All Forum Posts by: Trent Rogers

Excited to start your book today! I'm hoping there are some tips for doing market research as that's the phase I'm in. Can you clarify what you meant by the trauma level?

I think you make a great point and knowing your market and client is important in how you market them. I was actually scrolling this section of the forum to see if there were any discussion on market analysis or determining demand for MTR's, which ties back in to knowing the target clientele. Any tips or thoughts? As a lender do you perform any market research in your underwriting? 

My wife and I are in little bit of a tight spot. The guy that purchased the empty lot next to us has made an offer on our house. It's a long story, but trust me, it's most advantageous to negotiate and sell. We have to be moved by March 1st, so the proverbial clock is ticking. Because our "dream home" doesn't seem to be on the market right now, I'm looking for a rental/flip candidate. In our area about the highest you'll see a rental is about $1,500, so according to the 1% rule, that will cap me at $150k house. A lot of what I'm seeing is $160-$170k, which is beyond the high end of rent in our area. 

Is there a deviation from the 1% as the price of the homes go up? The only reason I ask is because if the goal is cash flow, and the property doesn't meet the 1%, but still has cash flow....what's the big deal? For example, if my mortgage is $1,150 and I can get $1,500 in rent....isn't that the goal?

Or, is it a matter of the 1% rule mostly works because rental homes are being purchased under market value(certainly helps)? I know we all strive for great deals, and certainly don't want to over pay, but the clock is ticking.  I'm not trying to justify paying retail, but if the numbers work...what am I missing?

I look forward to hearing your thoughts, and thank you in advance! 

p.s. Any wholesalers in the Louisville/Maryville, TN area? lol

Do you think he would sell it to you out-right, or is the 7% financing a contingency in the deal? 

If you're buying it at 65% with $5,000 down, and he's charging you 7% for 3 years, why not go through a local lender to get a longer term with a similar rate which could make the property cash flow positive. Those figures are all within the parameters that most lenders would accept. Don't get me wrong, being free and clear in 36 months is great and may be the smarter thing to do. 

To pay off or not to pay off seems to be an on going debate. If you are of the Dave Ramsey train of thought, then the deal doesn't sound too bad. The flip side is that it will tie up $7,500 ($5k down + $2.5k in neg cashflow) for 36 months before you see any return or cash flow. 

Plus, if you think you'll ever dip into the equity on this property to buy another, then this whole thing is an exercise. Try to stretch out your term with him, or finance through another lender with minimal down for 10 years and keep your money in the bank. Just my .02

We have looked into metal building homes, pole barn homes (Mortons Buildings) and financing can be tough due to lack of comps. I would imagine that a container house will very similar. If you can't get it done with a heloc ($93k) then I would probably look into something more conventional so that you can get a loan on improved value with the second home on the property. 

 This is exactly what I did with my first home which later turned into a rental. Having that line of equity not only allowed me to rehab it, but gave me peace of mind for any surprises that popped up while it was rented. Down the road that equity may give you the money you need to snag up a great deal. I'm a big fan of the fixer upper with a heloc because it let's you control the money and do the rehab at your own pace especially if you're doing it yourself. Plus if you get hit with an costly surprises your not having to come up with cash, or putting it on a high interest credit card. 

My wife and I currently live in a 110 year old house that as you could imagine needs work. We explored lots of options for a major reno, but because of the tight restrictions that come with FHA programs we were forced to look elsewhere. When I started approaching local banks I was surprised at how many options they offered, and how flexible they were. As mentioned above, you may find local banks that will finance 95% with lower PMI, or that offer their own version of a 203k. One local lender I spoke to stated that we could in essence make up our own "mortgage product" and that it could be brought before the bank's board and voted on. Talk about flexibility.

I'm no banker, but here is what I have gathered from my experience.... When most mortgage companies look at a mortgage they like it to meet some sort of "standard" parameters because there is a high likely hood that it could be sold off to another lender. Some lenders like local banks and credit unions, are willing to offer certain products in their market that deviate from the "standard" knowing that they will have to keep that mortgage "in house". 

I had another experience where a big bank effectively turned me down for a heloc because they claimed I didn't have enough equity. I then went to a local credit union, and was given a $39k line of credit. The first appraisal was $75k and the second was $112k. True story. The first lender was a nationwide bank that didn't really have a good feel for our market, while the second lender was headquartered and primarily invested in our local market. If you're persistent and have a plan that makes sense, you may be surprised how receptive local lenders can be. 

Feel free to correct me if I'm wrong, again I'm no banker. This has just been my experience from my real estate dealings thus far.