All Forum Posts by: Sergio A. Chucaralao

Quote from @Amha Demissie:

hello every one 😎 am new for this but i listen real-estate rookie so i need some help here so i bought a single family house in 2019 in Massachusetts and now i want to buy a 4 family so around Boston to buy a four family house is between 900.000-1.1m and i wanted to do a house hacking so i got 2 options to do take a HELOC for a 3.5 down payments and show for the Leander i have at lest 3 month reserve or pay 20% down at this point i don't know what to do

In my opinion a HELOC is very risky to use it as a down-payment, I have use a HELOC before but it was during the 2000 when interests were fluctuating between 2.5 to 6 % max in HELOCs. But the today the high interests and the unknowns in the market makes it very risky. Unless you can afford to pay the HELOC in full at any time and you are okay with the high interests, I would stay away from it. HELOC better used for short term, ideally for under a year. It is not optimal for long term debt. Est of luck with your decision, happy investing!.

Quote from @Cole Payton:

A DSCR loan or HELOC for purchasing another mid-term rental? How does a DSCR loan work? Do they base it on my current rental property or primary residence?

A simple explanation is DSCR is to finance the property based on the income or projected income of the property and a HELOC is like a credit card that will be given to you base of the equity of the house you are putting as collateral. 2 diffrent products consulting with a good mortgage broker that will provide you the information depending on your needs. I hope it helps. Happy investing!.

Quote from @Neil Warren:

what are your thoughts/experience with turnkey for starting

I bought a old house that they were in the process of doing an appartment in the basement. I didn't like the layout and ask them to stop the renovation. It was  finished about 60%. Once I closed on the property I started to tear down the walls and notice that had no insulation, at that point I decided I going to tear  everything up. when I took the sheetrock from the ceiling, I was in shock to see that some electric work was done with duct tape.  Ever since I focus on buying the most run down place I can get, knowing I will do a full gutt. I wouldn't buy a flipped home unless I see the process, because once is covered you have no idea if the structure,framing,plumbing or electrical is compromised. I spend over 150k to 230k in each full gutted property but I put that much in because 1. I intend to hold for a many many years 2. To have a low maintenance property 3. Increase rents to market value 4. Compete with new constructions with upgraded as granite or Quartz counter tops, central air and heat,and in unit laundry. I definitely over improve the properties and I am sure somethings can be left as is. Bottom line just like in construction or  renovated properties the only way you will get a" great deal" is if when they aquire the property, it was at a  low price that way you can put more money in to the renovations and still be within the ARV that the area supports. Or the other explanation is that they are cutting corners or doing the bare minimum for it to be code complying or both. I am sure there are some good Flippers I just haven't find one yet!  Happy investing!.

Quote from @Edna Rajan:

We own a small 2 br 1 br home in a very small town in MS . It needs a bit of work. A person came by and was interested in renting it out and was willing to put some work in it. I'm not sure if I can secure insurance for this house with the condition it is in. 

This would be my first time being a landlord and I will run a background check. Looking for advice on if I should consider this and what risks come with this .

The risks are, the person doesn't do the rehab, doesn’t pay rent, does a poor job and I can keep going.  But bottom line as others have mention stabilize the property get a qualified tenant paying market rent or a small percent bellow. I understand if funds are not available it is easy get blinded by what saves the most, but if multiple people are telling you that it is a bad idea mostly likely is because they have learned that most of the times or never, saving in the short-term doesn't payoff. Best of luck on making the right decision. 

Quote from @Derek Fortin:

I am a new investor trying to get my first deal. I found a property, contacted an  agent, made an offer. The original deal fell through. I contacted the seller directly. They are willing to sell the property to me discounting the realtor commissions after the contract with the selling agent is up. I do not want to do anything unethical or to jeopardize myself legally. Is there anything wrong with making this deal now without the realtors saving the money on their commissions?  It would save me $30k. Please help

 There is no abligation with the agent and the seller after the contract expires, however if the agent can prove that it was an arrangement not to pay his or her commission there might be a legal case there. I would consult a real estate lawyer since I am not one.  This are just my thought.

Quote from @Jomei Albojer:

I am 18 years old. I am starting from the bottom up and am in need of some first steps that would be beneficial to start my career off. I would like to go the BURR direction but also am just trying to get into the real estate world. Any tips?

If income, or credit is an issue, Learn and get good at something related to real estate and then eventually you can add value to an investor and potentially do a joint venture. Don't be greddy in your first JV, the fact that they are giving you the opportunity to be part a of a deal will make way more in your future and taking a bigger % in the begging. Best of luck!

Quote from @David Charles Edwards:

I'll be 55 this and our last one graduates high school and will go off to college this year. My wife and I a debt free and own 15 rental properties worth around 1.5 million (net after sale taxes). We also have healthy IRA's and will both qualify for social security in the future.

After being a landlord for nearly 25 years,  I'm thinking about selling it all and moving the money into immediate income annuites or some other fix income vehicle so we can travel and live a less stressful lifestyle.

There doesn't seem to be an easy way to avoid capital gains and I realize many of these fixed income investments don't hedge against inflation.  Just wondering if anyone else has thought of doing this and what some pathways might be.

 First of all congratulations on that early retirement. This is just me brainstorming ideas based on the scenario you wrote. This is not advise I'm not CPA, this is just something for you to think about. If it is necessary for you to get all the funds from the sales at once then it doesn't seem like you have another option than paying capital gains. But if this is not the case one option would be to seller finance that way you can have control of how much income you are getting every year. The other option would be if there is a possibility for you to sell your primary residence and every two years move to one of the property and gradually sell each property once you get that tax exempt which is $250 thousand if single or $500 thousand is married. I wish you the best luck with this good problem that you have whatever you decide to do make sure you consult a professional to assist you with the transaction. Happy retirement!

Quote from @Andy Sabisch:

Interesting content but pasting it into GPTzero, it shows that the article you posted was written by AI.  Your posts would be be better received if they come from your experiences rather than an AI piece ... 

Yes, you are probably right.  I will assume you have done couple of flips, and will follow up with, what part of the information doesn't apply to the majority of the flips? 

By embracing new technology, individuals and organizations can thrive in a rapidly changing world, leveraging the latest tools and innovations to stay ahead. 👀Some or all the content might be AI generated read it at your own risk*******

Quote from @Justin VanHouten:

Quote from @Sergio A. Chucaralao:

Quote from @Teho Kim:

Just found out that assumable loans are a thing for VA loans. My next military assignment is to Del Rio TX and I'd like to get take advantage of the assumable loan.

But despite it being a small town with a proportionally large military presence, I'm not seeing any mention of assumable loans on listings. Is this something I have to inquire for each listing agent? 

I personally would approach this with a self assessment. Think first who will give up this great benefit?  Would you do it and why? Remember all the not so wise decisions the junior enlisted have done or some not so junior as well? I would educate them on how it will affect them.  When a service member allows someone to assume their VA loan, it can have several implications: The service member may regain their VA loan entitlement, which can be used for a future home purchase. However, they may need to meet certain conditions and repay any remaining amount of the loan or use their remaining entitlement.
 Allowing someone to assume the VA loan may impact the service member's ability to secure a new VA loan until the assumed loan is paid off or released through refinancing. This can potentially limit their options for future home purchases.
It's important for service members to consult with their lender and the VA (U.S. Department of Veterans Affairs) to fully understand the implications and requirements of allowing someone to assume their VA loan. Additionally, they may want to seek legal or financial advice to ensure they make the best decision for their specific circumstances.

If after all this if you still looking to take advantage of such opportunity, I would verbalize in your new duty station that you invest in real-estate and that are looking to take over a loan. I would go after assumable loans but not VA loans because if someone is letting you assume thier VA loan is probably because they don't know the disservice they are doing to thier future. Best of luck!

If a veteran with eligibility assumes a VA loan it can be done so it doesn't impact the selling veteran's entitlement for future use. The risks you described are mostly applicable to cases where non-veterans assume VA loans--this will impact entitlement for future use of the selling veteran.

Correct, which I agree with another veteran assuming a VA loan with thier entitlement, but I not a non-Vet. Unless they fully explain and understand that they are giving away part or all their VA entitlement until that loan gets satisfied.

Buying a flipped home can be risky for several reasons:

1. Quality of Work:Flippers often focus on cosmetic improvements to make the home more appealing quickly. They might cut corners on essential structural or system repairs, leading to hidden issues that can be costly to fix later.

2. Budget Constraints:Flippers typically work within tight budgets to maximize their profits. This might mean using cheaper materials or rushing the job, which can affect the durability and quality of the renovations.

3. Lack of Permits: Some flippers may skip obtaining the necessary permits to save time and money. This can lead to non-compliance with building codes, resulting in future legal and financial problems for the buyer.

4. Superficial Improvements: The focus on aesthetics might mean that only visible areas are improved, while critical but unseen aspects like plumbing, electrical systems, and insulation are neglected.

5. Inconsistent Quality: Flippers might hire less experienced or lower-cost labor to do the work, leading to inconsistent quality and potentially unsafe conditions.

6. Hidden Problems: Quick flips can mask underlying problems like mold, foundation issues, or outdated wiring that aren't immediately visible during a casual inspection.

7. Inflated Prices:Flipped homes are often sold at a premium due to the perceived value of the recent renovations, which might not be worth the asking price if the work is subpar.

8. Short-term Ownership:The flipper's primary goal is profit, not creating a long-term, quality home. This can result in a home that’s only superficially ready for market, with long-term durability concerns.

To mitigate these risks, potential buyers should:

Hire a Professional Inspector: Get a thorough home inspection from a reputable inspector who can identify potential issues.

- Check Permits and Codes:Verify that all renovations were done with proper permits and comply with local building codes.

- Research the Flipper:Look into the history of the flipper or the company that did the renovations to assess their reputation and track record.

Be Skeptical of the Cosmetic: Look beyond the surface-level improvements to understand the true condition of the home.

Taking these steps can help ensure that you are making a well-informed decision and investing in a quality home.