All Forum Posts by: Mason Hickman

@Alex Critcher

I used McKissock. Straightforward and easy to use system.

@David Song

Yes, the printing of all this cash will cause long term inflation. A dollar in the future will be worth less than a dollar today. Due to the inflationary environment, holding debt on an asset that can service its own debt helps you twofold:

1. You get the benefit of the debt paydown as a result of profit from the asset

2. You pay off your debt for the purchase price in future dollars that are worth less than today’s dollars. You’ll get the benefit of the asset increasing in relative dollars while your mortgage is a fixed payment based on historical dollar values and prices.

In inflationary environments, savers are the big losers.

@Landrin Lewien

I'll caveat this at the beginning by saying I'm not an attorney and you should consult one. However, you should look at the purchase and sale agreement to see if the damages are restricted to the EMD. See below the standard P&S we use for the buyer's default section. In this example, you would only be on the hook for the earnest money.

15. Buyer's Default. If the BUYER or BUYER'S Nominee breaches this Agreement, all escrowed funds paid or deposited by the BUYER shall be paid to the SELLER as liquidated damages. Receipt of such payment shall constitute the SELLER'S sole remedy, at law, in equity or otherwise, for BUYER'S default. The BUYER and SELLER agree that in the event of default by the BUYER the amount of damages suffered by the SELLER will not be easy to ascertain with certainty and, therefore, BUYER and SELLER agree that the amount of the BUYER'S deposit represents a reasonable estimate of the damages likely to be suffered.

@Vu Nguyen

House hack in a small multi-family property. The savings and low down payments allow you to scale into more units more quickly plus the inherent savings in your own housing expenses. $100K gets gobbled up quickly with turnkey properties. 

@Nicholas OPatterson

Some colleges have a make your own major program. My alma mater, UMass Amherst, called it their Bachelors Degree in Individual Concentration. Other schools may even have a real estate program. I recommend finance as a strong contender so you learn the basics of Excel and become comfortable building complex models. It’s an invaluable skill even with all the calculators that exist out there. Large multi-family investors aren’t using the BP calculators to analyze deals....

@Jr Trotta It depends on the local area. Does the zip code mean it is in a different town with different school system, tax base, etc.? 

@Joseph Belgrad

Unfortunately, giving a renovation budget for a hypothetical property is very problematic because there are so many unknowns. One 1920s house may have knob and tube wiring and lots of deferred maintenance that will add thousands to your budget compared to a more modernized 1920 home. The location you end up in should drive the finishes and budgets because some neighborhoods in Worcester will warrant higher finises than others. It's best to get a local agent or property manager to advise on finishes once you start narrowing in on specific locations and properties. 

@Account Closed

If you're trying to look at it on an apples to apples basis with multiple ARV scenarios, don't take out 80% of the ARV as cash, causing your mortgage to be higher. Set the new loan to be equal to the cash you'll have into the deal that you are refinancing out, assuming that 80% of the ARV is higher than the cash you have into the deal. If you will have more than 80% of the ARV invested in the property, you will have to slice it differently and focus on CoC and RoE in order to make accurate comparisons.

I have a friend who is inheriting a property that is built into the side of a hill and is essentially underground. The entire structure is covered by earth except for one wall of windows and a skylight in the living room. The house is a 3/1 and is in need of repairs and updating from neglect. The land is a very nice large plot that is secluded and abuts a conservation area. 

I'm trying to help her navigate the situation to handle it in the best way possible. 

So, with that, I have a few questions:

1. If you are a flipper, would you flip an underground house? Why or why not?

2. What type of financing could someone get on a property like this? Is conventional out of the question? Will the rates be inflated due to the unique nature of the property?

3. If you are a builder, what additional considerations should we consider if we demolished the house in order to build a more traditional property in place of the current home?

Any insight is greatly appreciated!

@Jerry Poon

The realtor/investor may have different criteria from yours or may be in the middle of projects and can’t add one to his portfolio. As the others said, you want your agent to be actively involved in real estate investing because they’ll understand how you’re looking at deals.