All Forum Posts by: Jon Kelly

@Tyler Dietrich I respect you trying to turn this into an opportunity but I would keep your real estate dreams/goals/aspirations completely separate from your ailing grandmother.

It seems like the proceeds of the sale should go to your uncle (owner of the house) or your grandma. They will split the proceeds in whatever way they agreed to. Why would you, as a grandson, be entitled in any way to these proceeds? 

How is grandma paying for the senior facility? What other funds does she have to live off of? A lot of people rely on the equity in their house to help pay for living expenses as they are nearing the end of their life. 

If you want your family involved you can find a deal(s) and create a business plan and pitch them to be investors in your future business. Has nothing to do with grandma's house or the proceeds from the sale. 

@Joshua Stepanov Have to go with real estate. That comes from a biased real estate investor so take it for what it's worth :) 

@Thomas O'Donnell there's a lot going on here... 

Your main question is stocks vs. real estate. Since this happens to be a real estate networking site, most people will suggest real estate over stocks. I agree. 

You already answered the question. "I want more than anything to begin this journey..." Then you should use all means necessary to buy real estate. What is $9k in stocks going to get you? Not much. With an owner occupied property you can put 5%, so use $15k to purchase a $300k property. 

I would continue to save as much as possible. You'll need some reserves when owning a property. Ideally you find a slightly distressed property and you can add some sweat equity to add value to the property. You'll need some cash to improve the property. 

I wouldn't be too concerned about trying to time the market with rising rates or prices. You're at the beginning of your journey so this shouldn't be too much of a concern. Even if you overpay on your first deal, the experience and knowledge you'll gain is worth 10x more than an extra 1% on an interest rate. 

@Vincent R. You can make this work in cases: 

1. If you buy it for $1.2M

2. You're taxable income is over $1M. With this income you can absorb the $3k/mo loss and reduce your taxable income. You're losing $36k/year but "saving" $18k in taxes. All while hoping for appreciation. 

It's admirable to want to provide housing for a family member, HOWEVER they will make the cashflow of the property even worse. I assume you'll give them discounted rent or not raise their rents in the future. What happens when they start missing rent payments and you don't want to evict? You're cashflow drops to negative $5.3k... 

This seems like it has bust written all over it. Move on to the next one. 

@Devine Fletcher The most important thing in this situation is the purchase price. It's definitely going to be a bit of a pain and potentially costly to evict the current tenants, but that's why you're getting this property for a great price. You'll have almost no competition because no one wants to deal with the current issues. Is $20k off low enough? 

Run your numbers as if everything stays as is for 3-6 months. Then you evict, renovate and raise rents. Is it still a good deal at this point? 

Be conservative with your estimates. Assume it will take 2x longer to evict and rehab budget is 25% higher than expected.

Can you reach out to property managers / agents in the area and see what their experience is with evicting tenants that are not paying. I didn't think the moratorium was still applicable. 

@Fabian Pallares It's tough to advise taking a higher interest bridge loan to wait for rates to come down. What happens when rates continue to go up? 

@Kevin O'Brien I work for a lender and best case scenario we're seeing is low 6%'s. You can consider an interest only option for even better cashflow. We offer a 10-year interest only option, amortized over 30 years. 

@Sean Pearce as others have said, don't worry about the credit pull. Your score will drop slightly but will recover quickly. It's much more important for you to shop around to find the best rate. 

Things are changing quickly in the lending space. So, a lender (broker) that was great 6 months ago may not be reliable anymore. 

Your credit and debt to income is great. Real estate investing experience is going to be an issue. Many lenders will decrease the LTV% the less experience you have.

Continue to shop around and try to find the best terms. Don't let this stop you from buying a property and getting started in the game. Your second property will be a lot easier because of what you're going through now. 

@Nick Shri how many bills per month are you paying? 1, 2, 3? Is your time worth saving $15/mo? 

You hired the property managers for a reason, so I wouldn't suggest taking over some of their responsibilities. I would reach out to other property managers in the area and see how their pricing / fees compare. If they have better terms than you can try to negotiate with your current property manager to remove the fee or make the switch to someone else. 

You'll have more leverage to negotiate the more properties you own and the more business you do with your property manager. 

@Brandon Montgomery you can find smaller/local lenders that will let you cashout refi in 3 months or less. 

If you don't want to BRRRR you can consider three other options:

1. Seller financing 

2. Using Other People's Money (hard / private money lenders) 

3. Partner with others as @Owen Dashner mentioned. You need to add value to the arrangement, so maybe you are the one that finds the deal, becomes the property manager or puts in sweat equity to fix up the property. 

There's no perfect method. You can do all of the above. Just get started. 2 BRRRRs per year is better than 0.