All Forum Posts by: JM Payne

If your parents are financially savvy, they can add you to their credit cards and that will begin building your credit. 

What is your post-high school education/work plan?  If you have nothing particular in mind, I might suggest getting your real estate license and going to work as an agent.  Best of luck and good on you for getting started early!  I did too, but had to get a co-signer.

- jm

1. The loan with MIP will be cheaper per month, but obviously more expensive over the long run. The traditional 20 down will cost more up front. There are a ton of mortgage calculators available online.

2. Yes, you can put more down. 

3. Not sure, sorry.

4. The biggest disadvantage that I see to the 203k (which you may or may not be eligible for, as a first time buyer) is that you cannot do the rehab yourself...you have to hire an outside contractor.  Given that your business is construction mgmt, you could not otherwise save yourself the cost of doing the work yourself unless you had a friend that would act as GC and let you do the work, but that may qualify as mortgage fraud depending on your state laws.  

Best of luck and have fun!

- jm

The easiest way to get the answer to what to do is to go to every open house you can find in the comparables vicinity and see what other sellers are doing, then pay attention to which ones sell quickly and which ones sit.  Also don't overdue it either...you can over-rehab a house and lose out in the long run. 

As far as specific products, once you know what sells, you'll have an idea of what to use or can ask again for specific recommendations, although if your market is anything like ours right now, in the covid times, you may find that you'll end up using whatever you can actually get your hands on!  Best of luck and congrats on the investment.

I've got two...make sure it's newer than '76 and has the appropriate tag, and be sure that you have the title or a bill of sale if it's still classified as personal property.  Beyond that, walk the perimeter inside to feel for soft spots...they're pretty simply constructed and easy to rehab...tons of vids on youtube if you decide to go that route.  Best of luck!

- jm

If your local gov works the same way that mine does, the best place to start would be to check out the local zoning ordinance and see what properties are actually eligible for a conversion by right, as many places have rules against it or need conditional approval.  Second to that, I would talk to the planning authority and/or check the comprehensive plan and see what areas might be planned for redevelopment in the near future, as that would give you an idea of where they are hoping to see new development.  Best of luck, glad to hear you're killing it!

-jm

Originally posted by @Jeffrey St.Laurent:

@Tracy Streich thank you the more I think about it HELOC seems to make the most sense especially if I am going to be patient (which I should be) for the right property.

 Something to consider;  Cash out will lock you in at a low rate and give you flexibility over 30 years while your tenant pays the money back.  Helocs traditionally are short term lending solutions with adjustable rates that often can get called as soon as a year out.  While it's likely that it could be auto renewed, there is less stress knowing that you are set for 20 to 30 years than wondering if you will have everything wrapped up and paid back when your heloc comes due.  Just be clear on the terms of your heloc if you decide to go that route, and I'll give an example of the first one we ever did;

One year heloc with a 5.5% adjustable rate not to exceed 6.5 (this was 2018)  So off we go shopping, and because it takes time to find a deal, we didn't end up closing until 8 months later.  No interest or money paid during that time, obviously, as no draw occurred.  But at month 11, I get a notice for renewal, because the bank counts the year from the initial origination, NOT the draw.  Luckily getting a month extension was a very simple email away, and we sold the flip and paid it off a month later, but things could have gone very differently had, say, covid or a recession hit as I was trying to unload the flip.  With a cash out, we would have had a much longer sunset and a better rate.  My new heloc, by comparison, is 7 years with an annual review, but obviously rate is higher.  Best of luck with whatever you choose!

- jm

Consult a professional as you mentioned, but yes...you should be exempt. 

- jm

@Chris Piette

In my personal 14 years of property ownership, I have yet to have had either of the two problems you mentioned. I've never even heard of an electrical surge frying appliances, although I have heard of tree roots destroying old terra-cotta style sewer lines. If I had dealt with these situations personally, I could get a sewer line sorted for less than $500 (on SFR...not so much on an apartment complex worth of terra-cotta,) and I am not sure that replacing an $800 fridge would be worth the hassle of dealing with the insurance company to "save" $300, although there's still that annual premium to calculate. As long as you hold proper reserves, I really wouldn't worry about unknowns.

- jm
 

Nice work, Jacob.  Enjoy the rehab/rent increase and thanks for sharing!

-jm

I do not opt for additional coverages, and just go for regular landlord policies.  If you are worried, calculate the cost of the policy vs the cost of repairs relative to the current age of whats in place. 

How much per annum are these additional coverages they are selling you?

- jm