All Forum Posts by: Orion Walker

Each situation is different, so hard to give any hard advice, but here's a few thoughts from my experience on our tri/quad over the last two years:

When I started I thought I would do a lot of the work myself. What ended up happening is that I puttered along and the units I was working on sat vacant. I had two tenants that were nearly covering the mortgage, so I thought I was saving money by doing things myself. Eventually I realized that every month that the unit I was working on stayed vacant I was losing $1200. That made the money I thought I was saving by dong the work myself look pretty pathetic. So, I burned through 15k that I borrowed from family and finished the large unit and got it rented. I went middle of the road in terms of remodel. new fixtures, refinished the hardwood, but stuck with used appliances in the kitchen and held off on a kitchen remodel. In my market I wouldn't be able to get much more for the space no matter how nice I made it, so I think it was good that I didn't spend more. 

Once that one was rented I moved on to turning a random garage/empty rooms space into a 2/1. This was a pretty big job, adding some walls, a bathroom, a kitchen... I learned from the first round and hired out almost all of the work. I work full time, so thinking that I could do it on weekends or evenings just wasn't realistic, and I kept reminding myself that the sooner I finished, the sooner I'd be bringing in another $1000/mnth. It still could have gone faster, but after a coupe months we had that one fully remodeled and rented. I put money on credit cards and a line of credit at the bank to get it done. Now a couple of months later I have the money to pay that all back. The property is now fully rented, cashflowing well, and I'm using the funds to pay off debts as needed, while working to get into my next property. 

So, I guess what I would say for your situation would be to access money however you can (your savings, line of credit, prosper.com, friends and family...) Get it done. From the sound of your area it sounds like you won't be competing with the brand new places, but you'll be better than the cheap places. So, look at what other places like that look like, what kind of features they have, follow that lead, estimate middle range rents, and go for it. 

Thanks! @Mike Martin. I just read through the specs on this loan and it sounds like a great one to know about. I really appreciate you bringing it to my attention. I just sent info over the mortgage guy I've been using to see if he can do it. If not, I would definitely like to know who could in Cali. 

Thanks!

@Val Csontos, I literally had a dream last night where I was explaining your realtor payment plan to someone. I guess I really do have RE on the brain lately :)

Thanks again for the ideas/info.

@Franklin Romine, Yeah, I struggle with not getting attached to particular properties, and this one is particularly hard because its kind of a blend of personal interest and investment interest. 

As @Jon Holdman, asked, yes, we were looking to go owner occupy on this one. Partly because that would keep our money outlay down, and partly because we like the idea of occupying one and fixing up the other to rent (guess I didn't mention that there's a main house and a smaller "guest house" at the back of the property). 

The thing that frustrated me the most on this one is that they don't have another offer, so why not let us get the place appraised and then discuss what it would take to remedy whatever gets called out in the appraisal. 

I guess our best bet is to hope they don't get a cash offer and then maybe they'll work with us. And in the meantime I'll build my connections/marketing so that I can get out of so much chasing/waiting and into a stronger position.

Thanks again for the helpful comments.

@Val Csontos, thanks for your thoughts. Yeah, my main take away from my last couple tries has been that I really need to do some driving for dollars and marketing so that I can connect directly with motivated sellers. I'm working on getting my license, so that will help me deal more directly too. I'm getting tired of working back and forth through various buyer/seller agents and always being at the mercy of what the seller wants (via their agent), what the bank wants in terms of loanability... I want to be in a stronger position where I get to make the buy/price decisions rather than the banks and listing agents.

That's a unique idea about asking to borrow off of your agent's commission. Never heard that one before. Cool that you found someone willing? Were you paying significant interest on that money?

Thanks again for your thoughts/advice.

-Orion

Hi Folks,

Seller declined our conventional loan offer (225k, full asking price), seller and her agent don't think the property will pass appraisal/inspection process (needs roof/siding/decking work). They are holding out for a cash offer, but if they don't get it they said they might work with us. 

We are pretty hot on this place, so I'm just wondering about various financing options:

A 203k loan would be a good fit, but I currently have an FHA loan, so can't do another one right now. Any other loans out there like an FHA?

Our conventional loan offer was 5% down, instead of the typical 20%. Our loan guy says it doesn't matter because the same appraisal process will happen regardless of the amount down, but I'm wondering if more down would make a difference. 

I've never really explored hard money or other such routes, so I don't know if that would be an option. We don't have a lot to put down (maybe 20k tops going on current funds)

It is a good deal, but not a crazy below/off market deal, so not sure investors would want to jump in and fund. Seems like a great place to fix and hold. 

I could go max out my friends/family/crowdfunding options, but that probably wouldn't get me much beyond 20-30%...

Anyhow, let me know if I'm missing something in terms of a strategy that might appeal to this seller.

Thanks,

-Orion

Hey Roger,  Welcome aboard. I know what you mean about the podcasts I listened to all of them in about three weeks. My wife and I used to live and work in Palo Alto Menlo Park until we moved back to our small town north of the bay. If you're ever in the Ukiah area let's grab lunch.

@Jassem A. Thanks for your feedback. Yeah, on the one hand I'm happy to have everything occupied with rents coming in, but the downstairs renters are my best renters, so I'd really hate to lose them because of the little upstairs unit. 

Not sure how hard I should be with upstairs guy. Meanwhile I think I'll check in further with downstairs folks to get a better read on how content they are.

Any additional pointers from folks would be great.

Thanks!

Hi Folks,

I have a 4plex and I rented one of the small upstairs apartments to a single person. I recently learned that a girlfriend and toddler have been living there too, or at least there quite a bit at all hours. I really don't want to lose my downstairs tenants who pay more for a bigger/nicer space. It is an old building, so sound between floors carries easily. Month to month rental agreement states that anyone that is there more that 10 days in a 6 month period needs to have written prior approval, or breach of agreement. 

So, downstairs folks haven't mentioned leaving yet, but have noticed increased noise and I get the impression they aren't super happy. Upstairs tenant hasn't checked in about additional people. Haven't spoken to him about situation yet.

So, any thoughts on how I should proceed? Experienced landlords out there, what would you do?

Thanks?

Hi Folks,

It looks like I'm moving forward on a house with a HomePath Renovation loan. My lender has done some FHA 203K's but never a homepath renovation. Everyone I've talked to has said they are really a pain to deal with because of all of the details and paperwork, and I get that, but at the same time, I don't see a lot of opportunities where I can buy a house for 5% down (higher than market interest rate, but no PMI) AND finance up to 35k in repairs/upgrades on the place.

For someone who is eager to move forward but doesn't have a lot of cash, this seems like a pretty good option. Your thoughts? Experience with HomePath Renovation?

Thanks!