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All Forum Posts by: Kent Clawson

Kent Clawson has started 0 posts and replied 21 times.

Post: Appraisals came in WAAAAY too low? Options?

Kent Clawson
Posted
  • Posts 21
  • Votes 13

@Jeff Plotkin Ask the appraiser as well. If there was information they didn’t (or shouldn’t) consider they can update. Especially where you purchased cash, a lot of times they exclude those because they are not true apples to apples (Boise is seeing these exclusions on the other side because house prices are so blown up with Californicated money flowing in that if a bank had to sell the place a year from now that they would never be able to get purchasers who need bank funding). In the end the appraiser is covering the lenders interest and generally is less interest in yours. Ultimately the appraiser needs to give the the bank an idea of what they are going to get for your place if you flake out and stop paying them. The fortunate thing in all of this, they really are neutral (they get paid whether the loan funds or not :-)

Ideally I would start it off as legitimate learning effort and ask them what factors are influencing, because you really thought that it was most comparable to the house next door. For style points, if you are not a jerk, people often like to talk about what they do and how they do it. Worst case if there are areas that you are off, then you will know (and be ready for the next one ;-)

Post: House purchase with unpermited addition

Kent Clawson
Posted
  • Posts 21
  • Votes 13

@Andrew Powers Thanks Andrew I think that is what I needed to know

Post: Converting bathroom to bedroom and illegal/no permit addition

Kent Clawson
Posted
  • Posts 21
  • Votes 13

Thanks

Post: Converting bathroom to bedroom and illegal/no permit addition

Kent Clawson
Posted
  • Posts 21
  • Votes 13

Hey @Wendy S., How did this turn out? Did you have any issues with financing with the unpermitted addition? 

Post: House purchase with unpermited addition

Kent Clawson
Posted
  • Posts 21
  • Votes 13

Hey @Peter Sieracki Did you ever get a solution for this? 

Post: I'm a newb! Please critique my plan!

Kent Clawson
Posted
  • Posts 21
  • Votes 13

Hey @Scott Dongjin Lee, Welcome to the club. If you haven't figured it out already, this place is AWESOME!

Ironically, I am just buying a 4 plex in Colorado Springs while living overseas. We had a rental property in COS back in 2009, but sold it a couple of years ago before I found BP. All my wife saw was some equity and wasn't stoked about the property (but the dislike of the property also stemmed from getting it under contract after I told her I would stop looking for rental property. Life tip: Do NOT do that ;- ) Any way we were out of the REI market, but have started to look to get back in and had all of the pieces come together for this one that I am taking down right now. I agree with @Jeremy Gaal that COS is tough to find a 1% type deal. Fortunately this one was self managed, and so the lease rates were actually below market (unlike all the others on Loopnet that say they are), so we will be at about 0.75% at close, but should be able increase at lease renewal next Spring. 

At the time we got this under contract I was literally looking all over the country, but just happened to check back into COS mainly because I had a rockstar PM that I used before and thought if I could get back in the game remotely, that if I could use her it would take at least one unknown off the table. Fortunately it all appears to be coming together :-)

Regardless of all that, with your plan, if you can get your wife onboard then I would suggest rethinking your plan. Dave Ramsey is dead on for most things, and there is no arguing with his plan if you want security, but if you are wanting to financial freedom sooner than later, you have to risk a bit. I would offset this risk by having a good reserve account (6-12 months). In your situation, I am with the chorus of go as long as you can with as little down, as fast as you can. Especially if you are planning to move out in a couple of years. 

It sounds like financially you have been thinking a lot like my wife and I have for a long time, and that is to keep debt as low as possible and in all fairness, I think this is the best way to live your personal life. On this though, think like an investor and put things in terms of ROI and opportunity cost. If a 15 year mortgage shaves a 1/4 percent off your loan, but decreases your money available to save and invest, then maybe it is not such a great deal. Having cash available is always helpful. For example, this house we are taking down right now, is habitable as is (at least judging by the tenants it is ;- ) but has about $20-$30K that was identified in the inspection and that I really want addressed so that it passes the "Would I want my kids to grow up in this house." test At first I was looking to angle to get the price reduced so that I could get the work done to a quality that I knew, instead of some Craigslist crackhead. Then when I thought it through, if I got $30K off the price, it was going to take about $110 off my monthly payment. So what's the ROI of that? About 30 years. Instead, we are working with the seller to fix it, keep the price the same, and keeping that money for the next deal :-

Anyway good luck, and let me know if I can help. And hopefully I can meet up at King Chef Diner with all of you BPers in the Springs and have a Grump or Green Chili Cheeseburger (which are the real reason that I wanted to invest in the Springs ;-)

Post: Someone wants to use my Credit to purchase an investment property

Kent Clawson
Posted
  • Posts 21
  • Votes 13

Are they bringing the money and does he have experience in the space? As you say it gets you in the game, but will obviously affects your DTI when you demobe (thanks BTW for your service). As you point out family are tricky, and if it is an out-law it could be even worse. It ultimately comes down to the deal and is he going to bring experience to your playbook and honor to your reputation. I have learned my best lessons from both my best property managers and my worst.

On the plus side, it would be in your name (this can also be a liability as well, but that is what insurance is for :- ), it gets business income on your taxes (which you are not going to be able to much with the first couple years because there is no history), and gets the lessons started (another potential liability as well).

For me I would evaluate whether I could still do Thanksgiving with him if things went south. For example, I know my brother won't jam me up intentionally and wouldn't leave me on the hook if we engaged in something together that goes sideway (thanks COVID for proving this). On the other hand, I have a B-I-L that I wouldn't even invest in a paper sack because he is just a clueless victim of everyone else's actions. Above all, make sure your wife has the same perspective, because the best deal in the world doesn't make a difference if you can work with the guy and his idiosyncrasies if your wife sees things differently (experiential learner on this point  ;-)

Regarding item 3, I would put it back on him and see what he is offering you, because in this scenario you hold the cards. 

Post: Lease w/ Option 2 Buy gone WRONG!!

Kent Clawson
Posted
  • Posts 21
  • Votes 13

Play your own version of playing dumb (except you have a contract to back you up ;- ) I would just remind him that the window on the agreement is set to expire and lacking the $15,000 purchase you will need him to sign a new lease, and it will be at market rate. 

The hardest part of this whole REI thing is "trying to help" people out. Sadly that is the role of family, and to some extent community, but it is also not fair to you to carry a property at below market rates when I assume you got into this to establish a path to care for yourself and your family. I am not saying you should be a greedy jerk, but I have sadly learned that this is one of those that it does not make you a bad person for holding to people to the agreements they made with you. Actually when you treat others with the same level of respect that you would want, then you will find those good tenants. So flip the tables, how would you want to be treated? We would all want some level of leniency, but if you ask anyone on these forums they also would not want to live in a situation where they were not holding up their level of the agreement (granted they are a biased group, but they aren't wrong either ;- )

This part of the path is not and easy one, but you will actually be able to appreciate that you did the correct thing if you just hold them to the agreement. If you can't, get a GOOD property manager (BEST MONEY EVER SPENT) and let them take care of it for you ;-)

Good luck. 

Post: FHA CoBorrower/ Cosigner Loan for an Investment Opportunity

Kent Clawson
Posted
  • Posts 21
  • Votes 13

Hey @Mark Price Did you ever pull this off? I have recently been considering this as an option for my daughters going to school in two different towns, but was hoping to get them into a 2-4-plex. 

From some of the online sources this doesn't seem to be impossible, though I have found some conflicting sources as it relates to using a 2-4-plex for this strategy. Any feedback would be greatly appreciated. 

Post: Turnkey 4plex rentals — $300 CF

Kent Clawson
Posted
  • Posts 21
  • Votes 13

OUCH!! There goes your $300/ month plus

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