All Forum Posts by: Timothy Frazier

@Zack Elaroussi

I wouldn’t do it with borrowed money of any kind. All interest you have to pay is another expense on top of the rehab no matter where it comes from. You’d be surprised how people wind up making less trying to fix things up than if they would have just sold it.

In regards to your 401K I’d say this: no experienced financial planner would recommend you to do that. I don’t know the details of your account. But most of the time that money is in there pre tax. So when you pay it back it will be with taxed income so you’re losing the biggest benefit of the account.

Good luck.

@Zach Scott

You get comps for similar properties mainly the same school district for both and compare.

So find 5 recent sales of 3 bed 2 bath nearby and say median price is $100k.

Then find 5 recent sales of 3 bed 1 bath nearby and say median price is $95k.

Obviously there will be material differences between any houses. But the more recent the sales and the more comps you can find, the more that will get scrubbed out using the median in both samples.

In that example I just gave your second full bath is worth $5k.

@Athena Cave

One thing to be mindful of would be applying for two loans at once. There will be a period between sales agreement and closing and during that time lenders usually take a look and see if anything has been added to your credit. You could get pre approved for two loans but I wouldn’t spend the other one until your first one closes. You shouldn’t buy a car or anything major during that time.

If you want a good deal I would not use an agent to buy your investment property. I'm an agent myself so don't worry it's not a knock on them. No matter the condition MLS is always going to be market value.

Buy an absentee owner multi family list in a couple zip codes where you want your investment property to be. Hand write a simple letter to them saying you came across their absentee property and you’re extremely interested in purchasing it yourself. When people call you back just shoot it straight, tell them you’re a military family who just moved to the area, looking for a long term investment and already approved for the loan. Use an attorney to close it, sell them that they can sell it with no commission.

Good luck, you may even find one turn key.

@Hector Salas

Try to find one turn key.

Best was is to buy an absentee owner list in the zip code(s) you’re wanting to invest in. You can remove all property types you don’t want as well such as commercial, vacant land, etc. before hand so you don’t pay for hits you don’t want.

Hand write and hand address a simple letter to the owner mentioning the absentee property and that you want to buy it and wait for the calls. Yellow paper red ink, use an envelope that looks as close to an invitation as possible.

Good luck.

@Ashley Benoit

Buying turn key is harder to do but if you can find it is a huge asset for you first property. Eliminates the marketing time/cost and allows you to run your numbers with a known rental cost and duration. If you find one make sure to review any lease and tenant applications. Good luck!

@Wayne Brooks

Thanks for the reply. I had kind of heard about this.

But then from the perspective as a buyer, I am essentially counting on the seller to continue to make payments to their bank. Because if I’m paying the seller that mortgage but then they stop paying the original loan back, seems like the original bank can come in and sell my property to satisfy it.

Anyways there’s a lot of extreme hypotheticals I’m presenting, just trying to look at it from all angles. I don’t think there’s a perfect way of doing it no matter what.

Help me out from the sellers perspective.

Say the seller understands and agrees to concept knowing it stays on their credit.

What, from the sellers perspective, protects them if I don’t pay? Say either I pass away or I just flat out quit paying it for whatever reason.

I can get passed the fact that it stays on their credit. But still they have a loan balance but they don’t have ownership anymore. So how can they pay off the loan if I’m not making the payments but they can’t sell it because I now own the property? Is this just something you make clear in the agreement and is a risk that they accept? Do you use a life estate at all?

@Yusuf Qureshi

The simple answer: let the market tell you.

Bad schools, bad crime, bad property conditions = low sales price and low rents

Good schools, good on crime, good property conditions = high price and high rents

Take a bigger metro area like western PA where I live. Say I gave you the 10 neighborhoods with the highest median sales price in the last year. Then I gave you a list of the 10 neighborhoods with the lowest median sales price in the last year.

Then some education/crime/urban analyst of some type gave you their list of 10 nicest neighborhoods in western PA and their 10 worst neighborhoods in western PA.

At the end of the day you’re going to have basically the same two lists from both of us.

You can’t really compare city to city like that. Just bc sales prices in LA are higher than Pittsburgh doesn’t mean LA has less crime and better schools. But when trying to focus within a particular area the market will tell you a lot.

@Arjay Estrella

It may depend on the state but for most of them, legally you can’t pay them anything. The only commission they can collect is from the broker. You could go to her broker and say you’d like to give them a bonus but I would not give to them directly (although they’d probably still accept).

@Jose Gallegos

Most of that is already going to be built into the market already.

Nice area with nice schools = high sales prices and high rents.

Bad area with bad schools=low sales prices and low rents.

There’s not many areas with high crime and bad schools where the property values are sky high. Maybe some inner city neighborhoods that are being flipped where people don’t have kids but that’s about it.

In general like everyone said it’s all about the type of tenant you can attract. In general you’ll probably find just on paper there’s good numbers in lower income areas which there can be. But the appreciation over time won’t be as good. And you’ll want to factor in more of a higher vacancy rate and higher annual maintenance expense due to more tenant related issues. If you’re basing your purchase price on a desired cap rate you may want to raise that cap rate higher for neighborhoods like that too.

Just my two opinion.