All Forum Posts by: Luke G.

BS in Kinesiology (completely worthless) and a doctorate in physical therapy.  The W2 salary has helped me look good for the banks, but I likely would've went a different route if I had the chance.  

I use these all the time, they can work quite well, but as others have said, you need to to underwrite the seller.  I've gone as far as sending my personal financial statement and tax returns to seller's to get them more comfortable being in second position.  It can work well, it can be a win-win.  It lowers their tax bill for this year and I'm more willing to pay a bit extra as I don't need as much down.   

Mine is easily contractor's going over-budget.  

You needed to be more on the ball on this, both you and your agent should have been in better contact with the lender.  You may have had a terrible lender, but not finding this information out is on you.  Not getting the appraisal done is your side's fault, not the seller's.  Seller has zero obligation to sign an extension if they don't want to, it's your problem to get everything lined up to close on-time, not their's.  If I was seller I likely would keep the earnest money as you're the reason it didn't close, not them.  I don't think you'll have much luck getting your EM back, nor should you if you correctly described the situation.

The lesson learned is you need to have a couple different lenders in your back-pocket that will actually do it.  I had a 9 property deal this summer where my lender told me the day before financing contingency was up they wouldn't do the deal, I was upset but I was able to quickly switch lender's due to my previous relationships.  I scrambled and found another lender that could do it.  Got the appraisal done and still closed in the nick of time.  When I get something under contract I blast out about 10 e-mails and see who can do with rates and who will immediately order the appraisal.      

@Matt Huss I own a few student rentals and also have had success with a variety of creative financing options including having the seller secure a second mortgage for a portion of the down-payment with a balloon due after 5 years (I've had some banks that will even loan at 80% LTV with a 20% seller's note so I have nothing into it). I generally go in with full-price offers with that financing contingency (negotiable, anywhere from 5-10% seller's note, but you can usually get a much cheaper rate than hard money) with a balloon due at the end of 5 years and have done very well growing my portfolio with this, but you need to have a plan when that balloon is due. You can't just leverage to the gills and expect to refinance when the balloon comes due. Fannie or Freddie won't do these, you'll need a smaller local lender that does commercial loans. All of mine are on a 20 year amort, and anywhere from a 5, 7, or 10 year balloon or ARM.

I generally force appreciation immediately after purchase with a semi-version of the "brrrr" by renovating it right away.  I then either refinance out of the seller's note or just leave it and have a contingency plan to pay the balloon at the end of 5 years.  I've done a few deals where I refi out and don't have any money in (a true brrr), but most of mine I leave anywhere from 5-20k in the deal which is fine with me.

If you haven't purchased anything yet, I'd definitely house-hack a 4-plex with a conventional loan. FHA loan is fine, but there are other first time home buyer options with as little down as 3-5%.

All of my units are pet friendly, I get an initial non-refundable pet deposit and an extra 50$/month.  I don't figure it into my cash flow analysis, but I have 37 units and around half of them have pets.  It's a nice 2k extra each month.  It also helps keep my vacancy rate low as one of the markets I invest in it seems most people have pets.   

@Mindy JensenA LOI will certainly not be enough.@Mindy Jensen

@Mindy Jensen a standard OTP like linked will work just fine, just simply modify for closing date, purchase price, contingencies etc.  I've bought a couple all-cash properties and this works best in my opinion.  Once you have the document signed you can send it to a closing company of your preference and set a date for closing and then you're done.  If it is in the central or western part of the state I have some closing companies that have done worked well for me if you're looking for a reference for one.  Congrats! 

I use 10%, but everyone is different.  If you're house hacking and living in it you likely won't be paying anyone labor for things you can do.  

I wouldn't even consider buying it. Your initial out of pocket expense may be 14k, but that isn't what your actual out of pocket expense is. You don't have renters that are living in the car making the payments on the loan, you are. In RE we do pay ourselves first, but how is buying a depreciating liability paying ourselves first? Paying ourselves first means saving for REI or putting it away in a retirement vehicle, not buying cars.

@Marcus Auerbach.  The one who didn't get it was basically just showing me the house as my normal realtor was too busy to get into it and a ways outside of where he normally looks.  I thought for sure she'd be jumping at the bit considering she'd have a chance to double-close, I guess not.  I wouldn't ever actually work with someone like that, I could tell in the first 30 seconds talking to her she was clueless when it came to rental properties.    

My normal realtor certainly gets it, he also owns a PM, and knows that everything I buy he gets to manage.  He definitely gets it, many don't though.  A few of the houses I own I've never even been in since he went through them.