All Forum Posts by: Account Closed

 Just wanna give you heads up since you provided a new information. If that area is still under construction and are building new houses, you may not be able to sell it for the price you paid. There would be new inventories coming in making it harder to sell. Remember more supply = less value for a property. 

The only time I would invest in an area like that is if I was able to jump in on a high cash flowing property or can eat the negative cash flow a for a few years. It is a lot easier to invest in a neighborhood that is already established and the city is just renovating or companies are coming in buying up other commercial properties. If it was a middle of no-where or rural area and the the city is expanding, its practically a gamble on when the price would be right since there market will be providing newer and normally better houses. As an investor, I wouldn't want to gamble and see if the old homes would jump up in price nor would I jump in on a new construction since they are normally overpriced. 

 It's honestly really hard to tell you the right answer since we don't know your financial situation and the market. Just basing off of what you provided and doing a quick google search on the surrounding area, it is really easy to tell that your property is way overpriced for the zip code especially a townhouse. 

My recommendation is to sell it if you can (keeping a negative cash flow isn't good at all), fire your PM (they should have known that price is way too much), get a realtor that knows the market will and won't give you bs and put them under contract. 

I am new to real estate like you but have been investing in other venues for a while and one of the things I learned is that finding the right people to take care of your own stuff better than you can is hard to find. Easiest way to do it is if you think you found someone you like, draw up your own contract with your own terms (make sure its legal). If the person is trustworthy, and terms are fair, they would not hesitate to sign it. 

It literally took me 4 months to find my realtor, PM, General Contractor, and lender. I put the realtor, PM, and GC under contract even though I think of them as a family friend. This is prior to even looking for deals. 

I am in a buyer's market and a buyer actually using VA loan. Unfortunately for you, there is no way around it. The VA lender will not give me the funds if the appraisal is even a dollar short and the price is not re-negotiated.

 I am just closing on my first deal, but have ran hundreds of numbers on properties.

If your numbers are correct and I am assuming at least 6% interest rate for the entire cost of the investment you are looking at roughly $1,865 for PITI (which does not take account vacancy, maintenance, capex/repairs). That will leave you $1,135 a month or $285 per unit before the expenses I have said in parenthesis. In my market, that is not a good deal at all. I would at least want $350 per door before expenses for an investment property that I didn't put any money down. IF I did put money down, I would at least want $450-500 depending on the area.

 Just a quick glance at your zip code, I found a nicer townhouse bigger than yours for considerably less... $1,450/mo. I think you are way overpriced which is why future tenants are turning around and probably found something better for the same price point or cheaper. Now I do not know of the market your property is in, but a $200+ difference is pretty big. 

 I read the Publication. If that is true, then you are 100% legit, but I have not actually read the IRS section it was referencing to know for sure. If you have a lender that you have networked and can directly influence the underwriter, then you will be able to do something about it. For instance, some of my income is not reported on the tax, but I can prove it in my bank statements. Normally it takes longer to process the loan cause they ask for a bout a year's worth of statement. The issue you may run into is that tips are not "steady" income so depending on lenders, may not want to risk lending to you. 

In my opinion, the best route would be to put a large down payment 30%+ if you can. Then down the road, refinance it. The more down payment you have, the less the lender will view you as a risk. 

@Stevie Delacruz there is no such thing as too young to invest. I actually learned investments and business skills when I was 15 yrs old. Started paper trading (basically simulation using real time stock market prices) at 16 yrs old. Really got into it at 18yrs old. 

How? I joined the military. At first it was cause I didn't want to listen to my parents and I wanted to serve so I turned down full ride scholarships, but all the benefits including taxes are pretty awesome. Lost a **** ton in my first year and a half. Broke even on the second year, but by the time I was 20 yrs old, I was making almost as much as my military pay (roughly $5k total per month). Of course that was thru stock market, but real estate is the same way. There are different path to make money, you just have to be creative. 

Now I just turned 24 driving a $65k truck, have credit cards that normal people dreamed of, got my private pilot license (paid for the schooling myself), got military to pay for my associate and bachelor's degree and about to buy my first investment home which will be my primary residence for the time being (2200 sq ft home, 1.5 acres of land, and will be putting in $110k worth of renovation). I also project to buy a rental property using the equity on my primary residence in about 8 months. 

Of course I am still in and plan to be in the military for the full 20 years (14 more to go), so by 37 I will be retired collecting retirement check from Uncle Sam for the rest of my life as soon as I get out, investments I still have in stock market, and investment properties will be my income. I also am putting in ROTH IRA, but I am not counting on that since I can't start drawing until 59 if I want to take full advantage of it.

There were a couple of years even time to time currently that I would only get 4-5 hours a sleep a day. Sometimes less, but you have to have the mindset that if you want something, you will try all legal avenues to get it. Starting young will give you a leg up in the market. If you mess up, you still have time to recover from it.  

@Jonathan Roberts

Just starting out with investment properties, but been an investor for a while. My plan is to save a year's worth of reserve fund from property, then the rest would be used to purchase other properties. If a big expense comes into play, I have two credit cards that are $30k limit each with only 4% Annual interest rate (active duty military). So I would use the credit card to pay for emergencies, and liquidate the other investments I have which are stocks to pay for the extra expense. 

Or I know some people that have a HELOC against a home with a ton of equity and uses that as the emergency funds.

Of course that is only if the saving I had earlier was not enough which I think it will be cause I won't touch the net cash flow either and either put it in reserve funds or towards a new property. 

In theory, by the time I have 5+ cash flowing properties, I wouldn't need to tap into other funds since the reserve should cover it all. 

 That's the point. No one is suppose to fully understand the formula so you cannot cheat the system. All you need to know is what is taken into account. Which are credit card ratio, inquiries, payment history (including phone, utilities, etc). The reason for different scores is cause if I am lending a mortgage to you, I don't really care about the credit card inquiries so why would I want a formula that takes that into account. 

Something must be wrong with your FICO credit score and I highly suggest you pay to see the actually score and what is under it. sub 600 means there are red flags in there (late payments, defaulting on loans, or collection). 

If you want to start getting into investing, I recommend to look into the mechanics of all that. There are reasons they are in place. What the general public doesn't understand is that Global Economics revolves around investors. Most of the stuff including tax breaks are catered to investors cause if there is no one investing, any type of market would not work. 

If you don't like credit scores, then don't get loans. I know many investors who doesn't use credit score and just pay everything in cash. It actually works out better for them (you get better deals when paying in cash), but they have a good primary source of income to sustain that type of investing. 

 Like I said, there are different scores for different type of lending. The bank normally only shows you your score for credit cards. There’s a different score for mortgage, a different one for auto, and there’s also one for renting that landlords see. You actually have to pay a small fee to pull all those scores but if you do a self pull it won’t affect your score. Go directly to FICO website and pay if you really want to see the actual scores ($20 for all the scores). 

As a landlord and investor, I don’t think credit scores are scam, in fact they help me make a decision whether to lend or rent to someone. Credit score directly reflects on timely payments, credit responsibility, etc. 

maxed out credit cards? Scores will go down cause now you are a risk to lenders with DTI ratio.

If credit scores are taken away, it’ll take at least a week, most likely a month or two for lenders to go thru all your finance. Which means as a lender, I’ll probably charge you more on application fee since I would have to hire someone to search thru records and consolidate it.