All Forum Posts by: Kerry Baird

I looked it up elsewhere.  Overlays are additional lender-specific rules that can make it more difficult for an applicant to get financing.  These are extra hoops to jump through at that specific bank, but the next bank might not have that one requirement...Or they may have a different requirement altogether.   

"...mortgage lenders have issued their own, more stringent mortgage guidelines above and beyond what the government requires via 'official' program guidelines."

I plan on going *wide* by buying the SFRs to meet our goals, before I go *deep* and pay them off.  

Keller in his (terrific!) book Millionaire Real Estate Investor has a table that shows best practices for buy and hold, and using cash-out refinance to maximize your returns over the long haul.  Here are some of my favorite ideas from this book: 

Financial Model:  buy middle of the market houses, purchased at 20% below value, 20% down and a 30 year loan.  There are just two ways to build wealth with real estate: equity build up and cash flow growth.
There is a compounding power of making several real estate purchases over time. It will increase your net worth and passive income exponentially.
For the first ten years buy one every other year using earned income. From here on out you could make all future acquisitions from the accumulated cash flow. Now ramp it up to one house every year for ten years.

One house wouldn't do it for me.  5 paid off houses may do it.  10 paid off houses are even better.  

That place was a bit rugged!  

I'm not an expert in probates; just bought one probate house a number of years ago. In this situation the property was listed on the MLS. The story went this way: Army guy marries Korean woman, moves to the US and years later he dies. She occupies the house until she passes on. They have no heirs. The house was handled through the probate process. We made an offer on the house through our Realtor, and then had to go to court for approval of the offer. We presented our offer to the judge, who looked around the courthouse and asked if anyone else wanted to make an offer on the house. The judge said, "Going...going...gone!" and we got a great buy on a solid house.

Each state has different laws concerning probates, so you might read up on your particular state and local area.  Heirs may or may not be interested in selling; or as in our case, there were no heirs.  But there were notices of probate hearings in the courthouse, so that might be another place you could start learning, by going to your local courthouse.

Your question asked if it is a "good idea" to invest in two new areas.  I don't know your parameters for a "good idea."  However, we live overseas and wanted to invest in the US so we have purchased single family residences from a distance, sight unseen.  The potential for making mistakes is still there, but limited by having a good real estate agent who knows the area and will guide you to properties that fit your criteria.  

So you have two locations...have you set criteria?  I knew I wanted entry level or starter homes near good transport links, couldn't be over 10 years old because we didn't want to do repairs at a distance, at a certain price range, in a certain type of neighborhood, and must cash flow at a defined price-to-income ratio. Define these things so your agent can work with you to select potential purchases. Our real estate agent recommended several lender contacts, provided for the inspections, and sent a lot of emails to answer my questions. We did our closing in part via electronic documents, found a notary for our signatures on the hard copies and used FedEx to send the paperwork back.

You don't mention investing at a distance, as I have done, but research is research.  If you are clear on what your parameters, what you want in property, where in the specific locale you want to purchase and identify an agent who can step into your shoes, identify property management for the tenancy, I don't see why you cannot do this.  

I would pay off the debt over time, building up the credit score and at the same time you build up cash reserves. 

For me to feel comfortable in buying the next buy-and-hold property, I need an emergency fund, and I save up to 25% for the next  down payment for the next property, as well a couple thousand in reserves for make-ready, marketing, and vacancy on a new purchase.

I've also bought houses where I didn't need the 25% down, as with the few sub2 deals I bought, but these had different costs such as a marketing budget, and most every one needed significant repairs and upgrades. 

I'm at the phase where I want to save up for the next two or three long term holds, and then pay them all off. In the past, we have used annual tax return funds, work bonus payments, an inheritance, and have cashed in one IRA in order to buy the next property.

As far as good books:

Mike Summey's Weekend Millionaire was a very good start for me.  

And Keller's Millionaire Real Estate Investor has been my go-to upper level book.

I have done the same on my sub2 deals as above, with regards to the "additional insured" aspect. My goal was to be in and out in three months, which was the timeline for foreclosure in the state in which we were working. As long as I had a POA I could talk with the lender, on the occasion that happened.

This is a really good question, especially for people who are buying out of their local area, or like you, buying in a new market.  I have bought several properties at a distance, where I didn't have my eyes to gauge how a market was over time.  

-I used a local (to the area) agent to ask for their opinion.

-I read up on demography for big-picture trends, looking at what the various cohorts want in their housing.  

-I use census data for trends in people moving from what place TO what place.  

-On the micro-scale, I like to buy near military bases or similar government employers, and also near transport links. I want long-term paychecks as well as access to highways.

-In the past, I subscribed to a data newsletter; I found one specifically for apartments when I was looking at multifamily.  The last link below has been sending me emails for years and I read the free stuff, and he's also got products for pay, which I have not used.  

Here are links to a couple of sites that I found with a search for population migration patterns.  "Single family market research" and "multifamily market research" are good terms to use.  Depending on what you decide to do, you might look at the number of permits pulled for new construction and whether that number is increasing or decreasing.  It is a rather complicated picture...but to me, demographics is quite important for my long-term vision because it correlates with the type of real estate we work with: apartments for young singles, starter homes for rent/sale, family homes, larger homes for the career professional, and downsizing houses for after the kids leave, and lastly retirement homes.  

http://www.netmigration.wisc.edu/

http://www.realclearpolitics.com/articles/2013/12/...

http://www.census.gov/hhes/migration/

http://www.realestateconsulting.com/

That sounds like such a great plan!  I would love to do an RV Exploration Trip when we return from the UK.  Thanks for the idea~