All Forum Posts by: Shera Gregory

Hi Michael,
Your profile mentions that your goal is to buy a residential multi-family (2-4 units). I would absolutely recommend that you begin attending a local real estate networking group. You can probably find one or more in your area looking on meetup.com. Because people do tend to come and go in the real estate "game" it can take a while to build up credibility with the old-timers in your area. Being a consistent presence will help in that regard. Plus, more importantly, you will want to have connections with many people to make your launch into real estate most effective. Who are the experienced real estate lawyers in your area? Investor-friendly realtors? Will you use a property management company from the beginning? If so, you want to know who will work with a small number of units and grow with you.

Another point is that it can take quite a while to build up your knowledge on what is a good deal, especially if you are looking at something specific like multi-family. If you have looked at a few every month over the next year (even though it can be frustrating if you aren't in a position to buy just yet) you will be in a much better position to make a solid offer when you are ready. Just recently I began looking for a specific type of investment that was outside the normal price range I have been working with. Looking back on it, the very first house I looked at was really the best option but because it was the first one I saw I couldn't recognize that.

All the best!
Shera

I was in a similar situation once and we added that a move-out between November 1 and Feb 28 would require an additional half month rent unless we were able to rent immediately. I would also ask for more than 30 days notice and ask that they work with you to allow you to show the home to prospective renters in the last month they are there. We have had good success with quick turnarounds under those circumstances.

Thanks David Beard. I have read through some of the other posts about UBIT and it seems to be a hot topic. I expect to hear from Jon H soon :) Since the main benefit of the Roth is to allow gains to accumulate tax-free it seems counter-productive to do something that makes the gains taxable.

I didn't think I could partner with my own cash. Isn't that working with a disqualified person?

Sounds like maybe you just need a new property manager. The question is really what you would do with the proceeds and how does that compare to the current situation. If you do sell in order to buy another rental be sure to look into doing a 1031 exchange. Sorry if this seems too basic .. maybe that's all obvious!!
Shera

I want to be able to do a rehab/flip with my $43k Roth IRA that is in an LLC. The problem I see is that I can't be sure how much the rehab will really cost and it is not likely that I can find a non-recourse loan.

One of my contractors asked if it would be helpful if he pays for and completes the rehab work and gets paid from the sale of the property in exchange for a share of the profits. He said he would be willing to book the work at his cost. But even if he just did the work with a normal mark-up it would still accomplish what I need to do which is to buy with the cash I have and get the flip done without a loan. So his idea seems like something that could work. I would be interested to set up a JV agreement with him for just one deal to see how it goes.

I am sure there are many pitfalls to consider/avoid. Any major ones that come to mind? Anything essentially wrong with this idea?

Thanks,
Shera

I have a single family rental home that I plan to sell next summer. We are in the process of screening tenants for a one year lease. This is not a lease option but we have made it clear that we would very much like to be able to sell the home to the tenant. We have a couple of people who are very interested. We used SmartMove to get credit info.

Unless the best option is "none of the above" I plan to decide between two applicants. Which of these seems to have the best shot at getting a loan twelve months from now?

Tenant A has a credit score of 646 and is self-employed. His projected debt to income ratio is about 48% but can work that down below 45%. His income is about 29% of the planned sale amount. I have asked to see his tax return for 2012 because I'm not sure how well he can document his income. He has a painting company (!) with about seven employees but he doesn't seem to have a good grasp of accounting requirements for keeping track of all expenses, income etc to be able to do a P&L mid-year if the bank wants that. I don't mind working with him to help him get up to speed on at least using Quicken for this.

Tenant B has a W2 job that is higher than Tenant A. His projected debt to income ratio is about 31%. His income is about 44% of the planned sale amount. However, his credit score is 579. I asked about this and he said that he had applied for a home loan with two different agencies which resulted in multiple inquires that have reduced his credit score. He has 17 late payment incidents but none of those are in 2012 or 2013. So -- will he really be able to bring his credit score up into the 650 range by next summer? He has access to a VA loan.

My gut says to go with Tenant B and to sit down with Tenant A and give him some suggestions on what he needs to do over the next year or two to firm up his income reporting.

What else should I be considering? Do you agree or no?

Thanks Philip. What does "100% shop" mean?

Thanks Maureen Hannan .. I am in Virginia too. In Richmond. Your approach sounds very reasonable. I like the idea of being 100% up-front about my intentions. I have been attending a couple of meetup groups in my area so I'm sure I will be able to connect with someone so we can make this work. It would be helpful to me to understand the fee structure and whether the broker gets anything out of the deal. Right now I feel like I'm just asking them for a favor and that's not a good way to begin a business relationship.

Ah .. J Scott .. I think you are right, doesn't look like that would provide MLS access after all. Pooh.

I am considering getting my real estate license to be able to get access to the MLS and bid on HUD homes. But I'm not too keen on having to get a broker affiliation since this is all I'm interested in. I am hesitant both because I am not planning to be a "real" agent and because of the ongoing fees. The business model offered by Metro Referral Associates in several East Coast states seems like it could be a good in-between option. They offer lower price access for agents that don't want to sell. Does anyone have experience this this group?