All Forum Posts by: Trent Stone

@Sieanna Ariel You bet! So very simple example. Let's say you find a property off market that's worth $100k, but you are able to get it for $70k. When you go to your loan officer and ask for a loan he is going to get it appraised and find out that it is indeed worth $100k. He will tell you that you need a "down payment" so they aren't loaning on the full $100k and taking all the risk, with FHA he will want 3.5% "down" or $3.5K. Meaning he is willing to lend you $96.5k on your $100k house, and you have to pay for private mortgage insurance. You tell him, GREAT, I only want to get a loan for $70k on my property worth $100k (Because that's all you bought it for). The $30k you saved by finding a great off-market deal, is acting as a $30k "down payment" even though you put nothing down out of your pocket.

So in this example he was willing to give you 96.5% LTV(loan to value), but since you found a great deal you only need to borrow at 70% LTV, which is all you lender cares about, and in this case your deal was so good that you don't have to pay for PMI either, so your monthly payments will be way cheaper than you originally thought. Hope that makes more sense. Doing some work to find great deals and not just picking stuff off the MLS can essentially "earn" your down payment.

@Maher Bateh Shout out to David Greene and "The Book on Long-Distance Real Estate Investing"! He talks about how to put together your core-4. I vetted and interviewed several key players to our team and found the ones that I trust wholeheartedly. We have amazing boots on the ground in Indianapolis so we don't need to be there. They want us to win just as much as we want to win, if we succeed so do they. Teamwork! Also, like David says, rockstars know rockstars. Good chance if you find one or two of them then you can fill in the rest of your team with other rockstars. The margins in Indy are so much better than here in Utah, I think it would be silly to focus all my investing energy here when I'm doing so much better there. 

Depends on your area. San Fran, not a chance you could get one for less than 80% ARV. Jacksonville, most likely you can. I live in Utah and investors are paying over 80% all in ARV for flips....IMO, it's ludicrous. For that reason, I do all my investing in Indianapolis. We look to be all in at 65% and definitely no more than 70%. The US market as a whole is very hot so most investors are overpaying, but that doesn't mean you have to. Depends on your situation. Me and my partner have been picky and held to our criteria because we can. We have passed on MANY deals that other investors are drooling over, but we make a much higher ROI than they do and our investments are much safer than there's because we have a much higher margin of error. You can go to places like KC or Birmingham and get flips for 55% ARV. Just depends on what's acceptable to you and what your market has to provide. I'm not an expert in the Florida markets so you'd have to do some of your own research, but from what I understand you should definitely be able to get closer to 65-70% all in ARV.

It really just depends on the purpose of you buying the property and the area. Are you buying it strictly as an investment, then you might be able to do better, and you would probably want to look at buying a 3-4 plex, in which case your mortgage better be covered. Run the numbers as if you were renting out both units and see if it makes a good investment. What is the cap rate, cashflow, roi, etc. If it doesn't make sense purely as an investment, then you could be better as a personal residence. If you just absolutely love the place and you aren't a hardcore investor, then sure, you get a nice break on your mortgage, it's still house hacking. Just depends on your goals. :)

Call the police and register the noise complaint. 3 strikes your out. Eviction might not happen during the quarantine, but you can start getting your duck in a row with the noise complaints, written log and service to your tenant, then you can start the process if you need to with just cause, should help it flow smoother.

I like when people come up with friendly solutions though. Like, go over with a 12 pack and talk to them for a bit and just let them know how the neighbors are feeling, then maybe make some joke about how you'll give them a case of beer for every month you don't get a complaint. You don't want to have to evict them as much as they don't want to be evicted. It'll save you money in the long run if you can find a creative solution. 

The bank will still take their credit into consideration if you do a HELOC. If YOU have good credit, I would highly recommend selling your mom's primary residence, unless you know it's a killer rental. That way you aren't just keeping it because it's easy, you are taking your money to buy an actual investment property where you know the numbers work. For example, if your mom's house could rent at a 4 cap (capitalization rate), but a block over you can rent at a 6-8 cap, then sell your mom's house and buy 2-3 rental properties. You will get a lot more bang for your buck that way. Also, If you can qualify for rental loans you can use the awesome power of leverage in your favor. ie. you take your $100k and put that as 20% down and borrow the other 80%($400k) for half a million dollars of rental property. Depending on the class of neighborhood you should be expecting about a 6-8 cap, meaning on your $500k of property you should expect $2,500-$3,333/month (minus financing costs). But since the Fed lowered interest rates to 0% and mortgage rates are at an all-time low I would say now is a perfect time to invest :) House hacking or a live-in flip is also not a bad option as long as you would be able to help to refinance the property after the flip is complete. Feel free to reach out to me if you have any questions.

You are just listing the property as a rental? For me it would depend on how high demand is for that type of rental in your area. If you think it will be hard to rent, then I would have no problem giving an agent a half months rent or something if they brought me a high-quality tenant. You can usually also pay property management companies a referral fee to find you a tenant. But if there is high demand then I would just post your vacancy online and find the tenant yourself. Good luck!!

Just because a property is distressed doesn't mean it will show on a vacancy list. Owners, especially absentee owners, get TONS of letters. If you are there in person, leave something handwritten or have a conversation with someone who lives there you can get a big advantage over the people just buying lists. Also, lists cost money and the integrity of the lists is usually pretty low. I would say maybe only 50-80% of the records are actually going to be correct, depending on who you use. In my market, the distressed properties are very scattered, so driving doesn't make a ton of sense. But if you are in a big metro with lots of them, then driving for dollars can be more efficient. Spend $300 buck on a decent list or spend $30 in gas to drive for a week, just depends on your situation and budget. Also, the good wholesalers I know always have a few streams of leads, they'll never rely just on driving, but as they are driving around they can pick up a property here and there during their normal business. But, if all you have is a scooter and a little bit of gas money then you can go hustle and get it done. Good luck!!

You need to show solid financials. All they want to know is if they will get their money back and that it is secure. If it really is a GOOD deal, then it will sell itself. The BP calculators are great. Use conservative numbers, include every expense, make sure you are setting aside money for expenses and capex. Call 5 property management companies and get actually data to input for vacancy rates and expense ratios and management fees. Show him which professional company will be managing your property so he knows it will be well cared for and your numbers are accurate. 

If you are to the stage where you are buying then you should have all the historical data from the seller. You should be able to show P&L's, bank statements, receipts, leases, rent rolls, etc. for at least 1-2 years.  

Of course they don't want you saving $300/mo, they would be losing $300/mo! lol...

Talk to a bunch of portfolio lenders. If it is a cash producing asset with equity, I don't don't you can find someone who will want to take that loan. Your personal DTI shouldn't matter at all, get someone who only cares about the asset. Not to mention, for investment loans, lenders count 70% of the gross rents as income, and usually expense ratios are closer to 60%, depending on the property.....So, really, 10% of your gross rents that are being used as expenses should be counting as income and thus help your DTI. I think you are just talking to the wrong person, go talk to 15 more then come back and let us know what you find. I'm sure you can find a way to do it, good luck!!