All Forum Posts by: Teague Anderson

My mom helped me buy my first condo in Boulder.  But she helped because she comfortably could and didn't need the investment return.  Boulder has been a strong appreciation market, but townhomes/condos had an especially strong last five years (even higher than homes), and I feel like they're due for some plateauing.  If you're buying for the long term, then that won't be a problem, but maybe don't be disappointed if it's flat for the next 2-3 years.

These are the conditions I feel like it a would be appropriate to buy with your parents:

- Your parents contribute the down payment, but you pay everything else (PITI, HOA, and maintenance. If you can't afford that on your own, then you should look elsewhere. Like someone else said, live within your means. A huge monthly payment starts to feel like a burden really quick.

- Your parents share in the upside, and the downside.  Real estate is risky, and it's not realistic or probably even possible for you to make up for a large loss.  With that being said, it's not highly likely a townhome in Boulder will take a big hit.  If it does, you just need to be prepared to wait it out.

One other piece of food for thought: That first condo I bought had a train-wreck of an HOA. Within one month of buying it, they issued a special assessment of $5k that had to be paid monthly over five years, so there went our careful budgeting. Then, as soon as that special assessment was fulfilled, they had another one for $25k due immediately. These are payments, that if you fail to pay, they can put a lien against your property.

The lesson there is research the HOA you're buying into. Make sure they have done a reserve study and have enough reserves to manage their long-term maintenance.

With all that being said, I freakin love living in Boulder.  My wife and I live up on Shanahan Ridge and can walk across the street to open space.  There's actually a townhome for sale right by us.  2 bed/1bath with a. 1 car garage, $489k.  Fantastic location!

Good luck

Hey Sam,

I think you covered this in previous post, but what kind of lender and terms are you getting on these?  It seems like your lender doesn't give a hoot about title seasoning.

Thanks

For me I need to visit a city to calibrate my analysis of it.  A C-class neighborhood in one city might be a B-class neighborhood in another city.  My wife and I have visited a few cities we've considered investing in, and we spend all day driving around.  We pick out some pockets with the cheap promising properties and see if the neighborhood and surrounding areas are really areas we feel good investing in.  Once we've done this preliminary work, when we look on Google maps we really understand what it's like.  We have since bought 6 properties sight-unseen, but we had a good feel of the city from visiting.

Also, we get asked by a lot of our team, "are you guys moving out here?" or "are you coming out anytime soon?"  I feel like its respectful to the people of the city and your team to at least have some interest in the area and showing that interest by visiting.

I work in construction in Boulder, and the construction costs seem low.  For us, I don't think we could pull a pop-top off for less than $175/sf, and that's without remodeling the main floor.  Also, if you're a couple blocks from campus AND from Pearl street, then that's a mostly student rental area and $4,400 seems high for a 4 bedroom, but it's been awhile since I was a renting college student, so I may be out of touch.

Boulder is a tough market to eke out a cashflow.  I know some people kill it with specs homes, but there's a lot of speculation there and a high cost of entry.  If you do take on a project like that, the Newlands might be a better neighborhood for it.  Good luck with whatever you take on, and keep us up to date.

A lot of wholesale stuff comes up on Craigslist.  If you start responding to ads, you'll be able to tell pretty quick who does and doesn't have their crap together.  Personally, I would avoid fly by the night wholesalers who don't have much of a website, or who barely answer calls/texts/emails.  I stick to people who run their wholesale business like an actual business.  Also, if you move forward with a deal, make sure they are closing through a legit title company.

I don't remember the ins and outs of episode 301, but you could use the delayed financing exemption with a conventional Fannie/Freddie loan.  I'm actually in the middle of a refi like that in Chattanooga right now.  PM me and I can give you my lender there.  

She hadn't ever heard of the delayed financing exemption before I told her, but she called her underwriter and then called me back and said "yup, we can do those." It might have been in episode 301 where the guest talked about putting fix up costs on the HUD as a "prepaid fee". That's what I want to try on my next purchase. The only catch is that you need to get an accurate scope of work with a contractor you trust before you purchase the house.  Then you pay the fix up costs at closing, and it is either held in escrow, or paid directly to the contractor immediately (hence the trust part).  I have no idea what happens if the rehab comes in under budget and you have extra money to the contractor or in escrow.  I don't think you could get it back, because that smells a bit like loan fraud to me.

The last thing to keep in mind is that the bottom line of HUD is the maximum you can take out, but that's assuming that that amount is 75% (cash-out LTV) of the appraised value after fixing it up.

Writing this brings up a couple questions I'm going to make a note to myself to look up:

1)  What happens if you have extra money in escrow?

2) Do the fix up costs as "prepaid fees" need to be earmarked for a specific party, or could it be a general fund you can direct later?

Hey @Alexander Flores, I am going to try to do this on my first. Could you clarify something though? Say I buy a property for $60k, and prepay $20k worth of fix up costs for a total of $80k on the HUD. The property would then have to appraise for $100k after the rehab costs for the bank to loan back the full amount on the HUD, because they still need to abide buy their LTV requirements, right? So getting the right appraisal is still a necessary step in this method?

Hello all,

 I'm curious to hear everyone's opinions on investing in medium-sized markets.  I'm not sure if there's an official designation, but I would consider medium-sized to be a greater metro area population of about 500,000, give or take a couple hundred thousand.  There is a lot of talk on here about the big cities to invest in, but I find myself drawn to smaller markets.  

I'm currently investing in Chattanooga Tennessee, which has a metro population of about 550,000, and it feels like it's right in the Goldilocks zone of size to me.  It's big enough to support large employers, but small enough that you can become well acquainted with all the smaller neighborhoods.

What do you all think are the pros and cons of markets this size?

This weekend I closed on property number five, thus concluding my 1031 exchange.  

I bought a condo in Boulder 5 years ago for $170k, and sold it in May for $305k.  I had $210k burning a hole in my pocket and was able to get under contract on 4 duplexes in Chattanooga and close on them before the naming period was even up.  I felt enormous time pressure, but I feel like I lucked out on timing, because there was a decent surge of inventory into the Chattanooga market right when I needed it to be there.  It was a little intense going through the due diligence process on 4 properties at once, but like someone said somewhere, most tasks are just 5 or 10 minute tasks you can do with a computer or phone, so it really wasn't all that bad.  The fifth property was under contract after those closed, and handling just one property under contract compared to four was a piece of cake.

When the dust has settled and the remaining units are occupied, I'll have turned $305k worth of assets into $674,000, and a monthly gross income of $1350 into over $7000!

Thank you bigger pockets!

@Will G. Good points.  I've been liking the guy I've been working with so far, and I would indeed be worried about whatever yahoo the current owners might hire to "fix" the issue.