All Forum Posts by: Steven Nguyen

Hello BP members,

I am an OOS investor based in CA looking at new construction vs rehabbing existing properties

I had a few questions:

1. Do new home builders sell to OOS investors ? I know some only sell to people who will use as their primary residence.

2. What is the expected rent to value ratio ? I'd be happy with a 0.75 or higher RV ratio given new construction has lower CAPEX/maintenance.

Thanks for any insight.

With indexed universal life insurance (IUL), there is the potential to have your life insurance grow as you contribute more towards the cash value which gets invested into sp500 index funds.  There is typically a floor of 1% and ceiling of 15%, but the sp500 typically averages around 7% in the long term.

For example , for a 1.5 million IUL, the min funding is $700/month to ensure the policy stays active but the max contribution based on IRS guidelines is $2800/month.  If you max fund at $2800, after the cost of insurance and fees, the rest is invested into index funds.  The cash value is taken out as a loan tax free.  It is a flexible life insurance product.

Hello Alejandro,

I was shared this post by another BP member in the Bay Area and you may benefit from this information as well. I was planning on building an ADU in my backyard as well, but as posted above, you can get a better ROI elsewhere if unable to pull out your equity. For the cost of an ADU (~280k), you can put a down on a 20plex in another state for example.

Hi everyone, wanted to share with you a great way to tap into the equity built from your ADU.

The problem today: most appraisers used by traditional lenders would give ADU square footage a second-class treatment than the main house (as some of your mentioned above) since there aren't that many comps and they're trying to be conservative.

However, you can consider taking out a HELOC/doing cash-out refi through Figure.com (HELOC up to $250k, Cash-out refi up to $1M). I just took out a 30-year fixed-rate HELOC through Figure from my San Jose property that has an ADU on it. Unlike the other lenders, Figure.com does automatic appraisal (without a human involved) based on public data and they treat ADU square footage the same as the main house square footage. Because their generous appraisal value, I was able to take out all the cash I invested into the ADU (plus some more). The whole process only took 2 weeks and I'm really happy about it. In fact, you can check your property's appraised value by simply filing out the questions on their website. If you have an ADU on your property, it's super easy to find out approximately how much you can take out through just a few clicks with only a soft credit pull...

Hello Micah,

Thanks for the great insight!  The only builder I know is Smith Douglas.  There is a 4/2.5 2015 sq ft in Eatonton for $230k and 4/2.25 2548 sq ft in Jefferson for 270k.  What type of rents would these new builds get?  How are these cities?  Are the school districts good?  Are renters more inclined to pay more for brand new construction vs remodeled resales homes?

I'd be interested to see the new builds in Cherokee county and what the market rents are.  I'd be happy with a 0.75 RV.

Thank you.

 I would be interested in seeing any resale homes with 0.75 RV that require more cosmetic rehab 

Hello BP members,

I am an OOS investor based in CA. I see new construction in Atlanta GA for a 3 or 4 Bed / 2 to 3 bath costs around 230k to 270k.

I had a few questions:

1. Do new home builders sell to OOS investors ? I know some only sell to people who will use as their primary residence.

2. What is the expected rent to value ratio ? I'd be happy with a 0.75 RV ratio given new construction has lower CAPEX/maintenance.

Thanks for any insight.

Hello BP members,

I am an OOS investor based in CA.  I see new construction in Raleigh NC for a 3 or 4 Bed / 2 to 3 bath costs around 220k to 270k.

I had a few questions: 

1. Do new home builders sell to OOS investors ? I know some only sell to people who will use as their primary residence.

2. What is the expected rent to value ratio ? I'd be happy with a 0.75 RV ratio given new construction has lower CAPEX/maintenance.

Thanks for any insight.

Hello Wayne,

If your work offers a 401k match, that is the minimum you should do - that is essentially free money.  If your work offers a Roth 401k, you can pay taxes now vs later if you believe your tax bracket will be higher in the future.  With the remaining money, you can start to build a 6-12 month reserve for emergencies.  If you have a family, I'd lean closer to 12 months reserve.  After that, any excess money can go into real estate/index funds/ indexed universal life insurance.  You can house hack with ~10% down every year and in 10 years will own 10 properties.  The downside of real estate is lack of liquidity, but if you have a large cash reserve, it shouldn't be an issue.  Index funds provide a safe 8% return over the long term.  Indexed universal life insurance provide safety for disability/death in case life happens, but also has cash value which is invested in index funds as well.  Any growth in the cash value bucket is tax free if you take a "loan" against your cash value.

For me personally, I try to be as liquid as possible and try to maximally leverage real estate. I have a problem putting all my eggs in 1 basket so I personally invest in almost all vehicles (401k/IRA/Index Funds/ Indexed universal life / RE).

I hope this provides value.

Hello Josh,

Thanks for the insight!  As you already know, CA has great appreciation (1 property went up by 150k in 3 years, another property went up 200k in 2 years), but you will be lucky to break even with cashflow or be slightly negative.  I hope to deploy this equity into cash flowing properties apartment complexes out of state soon.

Hello,

I am an OOS investor based in CA and am interested in 20 to 30 plex apartment units in OKC.  How is the rental market in OKC? I have some apartments I would like to discuss with any property managers

Thank you.