All Forum Posts by: Zane Cress

You should absolutely not do a hard money loan for this. If you can't get approved for this as a primary residence with a FHA or some other low down payment loan then you have a few issues that need to be resolved before you buy a property. You either need to sit back and save more money or find a lending partner that can get you approved for a conventional 30yr. Your realtor is correct if they want you to offer above what they plan to list it at then you should wait. If they expect a bidding war and it doesn't happen in the first 5 days then you can approach the deal with leverage on your side.

End of the day if you really like the property and can make the numbers work then go for it. It's your journey. But don't fall in love with a property just because it's your first purchase, be patient, be smart, don't lose money. 

Based on the current market and future expectations for rates and global/macro economic conditions I would say cash flow. Appreciation is never a guarantee and most experts think the time of rapid appreciation is over, so if you don't cash flow each month you might wait 5 years for minimal appreciation and a break even, not a good start to your journey.

BP is a good place to start and FB RE groups will have a lot of people on them, but also trash and spammers.

If you are patient and find a good cash flowing deal then you will have no problem starting and continuing this journey. And if you're on BP and in Cali trying to buy investment RE then reach out to the David Green team of course.

Mixed use residential/commercial is a whole different ball game. You're going to be dealing with businesses and that's different lease structure. If the property area is not ideal it may be hard to attract new businesses if the current ones leave. Harder to replace a business than it is a regular tenant. And you need to make sure the tenants are actually paying and verify those numbers and that monthly income because it could be inflated for the purposes of the sale. 

But if these #s are accurate it should qualify DSCR

If it's unpermitted you run into insurance issues and it only takes one neighbor to complain about it and the government makes you tear it down or spend a ridiculous amount of time and money to get it permitted. If the seller really wants to sell then make them start that permit process and see how much trouble gets stirred up. 

This seems risky unless you have a lead on a homerun flip opportunity. Needs to be a lot of space for mistakes and budget overages. Also as a new business with no yearly cashflow you may only find 10-15k limits on your credit card. So you may need 3-4 credit cards to fund it all. Plus Lowes and Home Depot cards to buy materials and stretch the payments for 6 months. 

You can find a hard money lender on BP somewhere that can get you the down payment money and then you can fund the reno with your credit cards, but it's risky for a first time. Especially with more rate hikes definitely coming in the future. It would be safer to reduce all your personal monthly debt and grab a second job to start saving as much money as you can. Go into this career with a strong safety net or it could destroy you on the first round. 

Starting the conversation about buying my grandparents home in the mountains. They own all their assets outright and will probably remain in the property for another year or two. My rental properties kick off enough cash to cover buying their place now while they still live in it and floating the extra cost for a few years. After they leave it will become a STR that will cash flow nicely and I can refinance it for a decent cashout.

Option 1 is get a conventional mortgage and charge them rent to cover the monthly cost however long they stay there. I can give them a higher purchase price if they will cover the monthly cost for the next few years. They get the tax free gain in the meantime to live off of. Getting a 7.5% rate with buying points at 80% LTV. Most likely they would sell to me at the 60% value mark so maybe the rate gets better.

Option 2 is do a seller finance option where we work out terms for a few years at a cheap monthly payment and do a balloon payment at the end when they are ready to move out. My question here is about the tax implications. If they seller finance for 3 or 4 years and then take a balloon payment does it still qualify for tax free primary residence status?

Option 3 I rent it from them for a couple years at a cheap monthly rate and then buy at a reduced price later on since a primary residence you only have to live in 2 of the last 5 years. 

Open to any other scenarios people may have here. Looking to give them money now and secure the asset without doing any wills that could be argued later on in court. 

Focus on local lenders and credit unions in the area. If homes are that cheap they probably have programs to help local buyers.

Find a good inspector who is familiar with the age of houses you are looking at. They should be able to help you see a lot of those things because they see them everyday in their line of work. Will give you a better idea of what you are walking into. But there will always be problems, just roll with the punches.