All Forum Posts by: Tanner Sherman

@Carter Busby although what these gentleman said is definitely a good idea, I still have yet to complete my degree and I’m doing alright. I enlisted in the Army and then had to grow up a lot before I got the point of investing.

I admire your drive, and I’d say read every single book there is on real estate until real estate doesn’t scare you at all. I hated reading but I hate losing money more. The best education I got was my books. Once you’re comfortable, have established some credit and have the network or cash reserves to get started- go for it.

@Matt Miller ultimately that is up to the rent you can collect on your house. If you can swing the higher monthly payment and still cashflow, then yeah do a cash out refi and swing that money into a new rental.

If your monthly payment after refi would be more than the rent you could collect, I'd say leave it as is, use your 70k to buy a property that needs some rehab- you could go with an FHA Loan and find a property well into seven figures that needs work, take out a HELOC on your current house to pay for the rehab, and then refinance that property and enjoy your successful BRRRR

@Cameron Riley if you’re keeping all the money and only considering a small few applications then I would say there is a moral/ethical issue here. But if each of them are honest to God contenders and require a lot of due diligence to select the best one then maybe I can understand. However I think the best way to pick a tenant is to accept the first application that meets your criteria and not sift through a pool of applications. This helps protect you against fair housing claims.

@Anthony Catoni if you're okay with being upside down for a year then yeah go with the VA. Work on your preapproval now so that when you come across a property you can just pull the trigger.

Find a property that you can add some value to and you can combine the house hack with the brrrr with the live-in flip.

Anthony,

I would say the best option would be getting into a multifamily property that does not need too much work. Network with a realtor, (Or realtors) to get them to set you up on email alerts for the criteria you are looking for. To get a residential loan you will have to find one that is 2-4 units. 3 units can be tricky if they are what is called a conversion triplex. This basically means that a SFH was converted into a 3 unit and most banks will now do a residential loan for them. If it was intended to be a triplex at construction you should be alright, but the next difficulty is finding comps to get an accurate appraisal. This makes it especially difficult when utilizing your VA loan. Househacking a 4 plex and getting some equity over the next year is a good play, and if you can successfully rent out the other units for a year then you can use a good portion of that income to offset your debt to income ratio. After a year you can use your VA loan again to move, and keep the 4 plex as a rental.

From a strictly numbers standpoint, if you could save up the money needed to put 20% down on a property, then a conventional mortgage makes more sense for you. 0% down VA sounds appealing, but the issue with this is the VA funding fee. I got my house with 0% down, $1,000 in earnest deposit, and $200 at closing. Bought the house for $270,000. The VA funding fee was roughly $8,000. So then I owe $278,000 on a house that only appraised for $270,000. I won't have a penny of equity until owning it for a year. It was a great option because I didn't have 20% to put down, but I don't get that funding fee back in equity. If you can come up with the money to put a down payment you are much better owning 20% of your house at closing rather than waiting over a year of payments to own <1% of it.

I would say that your best bet is a combination of #2 and #3. Save up some more money, find a multifamily needing little to no work, and get some equity in it from renting out 3 other units. Once you have some equity you could absolutely look to a HELOC for your next deal.

Hope this helps,

Best of luck,

Tanner Sherman 

@Mario Cuartas

Sir,

I understand your skepticism for not wanting to waste your money, but this is a very relative question. My limited experience in home inspections has taught me that sometimes a 100 year old house is better off than a 1 year old house. Reason being, I can see the way the house settles with the surroundings. With a brand new house you can’t be sure how the house will perform in the long run. Don’t base your criteria on the age of the house, base it on the condition of the house.

Tanner

@Thomas Tarry once the offer was signed and accepted there should be very little that they can do to get in the way of the deal going through. I would go to their supervisor before resorting to that, as sometimes it’s simply ignorance not dishonesty.

Sir,

I appreciate the encouragement- I was just listening to Brian Buffini's Law of the Harvest today and I think the Law of Attraction really made me come across this today.

Best of luck to you,

See you in FF/FI land someday

Tanner

My mistake is survivable, but recently we bought our first house from out of state. We were living in Minnesota and the Army was transferring us to Nebraska. We met our realtor on BiggerPockets, who wound up being amazing and did virtual walkthroughs of many properties, writing up a bunch of offers before we got one accepted. We found one that needed a lot of upgrades, and had an unfinished basement. This house was in a nice neighborhood and was significantly cheaper than all the other houses around. We figured by upgrading flooring, kitchen bathrooms and finishing the basement as an air BnB we could get some equity out of it, to continue investing in the area. During the closing process we found out that even though the dwelling is not in the flood zone, the backyard is which required us to get additional $1300 in flood insurance on the property on top of the $1200 policy we already had taken out. Also, to use the basement as an Air BnB we would have to get a secondary use permit which was subject to much higher taxes. We then found out that we are on the county line and were considered inside a different county than we anticipated, which has much higher building permit fees. All these costs completely cut down our margins and ultimately would bring us to negative cashflow if we choose to rent it out in the future. 

We pivoted and instead decided to value add and try and get a HELOC on the house so we can focus on our next investment and work on getting the property surveyed to try and get our insurance cost down.

Ultimately, we got a very good house with closing costs covered and zero down, with a lot of upside potential. Completely survivable but we learned important lessons about the importance of diligent research prior to purchase.

This organization hasn’t given a red cent to benefit a single black person. The BLM organization is a joke. The movement is absolutely right, but you’re better off donating your time to rebuild the BLACK cities that BLACK lives matter is helping to demolish.