All Forum Posts by: John Ford

When you say manufactured home, are you talking about one of those houses that are effectively mobile homes made to not look like mobile homes? I think they tow them in, stitch the parts together, and drop them on a pre-built slab or something. 

I don't know what those run but I'd have to guess they're far cheaper than building. My main questions would be: can I get financing for one of those and at what rates? Are people renting those in your area? Can I get it insured?

For me, all said, it would have to be a cashflow beast because I doubt there's going to be much, if any, appreciation. I don't know your area but it seems to me there's equal or better cashflow in other deals for less work...you just have to find them.

Anthony, I recently converted my home, that I bought in 2005 and lived in until this year, to a rental. I struggled, and still struggle, with the decision. Bought for $192k, owe $150k, now worth $390k. It's renting for $1800 (should be $2k but I freaked out and lowered the price to get a tenant faster) and was cash-flowing about $200/mo. I just refi'd on Wednesday and now it's cash-flowing at $700/mo. I still ask myself daily, "should I just sell it and use that money elsewhere?!"

Some things that tipped me towards the keep and rent side were:

1) I love the location of the house and wouldn't mind moving back in at some point. If I sell now I'll likely never be able to afford to buy in that area again.

2) If I do $100k to $150k in renovation, I could match comps selling for $600 - 800k. But I can't afford that right now so I'll rent until I can.

3) The area isn't done appreciating. The appreciation has been great, but it still has a long way to go before it catches up with the surrounding neighborhoods. Infill housing and major renovations are slowly replacing the older, smaller homes like mine. 

4) I want to do more rental investment so having that equity sitting in that house goes a long way towards keeping me from being over-leveraged and will act as a "safety valve" in case I get in trouble on another deal down the road.

I suggest making your own list of pros and cons and then make the best decision for you, based on your priorities.

As a software developer who's worked at nothing but startups for the last 10 years...don't try to start a website unless you know a very motivated co-founder who can write code, and another very motivated co-founder who knows how to raise money. $300k isn't going to cut it. (It actually should be enough to get the thing built. But you're going to need 5 to 10 times that in sales and marketing budget to get people using it.)

As for what I'd do...I would turn that 300k into a relative fortune. But it would take about 10 years and it sounds like you're looking for something faster than that.

@Elizabeth Colegrove, I remember seeing posts of yours when I was researching if it was possible to use my remaining VA eligibility to buy another house while keeping the first. (Of course it was, despite the naysayers!) VA loans are definitely the best benefit non-retirement veterans get. I didn't even mind the .5% VA funding fee on the refi since I just see it as me doing my part to keep the program funded for future veteran homeowners.

I hands down recommend Navy Federal. They do not promote it but now *anyone* can join Navy Federal through a loophole from when they merged with USA Federal credit union. When they merged, they took on USA Federal's charter, which happens to extend membership eligibility to members of the Navy League of San Diego. Anyone can join the Navy League of San Diego for $25 and then join NFCU. Again, NFCU doesn't promote this, no one will tell you about it, but they do honor it if you use Navy League as your source of eligibility. 

I have not verified but I believe being a member of Navy League also makes you eligible to join PenFed and USAA.

Thanks, @David O!

I agree with @Account Closed, for the most part. I've heard of programs designed to help police officers buy in rough but up-and-coming neighborhoods. A police car in the driveway does do wonders for the neighborhood. But you'd have to find a seriously hard-up officer to accept reduced rent in order to live in a "war zone". If they're that hard up, they're probably already on the take and not the type of person you want in your units anyway.

105k is exactly 70% of 150k, so I'm assuming they're basing the loan offer on what you paid for it and not taking into consideration your improvements. Perhaps a proper appraisal would get you a better deal.

Today, I refi'd my rental property. I did a VA IRRRL streamline refi that I locked in before the election at 3.5% amortized over 30 years. My current tenant is paying quite a bit below market rent because I lowered the rent to get a decent tenant in because I started freaking out a bit while it was vacant. Even with the house vacant my DTI ratio is about 26% so it wasn't money...it was just purely emotional anxiety..."Ack! I have to find a tenant!!!"

But even at below market rent, the house was cash-flowing about $200/mo. (Not counting some capex expenditures to make the house more tenant-friendly...like adding a back door that doesn't require going through the standup crawlspace. As OO, that wasn't a problem but prospective tenants balked at the idea!) Today's refi brings the cashflow up to nearly $700/mo. And I'll be raising the rent next year. If this tenant stays, I probably won't bump them up to full market rates. But they work in a fairly transitive industry and are in town working on a 1-year contract so if their contract isn't renewed, maybe they'll move and I can get a new tenant in at full market rents bringing the cashflow up to nearly $1000/mo. (I know, if I'm hoping they'll move so I can raise the rent more, I should just raise the rent anyway and if they stay...*bonus*, if not, nothing lost. But I dunno...I'm not "there" yet.) And I still have $150k equity in the house.

I bought the house in 2005 as my personal home. I bought it on a VA loan, zero-down. I had a loosely defined plan of living there until area rents rose enough to support the mortgage then renting it out. The physical location was perfect for me even though the neighborhood itself was transitional. But as a Marine Corp vet and competitive shooter, that didn't bother me one bit. It was a pocket of blight and low-income housing surrounded by great neighborhoods and major development investment so I knew it was just a matter of time. And in the meantime, I got to live within amazing proximity to everything I loved doing. (Seriously. Now that I've moved, the thing I miss most is the l physical location. It's freaking perfect.)

I had originally planned to do a cash-out refi to get started on another investment property but now I have some other things in the works that may net me $50k-75k cash in the next 6 months or so. So I went with the streamline refi and left the equity to maximize cashflow. If this other thing falls through and I need to use the equity, it'll still be there (knock on wood). But even if the market tanks tomorrow and the equity evaporates...$700mo cashflow!

All in all, I'm pretty stoked and proud of myself. Even though this was part of a hazily defined "plan", I still can't believe it's actually freaking working. I keep looking for the "gotcha!" but I haven't found it yet.

@John D., the daytime resolution of these cameras is great. Nighttime is pretty good with good lighting. In near to total darkness, things are not nearly as good but still better than I expected. The camera I linked has several built-in IR LEDs that do an OK job of lighting the short-range scene, even in total darkness. But if you paired the camera with an external IR illuminator, I imagine the nighttime graphics would be great, without disturbing the naked-eye lighting.