one rental property so he isn't a big time investor but he understands all the concepts and seems to know what rents this market would support for any given property.

Hello all. I suppose this falls under the umbrella of "legal issues" but moderators pleas move this thread to the appropriate forum if there is a more relavent one. I'm looking at a four acre tract of land near my house. Seller is out of state. Found it on craigslist. We've been talking for a few weeks and finally reached a deal that we are both happy with. However, he just asked if we could do a quick claim/quit claim (same thing, different terminology as far as i know) transfer to avoid higher closing costs. I've heard of scams involving this type of sale, and I know it has the least amount of protection for me, the buyer, than just about any other kind of sale. Is there a way to protect myself from this, or should I insist upon a different type of deal structure? Anyone ever gone through this? Thanks