All Forum Posts by: Tim Johnson

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  @Jewel B.  absolutely!

If everything was great on the first round....it wouldn't still be sitting there right?

Find out what conditions are keeping buyers / investors away...and then consider whether you might have a fix or not. You most likely will come to a similar conclusion as others...but there may be a property where you are uniquely set up to jump in and do something. In those cases, make an offer that will work for you....and stick to it. 

Quote from @Jewel B.:

Good evening fellow investors and community members,

What else am I missing?

Why would a B/C property in a B/C neighborhood remain for sale for months in areas with investors?

The price. 

I could sell a rat-infested single-wide trailer up-river if the price is right. Conversely, if the price is not right I cannot sell your multi-million dollar luxury home. The short answer? There may be a million "reasons" why the house you're looking at hasn't sold. The actual answer? The price is too high for the property given all of those "conditions". 

Did I mention the price was the problem?

By all means, after checking things out.....make an offer that works for you! 

Hi @Justin Phen, welcome to the forums. (you sort of sound like an engineer....ready to solve those problems!) that's good by the way....

But my advice would be to not overthink it.

1. talk to a lender and find out what you can afford (the cost for this should be free)

2. find a good realtor that works with investors and understands your specific house-hacking goals and how the numbers need to work for you. (the cost of this should be free)

3. Buy the property. 

4. From here, as you move in and excitement and momentum grows.....you can make decisions about self-managing ....or hiring a PM, doing the bookkeeping yourself or getting a CPA, using a tax person....or not. You get the point. Let the team grow organically when needed.

Best wishes.

Hi @Alex Moazeni, the "HOA" isn't someone else. You're part of it. These decisions are made together as a group of owners and the decisions are documented in official minutes. Sort of like how democracy is supposed to work. Having rentals where HOAs are strong and functioning DOES have its downside - it can also have advantages. Bottom line - understanding this is a huge part of investment calculations going in.

@Hector Gonzalez

Both were bought within the past five years as our primary residence. The first one we bought (1920) was in much better condition and needed less than $10,000 to bring it up to a good level. As a buy and hold rental it now cash flows around $500 per month after all debt service, insurance, taxes, capex, maintenance and vacancy are covered (we manage it ourselves). The 1910 build was in much tougher shape and we've continued to work on it ourselves over the past three years. We purchased at 300K and with pretty incredible market appreciation (and value add work) it's present ARV is around 500K. That doesn't give you an ROI number but represents a pretty common example of using a primary residence as a stepping stone to the next investment.

@Hector Gonzalez  I own one house that is a 1920 build and one that is a 1910 build. Both great homes with character and potential. As @Andrew Bang points out, once improved, these older homes can bring great investment value. Get a good inspection and yes, have all major mechanicals checked out. 

@Ross Kline Hi, and welcome to the forums.

No, investors (if they're smart) know that they make their money "going in" , i.e., when buying. Of course, crazy market appreciation and dumb luck can occasionally work in our favor. But that's no strategy. The numbers you're seeing are common in many markets today. But you still don't buy negative cash flowing properties with the hope that something will happen. You dig in deeper looking for those true value-add deals - these will mostly be off-market in many areas. Best wishes and stay patient.......

Hi @Regnor VonDedenroth, welcome to the forums....and congrats on getting started.

1. If you're working with a great realtor who is well-versed in investment purchasing and can introduce you to good lenders and other vendors, why skip this chance to get her help and learn something in the process? It generally doesn't cost you.... and her experience and negotiating strengths may save you far more than a commission. 

2. When you're working as your own buying agent, it's generally a lot smarter to negotiate a lower purchase price and skip the buyer broker commission. Seller will get the same net, and you'll get a tax-free benefit. Obviously, if you need the commission to cover your closing costs, that's different..... 

I'd stick with the experienced realtor.....best wishes.

Quote from @Christopher Fabiany T.:

Quote from @Tim Johnson:

If property 1 is still legally your "primary" residence....i.e., you haven't adjusted the mortgage to make it an investment property, then no, you won't be eligible for an FHA loan. (You may be committing mortgage fraud however.) If all three of your properties are investment properties, you would be eligible to purchase a home (SFR up to a 4-unit) as your primary home with an FHA loan.

What is the process to adjust the mortgage to make it an investment property? Refinance? could you elaborate? 
Thank you for sharing your knowledge!  

Sorry Christopher, I should have been more clear. It's really an adjustment in the insurance policy that is required. As long as you live there as your primary home for at least a year, you are free to turn it into an investment property and move on.