All Forum Posts by: Renata Johnson

Welcome! We are currently in Newnan but bought our first two rentals in Lagrange. We are up to 11 units and growing.

Feel free to PM me if there is anything I can do to help!

@Renata Johnson

Initially joint venturing is a great option. Most investors want to see a partner have some skin in the game. Save up for remodel money and let your capital partner invest the acquisition.

Would love to have a conversation with you about your experiences and business. Please feel free to reach out to me and schedule a call. Best of luck in all your endeavors.

So are you in the Newnan area or somewhere similar that's between those two cities?

I would reach out to friends and family and see who is interested in partnering if that is the route you want to go. You can also try to find motivated sellers and do seller financing, where the seller holds the mortgage for you and you negotiate the terms. So you could negotiate low down to get started. That is a strategy I would look in to. That is how I purchased my first purely investment property. You can also buy a primary residence as an investment property and only bring 3.5% with an FHA loan.

@Renata Johnson

I had trouble following the numbers on your post. I did not read all the other post, so apologies if this was already said.

First, you stated this was structured as a rent-to-own with no deposit. How much are you into this deal? Did you excercise your option to buy? If you are still renting. Stop making improvements and fulfill the the term of the lease and then back out. You may lose the money for improvements you have made. However, better than being stuck with a bad deal.

If you did excercise your option. And you are now the owner, is this currently owner occupied? Any time of lending on Owner occupied homes are a PITA. They should comply with the Dodd Frank act. The Dodd Frank affects consumers of residential properties. Hence why many Hard Money lenders require an LLC to be the buyer of an investment property. However, If I'm not mistaken, if you only lend on a few homes a year you may be able to get away with it. Not sure why there are 2 prices? Seems predatory to me. I would consult an Attorney, that is familiar with lending laws. If the Attorney feels that the Seller violated the law he would have no problem taking him to court. There is also a good chance it may spook your seller, and he may let you out of this deal.

@Renata Johnson, okay...there's been a lot of other good advice offered so I'll offer a little more (but use their advice too).

The whole "you have to have perfect credit and put 20% down to get a loan" is a flat out LIE.  Maybe it's a little more difficult now due to uncertainty with c-19, but as little as 3 months ago banks were making mortgage loans with less than 3% down to people with low 600 credit scores.  Some were getting into homes with scores in the 500s, but that is where higher downpayments come into play.  Ask around and see what the real deal is before trusting this person.

Btw, the statement that "your payment can go up due to taxes and insurance" only matters if the Seller/Owner is paying taxes and insurance for you today.  Is that the case?  The only reason a bank loan "goes up due to taxes and insurance" is if the city increases your taxes or your insurance provider increases the rate for your policy: that happens almost every year regardless of whether you are paying the Seller/Owner or the bank, so it's kind of a "duh!" statement meant to confuse you. Bottom line: who is paying the taxes and insurance?  I'd be sure to find out that they are being paid and by whom.  Owners sometimes "forget" to pay insurance or taxes.  Wouldn't it stink if your house burned down and the owner "forgot" to pay your insurance policy?  Or what if you tried to buy out the contract, only to find the property is behind 3 years on taxes and about to be auctioned off by the county for delinquent taxes?  Yep...you would be out of luck!

I don't care what he PAID or how much $ he put into it: what's the market value, "as is", today?

@Renata Johnson

Before you buy or escape the deal get the house appraised by a professional and also inspected by a professional. You really don't know for sure if it's a good deal or not. I do know that 8% interest is about twice what the bank or mortgage company will charge you but they would need an appraisal and inspection as well. Early on in the game you need to have a team to work with. I have a mortgage broker and appraiser and a home inspector plus maintenance people that I always deal with. They know I am a repeat customer so they are looking out for my best interest as well as their own I also research recent sales and current rent for the area. Don't get too discouraged. You make have a diamond in the rough. Just do you due diligence. I think the owner sounds a bit suspicious but can't really tell with the unknowns.

@Renata Johnson,

I feel for you,  but the red flags were waving high!  I would just take this as a learning lesson, and be happy you didn't have to put more money down.   These situations are best for people who can't under any circumstances own their own house and get financing,  not investment properties. 

Eat your losses and move forward, if rent should be $600, no one will pay $825 or $900 unless it's the best of the best, and it will cost you a lot of money to get it to that, and it will be tough to keep someone happy at 50% more than other rentals.  Low income renters don't want to pay more-- they are low income, they want cheap!     

Sorry, this was just poor planning, use it as an expensive lesson learned, and move in 6 months.   The owner didn't do anything wrong, he-- along with everyone else-- is just out to make money, nothing wrong with that!   It's VERY common to see people buy houses for $30K here and do owner financing for $70-90K.

Don't let it set you back, cough it up as a bad decision and move forward, just a small bump in the road!