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All Forum Posts by: Ryan Tongue

Ryan Tongue has started 8 posts and replied 46 times.

Post: Finding "red flags" on older property listings.

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20

Hi all, quick question today.

I've been looking at a few older property listings while searching for a buy-and-hold rental property in Michigan. I'm aware that I should be watching out for "red flags" on these older properties (i.e. old roof, water damage, mold etc.). Firstly, what are some of the big issues I should be watching out for with older properties beyond what I listed? Secondly, how can I find out more about repairs and work that's been done on a property, especially from out-of-state? Using the roof example, where can I find out how old the roof is or when it was last replaced?

Thanks for any feedback! 

Post: Getting Started in Real Estate - Knowing What Is Worth Your time and What Isn't

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20
Quote from @Logan Laperriere:
Quote from @Ryan Tongue:

Hi all,

I'm a new investor in the process of making my first purchase out-of-state. I'm currently in a bit of a waiting period as I get my financing figured out (waiting for lender responses, etc.). On the note of making good use of time, I'm wondering what else I should be doing at this point. 

I'd love to keep my momentum going, so any advice on where I can put my energy as I wait for my lending situation to resolve would be great. Thank you!


 Hey Ryan, 

To keep gaining knowledge and momentum, decide on your target market, which I believe you already have. Then begin running the numbers on potential properties in the area. Running numbers on local properties will help you to quickly determine whether a property has the potential to cash flow or not. That will help you to decide what properties to consider when you are ready to buy. 

Go Lions!!


 Hey Logan, 

Thanks for responding, again! I'll reach out via text -- I'd love your input on a few markets I have my eye on.

Lions going all the way!!

Post: Getting Started in Real Estate - Knowing What Is Worth Your time and What Isn't

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20

Hi all,

I'm a new investor in the process of making my first purchase out-of-state. I'm currently in a bit of a waiting period as I get my financing figured out (waiting for lender responses, etc.). On the note of making good use of time, I'm wondering what else I should be doing at this point. 

I'd love to keep my momentum going, so any advice on where I can put my energy as I wait for my lending situation to resolve would be great. Thank you!

Post: New investor, looking to build my credit

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20
Quote from @Derek Brickley:
Quote from @Ryan Tongue:
Quote from @Derek Brickley:
Quote from @Ryan Tongue:
Quote from @Derek Brickley:

Hey Ryan!  It's awesome you're thinking about this now.  There are a few steps you can take (I did these steps before graduating and buying my first househack):

- If someone you know has an excellent credit history, you can ask them to add you as an authorized user to their account.  This will help you "inherit" their good credit and age of account.  Note that if they have poor history or if a payment is missed, it would reflect on you as well.

- If you don't think you would be buying in the next few months, opening another line of credit may be a good option.  Typically the hard inquiry from those will only last a few months, and entirely drop off your credit after 2 years.  

- You could also look into sites like Experian Boost that would report things you may currently pay (phone bill, utilities, streaming services) and that could also help there.

With your situation, even though you may have perfect payment history it is difficult to start because you don't have a large mix of accounts (credit cards, auto loans, mortgages, etc.) and the average length of accounts is small.  An important note with your current card (or any others you may get) the magic number for utilization rate seems to float around 9%.  So for example, if you have a credit line of $1,000, research would suggest that the optimal balance on that account for improving credit would be $90 or less.  Make sure that there is a balance on the account every month though, as having $0 does not help you improve your payment history or utilization.  Keep the balances low, and then pay the previous month's statement balance in full to prevent paying extremely high interest rates.

No affiliation or anything, but as a student I started with the Discover IT Cashback card.  This was a great first card and was not difficult to qualify for.  My next card I got while a student was the Chase Freedom Unlimited and gives 1.5% cashback with no annual fee, and getting Chase cards early on helps you avoid their 5/24 rule.

This is a lot but if you have any questions, feel free to reach out!

Hi Derek! I really appreciate the detailed response.I have a number of follow-up questions for you if you wouldn't mind answering them. I'll try to break them up:

- I'm already an authorized user on an account with exceptional credit. That being said, when I applied for a conventional loan 6 months ago I ran into an issue I'd love clarification on. Essentially, while my credit was in good shape, the lender still refused the loan based on the fact that the majority of my credit score could be attributed to the account that I'm an authorized user on. This has left me confused, as I'm now not sure whether being an authorized user on an account is a good or bad thing, or if it's situational. 

- I think there's a chance I buy within the next 2 months, however unlikely. How would opening another line of credit now affect my ability to do that? It would be great if you could expand on hard inquiry as mentioned in your second bullet point. If you could even tell me what to search for so I can find out more myself that would be great. 

- I currently have a Chase Freedom Flex that I use to pay for groceries, gas, utilities. I expect I utilize anywhere from 10-30% of my credit limit each month. Based on your suggestion to keep my usage down to the "magic number" of 9%, should I instead use debit on gas/groceries once I've hit 9% of my credit limit for the month?

Thanks again for responding to my previous post. If you're able to respond to this post too that would be super helpful.

Ryan
Yes happy to help!  Starting with the top
- if you don’t mind me asking, what lender told you that about your authorized user account?  When it comes down to it, that really wouldn’t matter.  We have never had an issue with that before
- if you may consider buying in the next couple of months, I would encourage you to hold off on opening new lines of credit.  There is no hard and fast rule, but generally speaking the hard pull from a new account (mortgage, auto loan, credit card, etc.) will only temporarily impact your score (maybe 3 months) and will drop off entirely in 2 years.  That said another impact of opening a new lines now would be your ‘average age of accounts’.  When you open a new line of credit, your average age of accounts will decrease and that will also have a temporary negative impact on your score.  

 - for the utilization rate, I’ll give my habit as an example for this.  Say your credit line is $1,000.  With the 9% guideline we want the balance that reports to be under $90.  Now that doesn’t mean you can only spend $90, I might spend hundreds on the card over the course of the month to maximize credit card rewards.  For me, my statement/closing date is the 18th of the month.  So I can spend as much of my line as I want, but I just need to pay my balance down to below the $90 so that when the 18th rolls around the current balance is all that will be reported to the credit bureaus.  So the key here would be to figure out what your statement date is and to pay down your balance below that 9% before then.  Then after the statement date pay whatever the remaining balance was in full.

Thanks again, Derek. 

- While I won't share the name of the lender, this is the exact message I received:

"Like I mentioned, you both have great credit scores (750 + ) and income. The issue is that your credit accounts are compiled mainly of Authorized User accounts. I will attach the Fannie Mae rule below, but the guidelines state that if more than %50 of your credit histories are Authorized User accounts, we either need to have the owners of the accounts co-sign on the loan, or prove that you are the one making the payments on the account"

I'm curious if this changes your opinion on whether I should stay an authorized user.

- I just want to make sure I'm understanding utilization rate correctly. Essentially you're saying that if my credit limit is $1000, I just need my balance to be at or below $90 on my closing date (which is different from my due date, at which time my balance should be paid in full no matter what) ? Outside of my closing date, it's okay to have a balance greater than 9% of my credit limit?


 Everything you said on utilization is correct!  Should be paid in full on due date, 9% utilization on closing date, and other than that it doesn’t matter for your score.  

How many authorized user account are you on currently?  And how many other accounts do you have?


Derek, I'm currently an authorized user on two accounts, and I have one other account that's entirely mine. Thanks for clearing up the utilization stuff.

Post: New investor, looking to build my credit

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20
Quote from @Paul Crosby II:

Fannie Mae has a guideline that if the Authorized user account has a significant impact on the credit profile (i.e that is where your score is coming from) then it requires Lender to either make the case that it isnt or proceed with non traditional credit (4 utilities paid over 12 months).

In terms of building  your credit score,  I would be strategic about building out a more complete profile.

Installment credit- Self Lender, experian boost or a secured loan are great for this. Credit unions and Huntington bank will do a small no credit loan if you have deposit history that you can use for this.

Revolving- you already seem to have this but you can boost it Tomoboost or Stellarfi since they use your bills to build you a revolving credit line up to $30k. Larger personal limits create stronger profiles

Auto- Technically this is also installment but i usually suggest my clients have a car loan or lease for 1-2 years before paying it off so this can build your profile.

Other than mortgage, these are the categories your credit history get divided into when we pull a credit report

Hope this helps. Everyone above is giving solid tips as well


Hi Paul,

Would you mind describing a little about what installment credit and revolving credit are? I apologize but I'm fairly new to these terms and after giving them a google I get very broad statements and am not quite sure how they'd apply to me. Specifically:

Installment credit: I see that this is borrowing from a lender and paying back the loan over a fixed amount of payments, or installments. How could I use this at my current stage? It seems like an umbrella term for all sorts of loans.

Revolving credit: If revolving credit is a line of credit that stays open (i.e. once I pay off the balance I can instantly use the money up to the credit limit again), how would this be useful? And what do you mean when you say that I already seem to have this?

Thanks so much for you previous input -- it would be great if you could also clarify these things if you have the time.

Best,

Ryan

Post: New investor, looking to build my credit

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20
Quote from @Account Closed:
Quote from @Ryan Tongue:
Quote from @Derek Brickley:

Hey Ryan!  It's awesome you're thinking about this now.  There are a few steps you can take (I did these steps before graduating and buying my first househack):

-

Back in the day when I was a loan officer, an "authorized user" on an account didn't carry as much weight, because there was no legal liability for them to pay the loan. It's better than nothing, but it meant that someone else had responsibility. What the lender is likely looking for are things that if the "co signer" isn't involved, will the payments still be paid.

Most of the lenders wanted 3 lines of credit that had been open at least 6 months and were used monthly and always paid on time.

Since I worked for a mortgage broker, we had access to over 300 lenders and there was a lot of variation on what lenders would accept. I'd try using a mortgage broker and see what their various lenders offer.


Hey Mike, thanks for the input. It sounds like being an authorized user doesn't significantly help, though I'm wondering if there's any way it could be hurting me outside of the possibility of the balance on the account I'm authorized for not getting paid on time. Basically, is there any reason I should consider removing myself from being an authorized user to either boost my credit or avoid something that may hurt my credit? Just to clarify, I'm quite sure that the account I'm authorized on will always be paid in full each month.

Post: New investor, looking to build my credit

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20
Quote from @Derek Brickley:
Quote from @Ryan Tongue:
Quote from @Derek Brickley:

Hey Ryan!  It's awesome you're thinking about this now.  There are a few steps you can take (I did these steps before graduating and buying my first househack):

- If someone you know has an excellent credit history, you can ask them to add you as an authorized user to their account.  This will help you "inherit" their good credit and age of account.  Note that if they have poor history or if a payment is missed, it would reflect on you as well.

- If you don't think you would be buying in the next few months, opening another line of credit may be a good option.  Typically the hard inquiry from those will only last a few months, and entirely drop off your credit after 2 years.  

- You could also look into sites like Experian Boost that would report things you may currently pay (phone bill, utilities, streaming services) and that could also help there.

With your situation, even though you may have perfect payment history it is difficult to start because you don't have a large mix of accounts (credit cards, auto loans, mortgages, etc.) and the average length of accounts is small.  An important note with your current card (or any others you may get) the magic number for utilization rate seems to float around 9%.  So for example, if you have a credit line of $1,000, research would suggest that the optimal balance on that account for improving credit would be $90 or less.  Make sure that there is a balance on the account every month though, as having $0 does not help you improve your payment history or utilization.  Keep the balances low, and then pay the previous month's statement balance in full to prevent paying extremely high interest rates.

No affiliation or anything, but as a student I started with the Discover IT Cashback card.  This was a great first card and was not difficult to qualify for.  My next card I got while a student was the Chase Freedom Unlimited and gives 1.5% cashback with no annual fee, and getting Chase cards early on helps you avoid their 5/24 rule.

This is a lot but if you have any questions, feel free to reach out!

Hi Derek! I really appreciate the detailed response.I have a number of follow-up questions for you if you wouldn't mind answering them. I'll try to break them up:

- I'm already an authorized user on an account with exceptional credit. That being said, when I applied for a conventional loan 6 months ago I ran into an issue I'd love clarification on. Essentially, while my credit was in good shape, the lender still refused the loan based on the fact that the majority of my credit score could be attributed to the account that I'm an authorized user on. This has left me confused, as I'm now not sure whether being an authorized user on an account is a good or bad thing, or if it's situational. 

- I think there's a chance I buy within the next 2 months, however unlikely. How would opening another line of credit now affect my ability to do that? It would be great if you could expand on hard inquiry as mentioned in your second bullet point. If you could even tell me what to search for so I can find out more myself that would be great. 

- I currently have a Chase Freedom Flex that I use to pay for groceries, gas, utilities. I expect I utilize anywhere from 10-30% of my credit limit each month. Based on your suggestion to keep my usage down to the "magic number" of 9%, should I instead use debit on gas/groceries once I've hit 9% of my credit limit for the month?

Thanks again for responding to my previous post. If you're able to respond to this post too that would be super helpful.

Ryan
Yes happy to help!  Starting with the top
- if you don’t mind me asking, what lender told you that about your authorized user account?  When it comes down to it, that really wouldn’t matter.  We have never had an issue with that before
- if you may consider buying in the next couple of months, I would encourage you to hold off on opening new lines of credit.  There is no hard and fast rule, but generally speaking the hard pull from a new account (mortgage, auto loan, credit card, etc.) will only temporarily impact your score (maybe 3 months) and will drop off entirely in 2 years.  That said another impact of opening a new lines now would be your ‘average age of accounts’.  When you open a new line of credit, your average age of accounts will decrease and that will also have a temporary negative impact on your score.  

 - for the utilization rate, I’ll give my habit as an example for this.  Say your credit line is $1,000.  With the 9% guideline we want the balance that reports to be under $90.  Now that doesn’t mean you can only spend $90, I might spend hundreds on the card over the course of the month to maximize credit card rewards.  For me, my statement/closing date is the 18th of the month.  So I can spend as much of my line as I want, but I just need to pay my balance down to below the $90 so that when the 18th rolls around the current balance is all that will be reported to the credit bureaus.  So the key here would be to figure out what your statement date is and to pay down your balance below that 9% before then.  Then after the statement date pay whatever the remaining balance was in full.

Thanks again, Derek. 

- While I won't share the name of the lender, this is the exact message I received:

"Like I mentioned, you both have great credit scores (750 + ) and income. The issue is that your credit accounts are compiled mainly of Authorized User accounts. I will attach the Fannie Mae rule below, but the guidelines state that if more than %50 of your credit histories are Authorized User accounts, we either need to have the owners of the accounts co-sign on the loan, or prove that you are the one making the payments on the account"

I'm curious if this changes your opinion on whether I should stay an authorized user.

- I just want to make sure I'm understanding utilization rate correctly. Essentially you're saying that if my credit limit is $1000, I just need my balance to be at or below $90 on my closing date (which is different from my due date, at which time my balance should be paid in full no matter what) ? Outside of my closing date, it's okay to have a balance greater than 9% of my credit limit?

Post: New investor, looking to build my credit

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20
Quote from @Derek Brickley:

Hey Ryan!  It's awesome you're thinking about this now.  There are a few steps you can take (I did these steps before graduating and buying my first househack):

- If someone you know has an excellent credit history, you can ask them to add you as an authorized user to their account.  This will help you "inherit" their good credit and age of account.  Note that if they have poor history or if a payment is missed, it would reflect on you as well.

- If you don't think you would be buying in the next few months, opening another line of credit may be a good option.  Typically the hard inquiry from those will only last a few months, and entirely drop off your credit after 2 years.  

- You could also look into sites like Experian Boost that would report things you may currently pay (phone bill, utilities, streaming services) and that could also help there.

With your situation, even though you may have perfect payment history it is difficult to start because you don't have a large mix of accounts (credit cards, auto loans, mortgages, etc.) and the average length of accounts is small.  An important note with your current card (or any others you may get) the magic number for utilization rate seems to float around 9%.  So for example, if you have a credit line of $1,000, research would suggest that the optimal balance on that account for improving credit would be $90 or less.  Make sure that there is a balance on the account every month though, as having $0 does not help you improve your payment history or utilization.  Keep the balances low, and then pay the previous month's statement balance in full to prevent paying extremely high interest rates.

No affiliation or anything, but as a student I started with the Discover IT Cashback card.  This was a great first card and was not difficult to qualify for.  My next card I got while a student was the Chase Freedom Unlimited and gives 1.5% cashback with no annual fee, and getting Chase cards early on helps you avoid their 5/24 rule.

This is a lot but if you have any questions, feel free to reach out!

Hi Derek! I really appreciate the detailed response.I have a number of follow-up questions for you if you wouldn't mind answering them. I'll try to break them up:

- I'm already an authorized user on an account with exceptional credit. That being said, when I applied for a conventional loan 6 months ago I ran into an issue I'd love clarification on. Essentially, while my credit was in good shape, the lender still refused the loan based on the fact that the majority of my credit score could be attributed to the account that I'm an authorized user on. This has left me confused, as I'm now not sure whether being an authorized user on an account is a good or bad thing, or if it's situational. 

- I think there's a chance I buy within the next 2 months, however unlikely. How would opening another line of credit now affect my ability to do that? It would be great if you could expand on hard inquiry as mentioned in your second bullet point. If you could even tell me what to search for so I can find out more myself that would be great. 

- I currently have a Chase Freedom Flex that I use to pay for groceries, gas, utilities. I expect I utilize anywhere from 10-30% of my credit limit each month. Based on your suggestion to keep my usage down to the "magic number" of 9%, should I instead use debit on gas/groceries once I've hit 9% of my credit limit for the month?

Thanks again for responding to my previous post. If you're able to respond to this post too that would be super helpful.

Ryan

Post: New investor, looking to build my credit

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20

Hi all!

Just a quick question today! I'm planning on buying my first rental property in the next 6 months (see my previous posts for more info on this), and in the meantime I'm looking for ways to boost my credit. I currently only have one credit card in my name that I pay off in full each month. Firstly, I receive mixed opinions on whether or not getting additional credit cards going will help/hurt my credit, so I'd love any feedback with that. Secondly, what are other ways I can build up my credit? To give a little context, I'm 22 and finishing up my degree at the University of Utah. I don't have any current debt. If there's more information that would help answer my questions please let me know! Otherwise, I'm looking forward to hearing all of your thoughts. 

Ryan

Post: I’m brand new!

Ryan TonguePosted
  • Investor
  • Salt Lake City, UT
  • Posts 46
  • Votes 20

Hi Kyle,

I'm fairly new to the platform and real estate myself, I just thought I'd reach out to say congrats on making an effort to get the ball rolling!

I also wanted to say that I've found the more specific I am in my questions on the forums, the better the quality of the advice I receive. For example, you say you're interested in wholesaling, these are a few questions that I'm wondering:

- Why do you want to wholesale rather than invest, property manage, flip, etc. ?

- Where/which market would you like to wholesale in? 

- What sorts of efforts have you made so far? 

Just a few ideas, if you check out my first post you might get an idea of what I mean. I've been fortunate enough to receive tons of responses and outreach from people looking to help, so keep at it and follow up with everyone!

Also, if you're wondering about where to find properties, there are websites like Zillow and Redfin that you can use to see on-market properties for sale. However, to my knowledge (which I admit is limited) a lot of a wholesaler's job is sourcing deals off market buy employing strategies such as driving for deals. 

Best of luck!