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    Monday, March 9, 2020

    Real Estate Investing: Weekly Question Thread - Week of March 9th

    Real Estate Investing: Weekly Question Thread - Week of March 9th


    Weekly Question Thread - Week of March 9th

    Posted: 09 Mar 2020 12:03 AM PDT

    Welcome to the Weekly Question thread at /r/realestateinvesting!

    (Week of March 9th)

    This is the thread to ask general questions about real estate investing. If you're brand new here, please read the rules in the sidebar before posting.

    • Please use the search engine first - many basic questions have been asked before (make sure you change it to search for comments, not posts). Alternatively, you can simply use the search bar at the top of the webpage within the subreddit.
    • Please also consider scanning (CTRL-F) the last couple of Question threads or other original content posts submitted by other users.

    This Sub is Modded with an IRON FIST when it pertains to spam, attempted SEO, "Guru" Promotion and click bait. Don't do it. Do not begin an AMA without approving it with the moderators first. Do not market deals as a buyer or a seller. This includes lending and syndication. If you catch a comment of somebody attempting to market a deal, service, or product please flag and report the post so a moderator can catch it.

    (MOST GENERAL QUESTIONS SHOULD BELONG IN THE WEEKLY THREAD)

    Examples of questions that can be asked here:

    • "I'm new, how do I begin?"
    • "Book recommendations?"
    • "How did others start their journey?"
    • "Analyze my deal or give me feedback on my situation?"
    • "How do you do X or Y?"

    IF you believe your question deserves its own post, you may post it as an original question. We will begin to create more clear guidelines on what belongs in this thread and what deserves its own post as time goes on.

    In other news, we will begin to create a bi-monthly thread (separate from this one) that has rotating topics. To start, these will include things like: Success Stories, Deal Analysis, Motivation Monday. If you have a suggestion for what might be a good topic to add, please comment below.

    Next Weekly Questions thread: Monday, March 16th, 2020

    Next Monthly topic thread: "Blatant Self Promotion" Monday, March 23rd, 2020

    Discord Server Link: https://discord.gg/n7dxPVd

    Last Weekly Question Thread:

    https://www.reddit.com/r/realestateinvesting/comments/fcjzh6/weekly_question_thread_week_of_march_2nd/

    submitted by /u/Hope-full
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    Can we get a handle on the “I’m 15 and broke, where do I start?” posts?

    Posted: 08 Mar 2020 07:07 PM PDT

    Maybe a daily or weekly n00b thread, or a FAQ we can direct people to?

    submitted by /u/rco8786
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    $600 water bill

    Posted: 08 Mar 2020 12:10 PM PDT

    I'm asking for my mom, she has an old artsy apartment building in south west Florida. It's three units, the water bill is 600 dollars this month. Each unit is on a separate meter so we can see which unit is "leaking water." The problem is that the meter is accurate af, no signs or readings of running water when nothing is running. The city of Sarasota literally said we're screwed. If a plumber or whomever can't find the leak they can't fix it. Doesn't the city have obligations to come fix the problem? It's their meter and their water, so why wouldn't they?

    submitted by /u/TravisFromTheTribe
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    22 yrs old and doubting whether or not to invest in real estate market with current situation

    Posted: 08 Mar 2020 07:25 AM PDT

    I am in a dilemma, hopefully one of you can help me out. I'm 22 yrs old living/working in Dublin, Ireland. I've really been wanting to get into real estate investing and I know the Dublin market is great to invest now. I'm trying to buy a 300k property with the following funds:25k personal funds, 175k mortgage, 100k family loan. I made a deal with my family that I would borrow 100k and pay this back by paying 1% per month over 9 years. This means my monthly expenses would be approx 750 (mortgage) + 1000 (family loan). I could rent out this property for 2000 per month (conservative estimation) and probably make even more through Airbnb. Also taking into account this property will likely appreciate upwards of 15%-20% would you invest or not?

    submitted by /u/max13811
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    Advice Needed: Best way to pull money out of a rental to do renovation on said rental?

    Posted: 08 Mar 2020 04:31 PM PDT

    Hey guys,

    My first rental I even bought is going to need some work. We rented to family friends who have 4 DOGS because we knew that it was getting worn down and was going to need work after them anyway.

    We owe about 70-80K on the house. We bought it for $116k. We now estimate the property to be worth around $200k. I am looking for advice on the best way to pull out money to do a large fixup.

    I don't know what I am talking about so please correct me. We are assuming we would just refinance to $160k essentially giving us $80k in cash to fix the place up? Is that how this works? Is this the best option? Where is the best place to accomplish what I want?

    In other words, we want to get money to fix up the house. Whats the best way to go about this?

    Thank you!

    submitted by /u/Imallvol7
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    Home equity line vs mortgage

    Posted: 08 Mar 2020 02:37 PM PDT

    Hi All, Would you take the existing money out of a paid off property (mortgage) or use a home equity line to buy a second property ? Rates are so low and I believe home equity fluctuate......thoughts?

    submitted by /u/Phuckingfunny
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    How to acquire second property without being over leveraged?

    Posted: 08 Mar 2020 07:42 AM PDT

    Definitely a beginners question, how do people avoid being over leveraged when acquiring a second property using equity from your first? If you do a heloc or cash out refinance to use for a downpayment, wouldn't you be 100% leveraged in that new deal? I don't think my bank would even allow that unless I'm missing something?

    submitted by /u/CoupleClothing
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    How Does a Second Mortgage Work?

    Posted: 08 Mar 2020 03:23 PM PDT

    I haven't seen this discussed much in this sub, but if it has been answered somewhere else, please let me know!

    So I have a mortgage on my personal house, and my plan is to move on to another house in a year or two, and keep my current house to rent it out. So I'm wondering how it works with getting a second mortgage. When applying for another mortgage, obviously my first mortgage payment would factor into my debt-to-income ratio, but would rental income factor in at all? If I'm able to get a lease signed, would that factor in, or would I have to have two years of rental income before it's factored in?

    I'm just wondering if I'm getting a second mortgage based off of my W-2 income alone, or if the rental income will be able to boost me a bit.

    submitted by /u/countvonbean
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    What really counts as a first-time home buyer under Roth IRA?

    Posted: 08 Mar 2020 11:23 PM PDT

    I'm referring to the exception with a Roth IRA where you can withdraw a lifetime maximum of $10,000 to put a down payment on your first home purchase.

    I want to start real estate investing with my mom this year under a joint LLC. She has purchased a home previously, so the exception wouldn't apply to her, but I haven't yet. The plan is to buy a duplex under the LLC for my mom to live in one unit and rent out the other. Would this count towards my first-time home purchase, or if I purchase a home personally outside of this LLC could the exception still apply?

    Thanks in advance for any advice.

    submitted by /u/The_Royal_One
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    Would you buy a townhouse with this ugly of a front side if the location is good?

    Posted: 08 Mar 2020 05:46 PM PDT

    FHA home living requirements.

    Posted: 08 Mar 2020 10:53 AM PDT

    I had looked up the requirements for getting an FHA loan and the primary residence portion seemed slightly open ended. The requirement says "The home must be the borrower's primary residence." When looking up what exactly a primary residence means I didn't find a solid definition. What I could find is it was more of a guideline/case by case basis of "where you usually live."

    With that being said, would it be possible to buy a multifamily and use 1 of the units as your "primary residence" and not rent it out but also not live there, but still claim it as a primary residence or does that fall under mortgage fraud?

    submitted by /u/WonkaKnowsBest
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    Do you have a plan if the market takes a downturn?

    Posted: 08 Mar 2020 01:25 PM PDT

    Hi, I am new to real estate investment; but I have been putting together a real estate business plan; for company structure and for lending possibilities. In my business description, I give an overview of the market and how my company will fit in and be profitable. In Houston, the market is currently up, and it is a seller's market. But what if the market takes a turn for the worse after the presidential election?

    Do you have a plan? What kinds of things does it entail? I Googled this very question but came up with very little. Acquire, hold, and rent seems to be the main mode for investing. Strengthening your relationships and just keep learning about the industry. But it just seems like there should be something more that one can do in a down real estate market and turn profits. I would like to show lenders and other potential investors that I have a plan when things go south.

    submitted by /u/Nubbies907
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    Mortgage rate

    Posted: 08 Mar 2020 11:06 AM PDT

    The rate is all time low. I am closing a deal and start hunting for the home loan. My credit score is around less than 700. Any tips or suggestions on finding the cheaper loan?

    submitted by /u/v2da
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    Purchasing real estate across Europe

    Posted: 08 Mar 2020 04:20 PM PDT

    Hi,

    Via my job, I have the option to jump around Europe and work across various cities. I can move every 2 years. What are your thoughts on purchasing a new property with a mortgage every 2 years, and then renting out after you leave, and letting the renter(s) pay off the mortgage.

    Any ideas or inputs would be interesting! Thanks!

    submitted by /u/trustfulvoice94
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    Is a PUD townhome a good rental investment?

    Posted: 08 Mar 2020 08:04 PM PDT

    Context:

    I'm under 30, have my home and cars paid off. My col is 26k~ and could be less if times got tough. My wife makes 50k and I am now going back to school so my salary will be virtually nothing, however I have 60k savings and could earn money if I needed to (independent contractor work).

    I'm due to inherit roughly 170k. I'm scared to make the wrong move..

    My first step would be buying a rental property. The market is high in my area, and the only homes that cash flow reliably without a ton of risk would be condos/townhomes.

    I'm looking at a 200k townhome, 20% down, $287 hoa including landscaping, sewage, water, trash. I should be able to expect $1450 rent for the home. I have excellent credit so I'd expect the lowest available rates, but should I look at the HOA as a killer?

    I could pay a bit more in a down payment and get a detached home without an hoa and have better margins.

    submitted by /u/Mayonnaiseandjelly
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    How much to deduct when filing Taxes

    Posted: 08 Mar 2020 07:53 PM PDT

    If planing on getting another loan for a rental property, when filing taxes, do you want to limit the amount of money that you deduct on your rental property income?

    In other words, if you want to use rental income to qualify for another mortgage for another property, does it look bad to the lending company / underwriter if your property actually shows a loss on your tax return due to too many deductions for repairs and other expenses?

    I have an understanding of everything that you can deduct when owning a rental property, but is there such thing as too much?

    submitted by /u/hthomas757
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    Planning cash out refi

    Posted: 08 Mar 2020 07:42 PM PDT

    Going to cash out refi my rental of 5 years. Would It be better to put new roof on before the refi? Same with painting outside? How about like flower beds and stuff? Does that type of stuff come into play when you refi a rental? Does stuff like new and not just ok bathrooms and kitchens effect it?

    None of this stuff is in NEEDING done nessisarly. But would all definently be done if I was selling. Was just wondering how similar it might be?

    submitted by /u/crymeariver88
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    A few questions I don’t seem to have the answers to

    Posted: 08 Mar 2020 01:04 PM PDT

    So I'm gonna make this post short and sweet. I'm 23 and I make decent money for my age. I have around 30k in the stock market in blue chip stocks. I recently been looking at real estate for any deals I could see maybe working. Typically what I'm seeing is usually deals come through fixer uppers or houses undervalued because they need TLC. How does someone get the cash needed for that if you can't finance a house like this? Any advice is great. I really don't want to pull out of the stock market. Thanks.

    submitted by /u/Acennn
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    Landlords: Now that's clear that the shit is hitting the fan, how many years of negative cash-flow can you comfortably handle before giving up?

    Posted: 08 Mar 2020 10:31 PM PDT

    Landlords: Now that's clear that the shit is hitting the fan, how many years of negative cash-flow can you comfortably handle before giving up?

    submitted by /u/4BigData
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    Government assistance for ADA accommodation

    Posted: 08 Mar 2020 06:28 PM PDT

    My friend recently interviewed a tenant that seemed like a really perfect fit for her rental property. She really wants to rent to him, but they're both afraid that the bathroom will be too small, as he ambulates with a wheelchair. Are there any government assistance programs that can help with a remodel to help accommodate people with disabilities?

    submitted by /u/allnida
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    Cash-out refi on investment property- lender wants to see overseas property ownership docs

    Posted: 08 Mar 2020 09:42 AM PDT

    I have never been asked to show docs before for refinances or mortgages. This is something that belongs to the family and only passing through me to the kids....

    I do get a meager rental income on it but I did not use it to qualify. It does show up on my tax return.

    Is it just this lender ?

    submitted by /u/anewdogpanicneedhelp
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    Next step with work bonus

    Posted: 08 Mar 2020 05:23 AM PDT

    Hey guys, just looking for a bit of advice. I've been very fortunate to receive a work bonus, plus this year's tax returns, and I'm looking at about 43k.

    It'll probably be a long time before I have this opportunity again so I want to be very tactical here and perhaps even multiply the money before buying some long term investments (lending it to a flipper friend).

    But I'm wondering what would be the smartest option... 1) Put down payments on 2 or 3 units (I have none at the moment). 2) Down payment on one unit and save the other half. 3) Lend the money out... I have some good friends that are always looking for capital for their house flipping. 4) A combination of these... Or... 5) Something entirely different?

    I have no real debt... I'm currently renting and I receive housing allowance from the military. I have one small car payment. That's it.

    Thanks!

    submitted by /u/lonelygorilla15
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    Need advice on a potential deal - TX

    Posted: 08 Mar 2020 07:33 AM PDT

    Warning – This is a long post -

    I need some advice on an off market deal I've found. The property is a 3 door - one duplex with a single-family home in the back. The duplex was built in the 20's and needs some minor work (a couple windows replaced and the floor could use a refinish). The back home and the other side of the duplex are currently rented until the end of this year with paying tenants and they are in decent condition.

    The seller owns the property outright and wanted $89,500 cash. I asked if he would finance the property instead with 10% down and 6% interest, full price (which would have put me around $750/mo. PITI). He came back with 50K down and 33K financed at 10%.

    I'm thinking about buying the property in cash (since the counteroffer is kind of crazy), paying for the repairs on the one unit, and then renting it out and doing a cash out refi. My main question is, how do I find an ARV? There have been very few duplexes sold in the area sold last year, and none of them had an additional single family in the back. I'd like to know about what to expect when the appraiser comes through as I don't want to leave too much cash in this deal long term. Any advice on how to calculate this?

    I'm also wondering what you all think about the deal as far as cash flow goes. Here are the numbers:

    Single home: $450. Duplex (per side): $550. Rents are slightly below market

    Insurance and property taxes are about $1600 each or about $270/month.

    Vacancies are low in the area, but maintenance and capex are going to be high . The current owner did a pretty good job of updating and maintaining, but the property is 100 years old now.

    Property management is going to be 10%

    Thoughts and advice is appreciated!

    submitted by /u/slappinfaceholz
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    Real Estate Investment Expenses in California (SFR)

    Posted: 08 Mar 2020 02:17 PM PDT

    Hey All,

    I'm writing out a spreadsheet with all the numbers needed to accurately assess ROI and profit on a flip. So far I have:

    • Offer Price
    • ARV
    • Down Payment
    • Closing costs on the buy (Typically 2-3% of the purchase price)
    • Realtor Fees on the buy
    • Loan
    • Loan Interest
    • Loan Points
    • Renovation Costs
    • Realtor Fees on the sale (Typically 6% of sale price)
    • Transfer Tax (Typically 1% of sale price)
    • Home Inspection
    • Termite Inspection
    • Roof Inspection
    • Natural Hazards Report
    • Notary Fee
    • Staging

    Am I missing anything? How could this list be improved?

    submitted by /u/jordanearth
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    Kidder Mathews Hierarchy

    Posted: 08 Mar 2020 11:38 AM PDT

    What's the difference between Senior Vice President and Executive Vice President? For any given location 80%+ of the people are a VP of some flavor, is it just title inflation? Are VPs basically fancy real estate agents?

    Received an unsolicited offer via a KM EVP which piqued my interest in their structure.

    submitted by /u/Small-ish
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