All Forum Posts by: Tamara Deering

For a done for you solution this is in the ballpark, I had a client tell me they received a $400 quote for a plumber to replace their faucet.  The last faucet I replaced had a really tricky location, it was up against a raised bar and we couldn't get a wrench on it.  It ended up taking two hours to get the faucet out, then another hour to get it in.  Supply lines cost about $10 each, faucets start at $79, but the name brand current styles are between $149 and $199 so you're looking at a minimum of $99 but more likely $169 for materials before mark up.  What you are paying for is the convenience of your property manager saying "get it done" which equals less hassle but more money.

@Tom S.

This was 15 years ago in Seattle, WA so my costs are going to be totally different than yours but I believe the installation was roughly the price of the fireplace.  I think I was all in for less than $6,000.

How much is the money going to cost you?  Just on the surface, you are at $303,000 without calculating holding costs and sales costs.  Calculate a minimum of 6 months holding costs between rehab and time on the market, and 8 to 10% for the cost of selling.  Sales costs are going to be about $37,000 that puts you at $340,000 out of pocket so if you can cover the cost of money and holding costs for 6 months for $33,000 you should make the desired profit.

@John Bell

Congratulations on your new endeavor. I work for a hard money lender, Little City Investments, and we offer loans at 70% of value for first time investors. We lend directly in Houston, San Antonio and Austin and have funding partners elsewhere. With your self-directed ira to cover the shortfall between purchase price and LTV and your origination fee and closing costs you should be able to get a commercial loan that will work for you. Keep up your research, hone in on the best area to invest and be ready to take the leap when the right opportunity crops up.

@Elijah Danielsen

Congratulations on your forethought. I think you should definitely start right away. As an agent you have access to the MLS, search on properties with owner financing. You will find houses that are owned by investors that are overpriced, properties that need a lot of work that are overpriced and maybe an option that will work for you. You may also be able to find or make your own opportunity by looking at rentals that are vacant, maybe the owner is tired of being a landlord and would be willing to owner finance to you. The reason I suggest this route is two-fold, one the owner really has very little risk, if you default they are in first lien position and can take the house back. The second reason is that typically the income verification on owner finance deals is less important than the down payment but the interest rate is lower than hard money. If you are willing to house hack you can easily cover the mortgage and live virtually rent free while building equity.

Go for it.

I added a gas fireplace insert in an existing wood burning fireplace when the original chimney was damaged in an earthquake. It was a really easy process, I measured the opening (height, width, and depth) of the firebox and went to a store that sells fireplace inserts.  I told them what I was looking for and they hooked me up with an installer who came out and checked everything out, gave me an estimate for installation and told me what I needed to do to make it happen.  It was the best decision we made.

How confident are you that you will be able to get the rental house fixed up, rented and able to convert to long term financing in a year?  There are new hybrid type loans out there that start as hard money loans but convert to permanent financing when the rehab is done or start with longer terms, 3 years or so.  My thought would be to use the equity from the business to finance down payment and origination fees on an asset based mortgage on the new rental property.  I'm fairly conservative and I think that you should consider tying the risk to the asset you are investing in.  That way if something goes south you're not risking your primary business and the other partners who aren't involved in this ventures equity.

I am still bruised from a partnership deal gone bad, the lawsuits aren't over yet.  So my first piece of advice is to go to an attorney or at least a diy legal website like legal zoom and figure out your partnership first.  If you can't get through the partnership documents without issues then you'll know the partnership will be tough.

As to your question about financing, yes your credit can affect things.  However, if you are using hard money or private money your credit score is not that important.  If you are using a conventional loan, see if there is a way you can structure the deal so your partner will obtain credit in his name but you will still be on the deed.  Maybe, he can co-sign for you or some other arrangement. 

The legal structure of your entity is primarily a tax-planning/legal question.  You should discuss that with an attorney as well.

Finally, executing a quit claim deed may trigger the due on sale clause on the mortgage, so without researching that I wouldn't advise that plan as a viable strategy.

Best of luck going forward.

Jamie,

Do you currently own a home?  In my opinion the absolute best way to get involved in real estate is by doing a live-in flip or house-hacking.  You can compete so much more effectively by capitalizing on owner occupant financing.  Add the new bigger pockets house hacking book to your reading list.  

@Austin Nicoson
I would house hack an single family in Houston now, then sell it and take your tax free gains and roll them into a new property in San Antonio when you are ready to move. You have to live somewhere for the next 3 years right? Houston is booming, find a gentrifying or soon to gentrify neighborhood, buy a house that needs some work with an FHA mortgage fix it up and then sell.