All Forum Posts by: Eric M.

Greetings all,

Thanks to years of savings and capital gains from the stock market, I have a little over 1 million to invest. I understand the market conditions today aren't as ideal as they were a few years ago, but I am looking for opinions and ideas on how to best leverage this cash to build and grow our venture into real estate.

Our location is South Florida, and would like to stay local (or at least within the surrounding area/states) ideally. We are open to STRs and LTRs alike. Any ideas are welcome. 

Hello all.

A situation has come up and I need some advice from the experienced guys and gals on this forum.

My father owns a duplex (1/1 and 2/1) which he is currently underwater on. He is either breaking even or losing money monthly on it as my grandmother occupies the 2/1 and the 1/1 is rented out to a family friend.

The duplex holds some emotional attachment as it is my grandmother's home were we grew up in. She is in her 80s and I would like to see her stay there if possible. Also, my father is trying to retire and would like the responsibility of the duplex off his shoulders.

The proposal:
My father wishes to transfer the deed over to my name, if I want it of course. The mortgage would stay under his name. I would assume all responsibilities for the duplex as it would essentially be mine now.

The numbers:
- Mortgage, taxes and insurance come out to around $2,050 monthly.
- Approx $270k is owed on the mortgage with 21 years remaining.
- The property may be valued at around $190-210k conservatively. During the peak, which I know means little, the duplex was valued close to $600k.
- My grandmother would occupy the 1/1 for $850, which is low for a 1/1 in the area but it is what she pays now comfortably.
- I checked the surrounding area, which consists mostly of duplex or SFRs, and found almost no rentals to compare the 2/1 to at this moment. The ones I did find ranged from $1.5k to $2.5k but the higher rents were for 2/2 single families.
- The property is in the heart of a busy SFL city so the demand for rentals should be high.
- The property is slightly outdated inside and would need cosmetic improvements to the bathroom and kitchen as well as some paint.
- The roof is over 15 years old, but appears to be in good shape.

Basically, I'm seeking advice as normally I'd jump at the chance to own a duplex for no money down but the fact that the home is underwater sort of worries me. However, I believe I can generate a positive cash-flow of $300-$400 a month on the duplex which makes it seem a bit safer to me.

To sum it up, if I can help my father retire, while keeping my grandmother in her home, and not burden my family in the process, I would be happy to take the property.

Originally posted by Brian Hoyt:

I knew "sell the motorcycle" wouldn't be a favorite, haha! You can always buy another one later on, though.

I supposed you could get into some problems by letting your tenants know you are an officer of the law. Sigh...

In regards to financing, I would max out my options for traditional financing before going rogue. You can get up to 4 traditional mortgages before it becomes VERY difficult to qualify for another. Then, I understand Fannie Mae has options of up to 10.

I don't know if you can do this, but I have heard if you get the properties in just one person's name, your wife can get up to 4 in her name as well - provided she shows enough income for hers and you for yours.

Regardless, maxing out your traditional options before seekingg out portfolio or owner finance is the best long term strategy IMO.

Hehe you are correct Brian, it was my least favorite bit of advice so far! You are right though, and I had thought about it from a financial point of view... even if it hurts now it will be worth it later on.

And thank you for that info, you made me a bit more at ease knowing that there is no immediate need for an HML. I am subscribed to two email newsletters, which I heard about from a friend, that sell homes to fix and flip or rent but they only accept cash or HML as these properties usually dont qualify for traditional financing. I feel much more comfortable dealing with a traditional mortgage than I do an HML.

J Salter,

What other information would you need to give better advice? I would be more than happy to provide it. And thanks for the suggestion. I will look into seller financing.

Nathan Emmert,

Thanks for that tip. I am going to speak to my police credit union today and ask a few questions. Upon completing the refinance to conventional, Am I correct in assuming that's when I would withdraw the equity and purchase the second property?

Originally posted by J Salter:

Brian is right! I overlooked that. You have no idea how sweet your revenue stream could be! I wouldn't play on it too hard to frighten but I would let them know that the law will be abided by!

Haha you guys are too much!

Originally posted by Brian Hoyt:

Sell the motorcylce.

As much as it hurts, I have thought about selling the Harley. I owe about 10k and, conservatively, it is worth anywhere from 16k to 17k so that would give me some additional capital.

Originally posted by Brian Hoyt:

BTW, that fact that you're a cop is a sweet motivator to make tenants behave.

If I was a cop, I'd not say anything about it. Then at two weeks in to their lease, I'd swing by in my squad car just to check in and make sure everything was alright. Bet they'd think twice and thrice before trying to screw you over.

Although it is might be tempting, you'd be opening yourself up for a whole world of hurt by doing this. Trust me, its been done before and it didn't end too well.

Thanks for the welcome and quick replies!

Nathan,

The interest rates for both loans are 5 and 6% so you are absolutely correct when you say that I would achieve a better return from investing my money rather than paying off the loans. My worry was that the debt might hinder me from seeking out financing from a bank or credit union for my first property. That said, my credit score is in the mid to high 700s.

Bill,

You nailed my main concern. I was worried that I might not be able to seek out financing for my first deal even though I have a good credit score. I will have to do the math and see what % my wife and I are currently at.

Also, I am not opposed to doing a few flips in order to raise my capital. In fact, my wife prefers flips to rentals but I believe rentals will give us the steady cash flow that we want.

Are hard money loans advisable in my position or should I stick to traditional financing for my first deal?

Hey everyone,
Ive been a member here since about 2008 and am just now finally getting around to making my first post. I'm a police officer in South Florida and things have gone from bad to worse for us financially. Therefore, I would like to dive into real estate in order to supplement my income.

My plan:
According to my conservative calculations, I would need around 15 rental properties in order to retire from police work.

I vest (with the minimum) in a little under 6 years and would like to have a steady stream of rental income by then.

I would like to purchase my first rental before the end of 2012.

My situation:
I am very good with my keeping my debt and living expenses to a minimum.
I have about 36k debt which consists of a motorcycle and car loan and a 150k mortgage - credit cards are paid in full monthly.

I currently have 20k saved up and on track for 35k by the end of the year. Originally, I was going to pay off the 36k remaining debt so that I would be debt free (except for the mortgage) and then save for my first rental property. However, I'm starting to think this might not be the best option as it would set me back another year in order to replenish my savings.

Therefore, based on my situation, what would you all advise me to do? I know there is a lot of experience here and I look forward to hearing your responses.