All Forum Posts by: Account Closed

@Max Malec Are you saying you have $200K cash to use or are you saying you are looking for a deal up to $200K?

Lenders look at W-2 income, monthly expenses, and debt. So if you have no W-2 at the moment, you can always get a job just to show them your working and brining in income. Debt to Income sounds like your biggest inhibitor, therefore, get started decreasing debt and increasing income. If that means using cash saved for RE to pay down debt, then so be it.

As far as partnering, having a good relationship with your partner is super important. If you don't know anyone who can be the capital side of the deal, you need to start networking and building trust/credibility. Just my two cents.

@Max Malec Have you given any thought into trying to use the FHA 203K for your first deal? This loan product allows you to include rehab costs into the loan value on a property up to a 4-unit - all fo 3.5% down. This seems like it would fit in line with what you are trying to do for your first deal. You have to live in the property for a year as part of the deal though.

While your living there and when your done rehabbing, you can then look to acquire another deal, either with your own money or together with a partner. After the year is up, find another property to use the FHA. Seems like the best way ahead for you if you can find eligible properties.

@Juan Espinoza And once you find someone, your pitch needs to be compelling enough for them to be excited to invest in you as opposed to other investment vehicles.

Have a plan written out with your strategy on the deal, projected ROIs, and any other stipulation that you can think of. Make sure all of your bases are covered before taking on their money.

That sounds like a solid strategy. So for a very hypothetical and generic example:

Purchase Price: $100K ($20K Down) / Closing Costs + Misc: $5K / Rehab: $10K = Total Cash of $33K

If the property rents at the 1% rule, or $1,000 month and your able to cash flow $200 month, you'd be splitting profits 60/40 let's say with your FIL. That would be $80 month for him, or $960/year. That's just shy of a 3% annualized return on his $33K in cash. Not great - but if you can find way to make the deal better (lower purchase price, minimize rehab, increase rents, get a duplex/fourplex instead of a SFH, then the numbers start making a little more sense.

@John Shackles Welcome to BP! It's a great place to learn and connect!

@Caleb Anderson You can structure any way you desire. Even though he is your father in law, it can't hurt to put terms into writing just in case tensions rise in the future. If it is a flip and he's bringing the cash but you're doing the labor, I think giving him 50% of profits may actually be excessive. Risk aside, bringing the cash to the deal is the easy part. Think of everything else you'll have to do while he would just be collecting his profit.

I would advise against him completely paying off in cash - especially since its your first deal. What if things go south? Mitigate losses by minimizing cash invested up front. Having him fund the down payment and maybe some rehab and then leveraging the rest of the property on a mortgage would make much more sense in my opinion.

@Caleb Anderson Depends on your comfort level, but 45 minutes seems very manageable. Would you plan to manage the property yourself? If the rents and rental demand in Locust Grove are stable and you can cash flow, it would surely be simpler to manage/oversee.

It also depends on what your desired ROI is - as long as you run realistic numbers before making any decisions, it seems that either course of action can work for you.

@Victor Andrade Right off the bat, you want to see if they are investors themselves. If not, they will throw every single multifamily deal at you regardless of investment potential and just waste your time. A good RE agent for an investor like yourself understands your goals and works to meet them with applicable listings.

@Vanrith You Welcome! LA is a tough market to get started, so wise of you to look out of state. I'd look into some AZ or NV markets. Maybe call up some realtors and make some connections in places you'd be interested in. Get on some auto-email lists with realtors in your desired areas. This way, you can get eyes on a property as soon as it hits the market (or maybe before it hits the market if you have an awesome realtor).

Continue to learn about out of state investing and listen to the BP podcasts. There have been some great ones on investing out of state recently.

Financing can be tricky out of state. You don't have access to some of the low-down owner occupied loan options that allow you to house hack. You can always get creative, but you'll pretty much be held to conventional which will require 70-75% LTV. Another option is hard money/private money but that has its own set of risks.

Bottom line is keep learning everyday! Best of luck!

@Tom Lipps Definitely don't rent it as a duplex if its zoned commercial. I'm not familiar with OH laws, but you'd want to work with the county or city zoning commission to discuss the process for re-zoning. They'll be able to give you more details on what is classified as Zone B as well. It would have to be re-zoned before you could start converting it to residential.