All Forum Posts by: Melissa Kirchhoff

@Jacob Flores - A lot more information is needed. I'm not a fan of renting at all, personally, but I would say what is your mortgage payment versus what is rent? If it's similar, why do it? Do you mean just rent short term so you can buy another property?

Here's some things I'd consider with the info you gave me:

1. Can I cash out refi? What would the payments be, and could I use that cash out to put money down on another property, will you qualify for another mortgage with that refi? What would the payments be if you did?

2. If you do sell, what could you do with that ~100k in equity? Could you buy for cash, or buy something bigger and use that as part of downpayment/repairs?

If you go that route, I would consider house hacking versus renting. Buy something 2+ units and live in one and rent out the other and live free and clear (or have a small payment) and continue saving to repeat the process.

Also, realize that nowadays you don't need 20% down for most loans, if it's owner occupied. There's many different loans out there with low money down, so if you have a trusted lender, discuss some of your options with them. If you don't, interview some and find one, when you have someone good and creative, they can be worth their weight in gold in helping give you numbers for different options, then you have some facts to base your decision off of!

@Sherry Gao - IMO, yes, you should still do the due diligence as if you were purchasing non-new construction. I would still recommend a home inspection, I've seen a number of new construction homes where steps were skipped and things needed addressed. Granted, they usually weren't as big as other properties, but still, worth doing that and making sure there's not something that will hit you down the road that could have been taken care of before closing!

@Whit Dhamer - I would agree with Joe's point except I think I see what you are saying, you want to lock it up so that you can do renovations in the meantime and not lose out on any time while waiting to qualify.

I also don't love situations like that, my suggestion is to talk to other lenders if you haven't already. Is there other types of loans you qualify for? I don't understand the comment on taxes, you would be required to file Schedule C if you are self employed, what was the mistake? And why would Q3 of next year clear it? 

Unless you are financing somehow different than I do, none of these really align with what I know about lending, so that makes me wonder if there's something with the lender versus you. I would get at least 3 opinions before pursuing something else like seller financing. I like to recommend local credit union/small local bank, a bank that you bank with and a big bank as the three. Sometimes one can do things others can not because of their underwriting situation. I also usually recommend people try 2 big banks, one that sells their loans and one that doesn't (as much anyway) because if they keep their loans in house, they are usually able to lend more flexibly. The one I know that keeps them in house is Wells Fargo. I have a Chicago guy I've worked with who really impressed me that I could connect you with if you wanted. 

No matter who you use, just get another opinion before moving forward with seller financing, and if you do, please make sure you are protected in this. As an agent, I don't like the idea at all either. We've seen what can go wrong and the risk IMO outweighs the reward of starting work early. If the deal is just really excellent and you don't want to lose on it, maybe offer up some huge earnest money or other benefit for seller and see if he will let you lock it up until you qualify. If that doesn't work, try to offer some other type of benefit if it's worth it. Just please try to use the seller financing as last resort!

@Account Closed - Great idea in the move and investing out that way now! Also, having that land I always think is a good idea and seems like an amazing price for that. Be cautious of asking seller's agent, remember what their job is ... 

Also, do you have a buyer's agent? They are usually seller paid, so you should probably get one if you don't, and that's the sort of questions they should know or know lenders to be able to talk to to get you those answers. Also, for other due diligence issues since you aren't familiar with the area, I think it would be an excellent move, they might have some inside knowledge that might save you from buying a pig.

@Tim Polk - Right now I just invest in Ottawa, IL, where I live. I'm actually looking more out west of here right now (like 30-40 minutes west of me off 80 since there's some nice places and amazing prices) and I'd love to expand out even more in the future. I've just in the last few days started considering reciprocity states, but I need to learn more about that and I probably wouldn't do it just yet, possibly in a few years though (like WI, IN, FL and maybe CO). 

Mainly, I want to get to the point where I can build a townhouse style complex here in a certain school district and rent them out. That's my big picture goal to have something like 100k+ in passive income for my future. So in short, I know the end goal and will do anything that makes sense to get to the point where I have those connections and resources (and finances!) to do that.

I'll check out that link, as I said, I like keeping my options open! Ultimately, I stick more local because I know the market and have connections to make everything easier if I need to be more hands off. I get nervous about going too far out and having to hire help. Both because I'm terrible at networking and a control freak! But those might be good hurdles to overcome if the numbers are good! Thanks!

@Tim Polk - I am the same, I love audiobooks when I'm driving (I used to commute a lot more so I cranked through them!) and I listen to podcasts at the gym as well. It's great to feel like I'm doing something good while I'm driving or working out, double gains! And good for you paying that off!

Yes, similar as well, we love listening to things like that when we take road trips, I have the real estate side and he has the finance and budgeting side and he's just getting into stocks and stuff now. So it's very interesting and something we really enjoy discussing and planning together. He definitely makes me a better person and we totally drive the passion in each other to work hard now to have mailbox money later in life!

So with the FHA, yes, it makes sense now what you are saying, keeping liquidity and even with her having her own in her name to use another FHA. No issues with that. It's an excellent idea, but please still look into low down, they are definitely win/win. Because there's still a few drawbacks IMO on FHA - the PMI never goes away and if you refi then the rate may be way higher and closing costs again have to be paid, versus conventional the PMI goes away once you hit 20%; the inspection you have to pass for government loans. It does have benefits like higher DTI and stuff, but it doesn't sound like there's an issue with that.

With the plan, I understand, things will fall into place and change, it's just good to have a general game plan and navigate as you go.

She's not a guru, she's someone I work with but a very smart investor and person. I try to take a lot of cues from her and I think staying on top of the trends and news is very smart!

For attorneys, I would talk to some agents, actually. They usually get the most inside scoop, I have a few local ones that are absolutely amazing and very reasonably priced, one I use for my transactions because I know she's more on top of it than even me, she knows every date in the contract and hits them perfectly. From there, just try them out, but see if a few in your local area have similar recommendations.

For sites I like to check:

www.hudsonandmarshall.com

www.xome.com

www.auction.com

And yes, I think the stomach compass thing is key! People think it's silly but I trust my gut with many big decisions and in the situations where I've been able to see the results later, it's served me darn well! So yes, trust that!

@Yisroel N Moebus - Yikes! Red flag to me! Get those answers! Let her know that's very important for you to give her a number and let her know it's not necessarily a deal breaker but you need those answers to continue on. Lots of sellers try to dodge the truth so I found creating sort of a safe space for them to approach it helps everyone. 

I'm curious if any agents take advantage of reciprocity for investing or such? IL has it with FL and an agent in my office is doing the snow bird type thing and she spoke with another that does similar and said it's amazing, when it's slow in winter in IL, it's lucrative out there in FL. I started thinking this might be interesting to explore, or maybe use from an investor stand point.

Anyone do this and can anyone offer any insight on it from and agent POV or investor POV? Worthwhile or not?

@Yisroel N Moebus - Just do your due diligence on that. I would say see it first though. All the time around here people do this, and it can be something like a dining room made into a bedroom or basement bedrooms added (but like, MLS wise can't really be considered bedrooms) or things like that. People be crazy. So just check it out first and then, if it does seem like an addition, ask questions from the seller like that and do the research needed from there. Seems crazy to make a 5bed into 8 in general without converting into duplex or something though? That has me scratching my head...

@David Sussman - So, obviously I'm not in your local market, but hopefully I can help. Around here, even though I'm considered a rural part of Chicago (about 90 mins outside Chicago and mostly corn!) the demand for properties like that are HIGH! Like, honestly, you wouldn't believe. 

So if you don't know, what I would say is call some local real estate agencies and ask. They know the market and most likely, they won't mind telling you.

Also, here's a few other things that jumped out at me. Here, they can't lend on trailers, so they would have to be removed from the property. You would think they would be seen as a plus, more property and rent income and what not, but for some reason they aren't. I've talked extensively to lenders about this and they all shrug and say that's just how it is. I think it's for the reason you said, no comps. Also, most won't lend on personal property, so keep in mind that might have to be agreed to outside the contract (like the cows and such) but we have seen stuff like that happen. We usually just negotiate it into the contract and have attorneys draw up something for the personal property which is agreed to off the record, in a sense, that just the lender doesn't know about this. Most lenders I know are fine with this, like a don't ask don't tell policy.

So unless your target is going to be a cash buyer, these are some things I'd be considering, and some things I'd be discussing with the seller. Selling stuff off separately might be your best bet in terms of making money. So you can add that to your resume, cow and trailer dealer! ;-)

As always, things will be different for different lenders and different places, so call and talk to some lenders locally. Honestly, most I've met are happy to chat about it and give you feedback. Good luck!