All Forum Posts by: Account Closed

@Meghan Billings I'm going to give you an answer you probably didn't want to hear - you should call a local bank/lender who may have experience with these loans. Best to hear these answers straight from the source.

One thing I can comment on is that in order to use the FHA 203K like you mentioned, it would have to be owner occupied probably by all of the names on the title. I could be wrong there, but a lot of people would abuse the loan if that wasn't enforced.

@Kevin Larson Hey Kevin, I recommend you calculate all of this out and figure out what you'd pay over the course of 30 years. I can almost guarantee that in this case, paying points up front to get a lower interest rate will be well worth it in the end.

@Emmett McNulty No doubt this could be a good deal. I was very interested in a 20 unit in a remote Wyoming town last year but ended up figuring it would be more of a hassle, and in your case, I would stick to your guns of buy and hold rentals. Seems like the best option from an outside perspective. Especially since a remote storage unit probably has very little chance of appreciation.

@Sedgrid Lewis I'm not super smart in hard money, but I know that with the hard money terms you'd probably receive, you'd need a lot of cash reserves before jumping in. Holding a hard money loan for 1 year could end up being very expensive.

Hopefully someone with more experience can chime in - but this could be an option of the landlord and yourself are patient: buy one property at a time, wait 6 months, and then cash out refinance. Then take that cash to purchase the next property. Then repeat. It would also give you time to ensure each property is stabilized and rented. This would get some cash flow in your pocket to help give you a peace of mind rather than jumping in with three right away and having your feet to the fire.

If the landlord is hesitant of this idea - you could pay him a "stipend" each month for holding the property for you. At the end of the day, this would still be cheaper than doing hard money I would imagine. Just an idea!

@Allyson Edwards The best way to solve this is to get out a spreadsheet and run some calculations. If you have to pay 1-2 points but can get a .25% lower interest rate, it could very possibly make sense in the long run.

Alternatively, if you're thinking of a non-conventional lending option like a Hard Money loan, you will almost always have to pay points. But if it is your only option to capital, it might be worth it.

Bottom line I'd say is that there is no right/wrong answer - it's all about how the numbers come out and if you can get an ROI acceptable for your standards.

@Virginia Lara Yes! Right now, I'm re-reading @Brandon Turner's "The Book on Rental Property Investing". It's such a great book - especially as a beginner who want's to understand general real estate principles to help launch your investing career. And of course Robert Kiyosaki's "Rich Dad Poor Dad". That book will just get you pumped up about working hard, investing, and setting yourself up to have your money work for you instead of working for money.

@Fernando Landeros So in today's dollars, you'd be paying a total of $188,000 over 15 years for this property with only $8,000 in cash? I would do that in a heartbeat - especially if you've already confirmed the rents and make sure they check out.

$400 is a little high for CapEx. Is it an older property? Either way - you seem to be playing all of your numbers on the conservative side which would only help you in the long run. I'd make vacancies 5% of total rents so $130 or even 10% at $260 to play it safe if it's a high turnover area.

This seems like a great deal. Another recommendation would be to put this in writing - some contract of sorts. Although you probably trust your uncle, money can do strange things to people and you want to make sure that he doesn't take back his word a few years down the line when he realizes your making great returns.

@Chris Pasternak If you can get it to work down there, more power to you. I lived in Colorado Springs for 4 years and never did more than drive past Pueblo so I can't speak to much to the quality/desirability of living there, but either way, if the numbers work - you can't go wrong.

@Virginia LaraWelcome! BP is a great place to be! I'd recommend start listening to the podcasts, attending webinars, and digging through the forums. There is really so much to learn on BP. You can't go wrong spending a little time each day trying to learn something new.

Best of luck!

@Carl Mccrory Another possible thing to consider is financing. Depending on what you want, most banks are limited to what they can actually lend on. I was very close to putting a condo on contract down in Destin last fall, and three different banks told me last minute that they could not lend on the specific condo development because a certain percentage of the properties were considered short term rentals. 

 A house may be better suited, but then again houses close to the nice beach area will not be cheap.

Another thing to consider is the fact that most property managers will start at 20% for vacation rentals in that area. So unless you're going to be headed that way or have family that can run it, that will eat into that ROI pretty quickly.