All Forum Posts by: Jody Sperling

Run the numbers on the cost of the rehab, cost of interest on loan (private or hard money), and purchase the house as long as the cost of the rehab is less than the After Repair Value.

One important thing to keep in mind: Houses appraise with a vastly different value if they are selling then if they are refinancing. Cheaper in the latter case. Be sure the appraisal will come in where you expect it to when you run the numbers.

Private and hard money tend to go for six months, but you can focus on the immediate repairs that enable the house to qualify for a traditional loan. I'm working on a project just like yours that my family will live-in BRRRR as well. We need to address utilities, roofing and doors before the bank will lend to us, but there's significantly more than that in the long run.

Hit the big ticket items, refinance, and take your time with the rest. Best of luck!

Find someone who can set up a first-position HELOC on either your rental or your primary. You'll get more access to more money if you get the HELOC on the primary, but I might not mess with the primary since my understanding is that the VA loan is quite good.

I have a first-position HELOC on one of my rentals, and it's the well I tap for purchasing everything, including my other rentals. If you want to dive deep on this, look into Velocity Banking. But basically, the HELOC replaces your mortgage and makes it so the entire equity of the home is a line of credit. As you pay it down, you have more available to borrow, and you only pay on what you use.

If I could replace all my mortgages with one giant HELOC, I would do it in a blink. Best of luck!

Even six months ago, I would've said your numbers for a 3/2 were easy to find, but nationwide prices have surged on low interest rates, economic stimulus, and limited inventory. Even in ideal Middle West states like Indiana, Ohio, and Michigan, those prices are now fairly uncommon. 

Your best bet if you want those prices is to pick a target market, design a mailer, and advertise for off-market property. I've snagged two houses for very low prices in the past four months because the sellers wanted to move quickly and had issues that made the property hard to sell through the typical avenues, but if I was only relying on MLS listings, I'd be shut out right now.

What are your long-term goals with real estate? Are you open to managing rehabs? Best of luck!

You're in a complex situation, and it sounds like there's a miscommunication between all parties and the appraiser. You might want to contest the appraised value and provide your own comps. It could be a long process, but probably worth it. @Billy Daniel is right that someone's not doing their job.

I also agree that a door between the units is a bad idea. But to your broader question, there's almost no time that is a bad time to buy real estate. There are only harder times and easier times. Right now I don't know anywhere in the country where it's easy to buy housing. Keep up the good fight. House hacking will change your life in a the best way. Don't give up!

There's a house in my neighborhood I walk my dog by more days than not. It listed on the MLS—not even off market!—last summer for $125,000. The average in my area for a 3/2 was between $175,000 and $200,000. I wanted the house badly and asked my real estate agent to get us a showing.

He got us out that same morning on his way to his kid’s soccer game. At the time I had one rental property, and though I’d studied hard, and learned as much as I could, I still leaned on my agent heavily. We walked through, and when I asked his opinion, he indicated it was too much work for his investment preference. Nonetheless, I asked him to put in an offer for $125,000 cash, closing at whatever pace the seller wanted.

Surprise! I didn't win. But…four months later I saw on Zillow that it sold for $126,000. This would have been a live-in BRRRR for my family, and the kicker is, the basement had a nice 4th bedroom framed in with an egress window, giving us extra space for our family of five. I’m angry at myself for not doing the mental math, and angry at my agent for missing the dang bedroom, and angry at myself for leaning on my agent because I was too afraid to assert myself.

Now, when I walk past that rehabbed house, which sold again this February for $235,000, my heart still races. I think my dog even senses how upset I am at myself for letting that house get away because he always barks when we’re going past that driveway.

I have a HELOC on my rental. It takes a little hunting, but you should be able to find a bank that would help with this, though you might need to move faster, since the bank would likely want an appraisal, and as you said, you have the deal now.

The next best option is to hunt further for a Hard Money Lender with different terms. I know of at least two in my area that will lend 100% plus the money for rehab. It's expensive, but if you have a deal, well worth it.

I'd say your best luck will be joining a local Facebook Real Estate Investors group and posting a hard money request there. Best of luck!

For the sake of ease, standard, single-family-homes are the properties to target. They're simple to comp, simple to show, simple to sell, and simple to buy.

Multifamily, including duplexes, increase your door count faster, reduce your vacancy percentage, and improve your loan position because you can have more doors with fewer bank notes.

I prefer single family property over duplexes in most cases because they're easier to find, the odds of long-term renters increases, and the typical tenant pool tends to be more economically stable than those looking to rent a duplex. (Any time you generalize, there are going to be outliers, but I find a few general guidelines help me to analyze quickly and define what is the best fit for me.)

If I found a large duplex big enough for my family to occupy one side, in a neighborhood we felt comfortable in, I'd snatch it up and house hack though, so a duplex for cost-sharing would be a huge win if that's something you'd be open to. Best of luck!

I'm the radical sort who doesn't believe 401ks are a good investment. For example, in your situation, you could have saved $12,500 in taxes this year, but how much will you pay on the money you put in the 401k by the time you begin taking distributions, because you'll be taxed on a larger base then, and likely at a higher rate.

Roth IRAs are no more exciting, because they're funds you remove from yourself to cashflow today. I only invest in assets that cash flow me today and equity fund my future self. Real estate is a great asset that meets that requirement. Dividend paying ETFs can be a good asset to meet that requirement. Properly structured Whole Life Insurance is a great asset that compliments that requirement. Those are the three buckets I put all my money into.

If you are able to, build up some more equity in the loan by making extra payments. Then finance directly into a first-position HELOC so you can recapture the trapped equity. Don't just refi into another loan product and reset your repayment calendar and interest payments.

I've really benefited from teachers like the Kwak Brothers and Denzel Rodriguez learning about HELOCs and what they can achieve. Finding a bank that will sell the product you need can be work, but if you find it, you can ditch PMI, have a revolving line of credit, and pay the debt at a much accelerated rate. Best of luck!

The lender is correct. An FHA loan requires you to live in your property for at least one year.

In most, but not all cases, banks won't offer terms for a HELOC if the homeowner has less than 25% equity on the property, but if you search, you may find a lender who would give you a small HELOC. It's doubtful you could get enough for another home purchase.

If being in a good school district is your short-term goal, you should have until August, but that would still put you at 10 months, not long enough to sell, so you might consider seeing if a target school district has an open enrollment or lottery system for students outside the district.

My wife and I looked into a similar system for District 66 here in Omaha a year ago when we were moving and converting our former primary into a rental. We would have been able to keep our kids at the better school through an application process, but it ended up moot, as we bought a new primary six blocks from the former primary.

Best of luck to you. I understand your drive, and it can be hard to feel that things are moving too slowly, but stay the course!