All Forum Posts by: Jon Kelly

@Hannah Taylor Bottom line is you cannot make the wrong decision. Whichever option you choose you will make it work for you. If you believe in real estate, which you clearly do, I would choose the option that allows you to buy property(ies) the quickest, which is option 1. 

This also aligns with your goals and I would imagine it's the option you're leaning towards. For some reason doubt crept in and you tried to talk your way out of it. Go with option 1. You will have a "safe" job learning real estate and have unlimited income/net worth potential while you invest in real estate on the side.

@Alex Mora It sounds like you committed to selling your current house, which is the best way to use all of the equity you have in the property. You could do a cash out refinance, but you'll still have some equity in the house that you can't access. 

As far as your approach to your next property, it sounds like you want to house hack (multi-family property) or do a live in flip. I don't think you can go wrong with either approach. It will come down to the numbers. Can you work with an agent and begin looking at both types of properties? 

@Christina Hall Smaller local banks are usually a great option. Start there and then expand to regional or national if needed. Rocket Mortgage can be useful to an inexperienced home buyer, but I doubt many investors use them. You can find much more competitive options out there

@Collin Bryston Adams I love the creativity and trying to create an opportunity, but it seems too risky. I've never heard of section 8 rents consistently going for $600-1,000 higher than market rents. Maybe this is a rare situation due to section 8 shortage, but what happens in 1-2 years? 

If the numbers ONLY work with section 8 this will limit your exit opportunities. It seems like you'd need to hold it for a long time until it appreciates high enough. 

@Joe Villeneuve, I completely agree with you. Selling allows you to access the most amount of equity, and in an "all else equal" scenario, it is usually better than refinancing. Especially, if you utilized 1031 exchange to defer taxes on the sale. However, if the options are "Sell" or "Do nothing," you should consider "Sell" or "Refinance." If you find other properties with stronger ROI, then selling is likely the better option.

@Allende Hernandez It's all about the numbers. What is the current ROI on your property? If you sell the property, where will you put the cash? Do you have another asset with a greater ROI to move it to (e.g. a larger investment property)?

If you have equity built up, consider a cash out refinance. You keep the investment property and pull out cash from the equity, which you can use to purchase other income producing assets. 

@Isaac Salcedo You mentioned you have concerns of not getting approved for a loan and having to wait 1-2 years... Have you approached a lender? Go to a lender now and see if you can get pre-approved... Reach out to as many small local/regional lenders as you can. 

@Matthew Metros I usually use 50% for the initial "sniff test." If it passes the sniff test, then you want to dig into actual expenses. It's possible to have annual expenses 30-35%, which is a strong year. But, what about the year(s) when expenses are 50% or higher? I'd always lean towards conservative estimates until you are really familiar with the area and have a few deals under your belt. 

I've seen a lot of marketing packages with minimal repairs. It makes the numbers look great, but it's also a red flag. How are there expenses so low? Are they reporting everything? Is there a lot of deferred maintenance the new buyer will have to pickup? 

@Bryan Rodas Find a local lender. A simple google search will do. Reach out and get options from 2-3 different lenders. 

Have the repairs and value add renovations well documented (what was done, how much did it cost, etc.) If your brother did all/most of the repairs, I would factor in his "sweat equity" cost. Add his total hours worked X market hourly rate for a contractor. 

You'll need a signed copy of the lease showing the rent amount and when the tenant moved in. 

@Bill Veight Are you approaching these lenders with a deal and asking for a quote? Most lenders have been very busy with PPP loans or refis, so I could understand why they are pushing you off unless you are looking to close on a deal ASAP. 

I would continue to call all local/regional banks in your area. I would ask for a loan officer with experience working with real estate investors. 

Be very clear what you want from them (e.g. I'm looking for 75% financing on a $350k tenant occupied single family investment property that I will be closing on in 45 days...)