I am about 18 months away from retiring from the military and would like to begin rei, but need a little help and/or advice. Here is my basic plan: rehab part time (1-3 residents a year), do a lot of work myself ( paint, tile, windows, doors, roofing, drywall, landscaping, and minor construction) all of this with labor help of course. I will hire the pros for elecrical, plumbing, carpet, HVAC. I plan to use a realtor to buy and sell. I am looking at the LTV loans??? IS this a good idea or not? I have money for down payments 35k, but if I can roll it all in one loan I would like to do that. Thoughts? I plan to do one resident at a time and sell under the year mark and pay the higher taxes. I really don’t want to get into the landlord business it seems to be a lot of headaches, but if I am wrong please tell me.
What I need help with is finding the most updated site, book or whatever on Texas residental building codes. Second, is there a site or sites that break down all of the legal issues of rehabbing and possibly taking the rehab from part time to a full time business?
Any advice or help would be greatly appreciated. Thanks
I have read many books but one of the newest and most detailed for flipping is FLIP and the website is www.flipthebook.com It has some great checklists in it. I am almost done with my first flip. I got the book two weeks ago and wish I had it before I started. Best of luck to you.
I just finished that book about two weeks ago, and you are definitely correct about it being one of the best, if not the best. But to make sure I get different points of view I will keep reading others to hopefully gain as much knowledge as possible before I dive in to REI.
One thing I would have done different though (this is for other newbies) is to take and organize notes on tips from each book. Now I have to go back and reread a few books and write down tips that would be very useful. The majority of the books say the same thing, some in greater detail than others. Plus, you have to weed out the authors opinion in some books.
To answer my own question on my original post about building codes: as I was reading other post in the financial section I found one that was talking about electrical codes, which lead me to building codes( I searched for “National Electrical codes” on google), from there it talked about International building codes and certain city and state building codes…long story short, I went to the web site were I plan to operate ( city), and the codes were posted on the web site. I’ve learned so much already just by browsing the site. Thanks all.
I am still looking for advice on legal issues (rehabbing) I need to be concerned about though. Any ideas???
First, thank you for your service to our country…what branch? I’m a retired Army Warrant Officer.
Second, as you probably already know, books will run the gamut from excellent to “WTF?”…some will be really sketchy as to specific details and you kinda get to figure it out as you go along.
It appears that you plan on going to Texas…what area?
My regards to you for your service as well! Hopefully in 18 months I will be a retired Army First Sergeant. I am looking at the Conroe, Huntsville, The woodlands ( north of Houston) areas. Still undecided where I will plant my roots just yet. The wife is a math teacher and that will play into our decision.
My first book was a “WTF over!” After weeding through the opinions, and the area that he was writing about there was some helpful info. After a few more books on rehabbing I plan on researching financing. There seems to be a million ways to find money…all confusing at the moment.
Looking at your number of post, you have been at this for a while?
<<My regards to you for your service as well! Hopefully in 18 months I will be a retired Army First Sergeant. >>
Hoo-rah! I did “Twenty-on-the-money” and retired due to some personal issues…if i would have stayed, I’d be a CW5 and right at the edge of 29 years.
<<Looking at your number of post, you have been at this for a while? >>
Yeah, for a while now…many of my posts are because I’m one of the more senior Moderators. I was really active here when I was in Louisiana and had several rentals…I moved to Western Colorado for work about 6 months ago and the RE market is a lot different here. An average 3/2 here sells for $200K-ish but rents for $700-800. The sales prices are far outstripping the rental prices. We’re looking for some fier-uppers to fix and flip.
18 months will put me at 20 and some change. I’m retiring because I’m tired of working for dumb smart people if you know what I mean.
Speaking of Louisiana, thats where I am heading in two weeks. I am being stationed at Fort Polk. Hopefully that will be my last stop and my retirement will be approved next spring.
I do have a question for you though. Whats the average size resident that sells the fastest in your opinion? 3/2 1600ish square feet???
Read everything here…financing is not that hard. A lot odf it is common sense. Stay away from adjustables and gimmick financing. If you’re absolutely, positively going to sell in, say, 2 years then a loan that adjusts in 2 years might be OK. I’m pretty conservative so I’d rather pay a bit more than to risk getting jammed.
I was a “ground-sucking warrant” – our Class motto was “Better dead than a rotorhead”! I was a Telecom Systems Maintenance Tech…but, if you’re gonna stay in, warrant is definately the way to go – you get to be an officer and the troops don’t hate you!
Here is my basic plan in a nut shell: to buy and rehab and sell within 4 to 6 month. From what I have read its possible to get a loan for purchase, rehab, quite cost and some holding cost?? Is it possible? Who would more likely do this, Banks, private lenders or what? Any ideas
My neighbor is a rotorhead CSM. I’ll have to use that saying on my medic, he’ll like it:)
In regard to your main question, I have had a ton of success with rehabbing then renting while I am waiting to sell in order to lower my holding costs. Landlording does have its headaches, but it seems anything worth while has headaches, If I am clearing $200/mo on a property and I have to work 3 hours on the home per month then I am getting $65/hr for my headaches, thats not bad.
From a financing prospective, I have found it very helpful to get hooked up with a commercial banker. I pay a flat closing fee of $500, and many deals he will finance at 100% of purchase price up front, then I make the repairs and he will refinance up to 80%LTV based on appraisal, and the cost associated with the refi are included in the original $500 fee. To get around title insurance twice, when I orgianally buy the home we pull a mtg policy equal to what I think the 80% LTV, will be. Doing it this way many times I will get 10-30k extra out at the refi to help with the purchase of more homes.
If I am clearing $200/mo on a property and I have to work 3 hours on the home per month then I am getting $65/hr for my headaches, thats not bad.
Eric,
That is not correct. If you are getting $200 per month and are working 3 hours per month at $65 per hour, what you have is a rental property that is generating a positive cash flow at best of FIVE DOLLARS per month (if you’ve considered all the other operating expenses). Maintenance expense is part of the operating expenses. Cash flow is defined as Gross Rents - Operating Expenses - Mortgage Payment (P & I).
I agree that $65 per hour is not bad pay for being the maintenance man. What is bad is owning a rental property without cash flow! I never do that!
Ok, I get the idea. Rehab, rent out to keep the holding cost down or keep as a rental. I couldnt imagine a rehab needing much maintenance…but I am a newbie.
Eric,
About your commercial banker: you said he would finance 100%, is that just for purchase or is that for purchase and rehab cost?
Also, if you dont mind me asking do you keep most of your properties for rentals or do you eventually sell them? I’m just trying to get a feel of what some of the experienced investors are doing. I am leaning towards the landlord business after building some capital for the operating expenses .
Been following along your thread here. Im a newbie as well and want to get started in my area where I am stationed (did 8 yrs Marine Corps; now Air Force F-15E WSO). I am looking into rehab/renting as well. I’d like some guidance on funding these rehabs as well. Specificlly, POCs (points of contact for the non-mil types:)). Im in NC.
Found a REO listing 49000 that would rent for 600 in my area. House is 3/2 1450 sq ft. It needs a new roof, carport built, and paint. But it has brand new windows and decent appliances from what I can see. Going to get inside it Monday. If I could get the property for say 42k, how much could I spend on the rehab and still have positive cash flow. I know its asking alot, but any guestimates are appreciated. Oh the house next door is a 2/2 and is selling for 74k. Sorry to hijack your post bro.
Dave I would like to echo the thanks for your service. I am in north Houston and have a pretty good network of real estate investment professionals. If you are in need of finding some help you can contact me and I will let you know who I use. I have everything from real estate agents, appraisers and mortgage companies to rehab companies and make ready people that I can recommend to you. If you need help or get stuck give me a yell. (By the way I don’t charge for help, I do it for fun)
Thanks for the offer, and yes I will be taking you up on your offer :biggrin If you don’t mind I would like to ask you a few more questions on down the road.
I am in the middile of a PCS (move) from Fort Hood to Fort Polk, which actually puts me closer to Houston and the area I am looking at retiring. I am looking at the Woodlands and conroe area, but I have a while before I have to decide. My wife is a Math teacher so that will play into also.
Bottom line, I appreaciate your help.
While I have your attention, and if you don’t mind, what area do you invest in(two part question:)) how long does it take you to find a deal at the moment?
I would like to take you up on your offer soon, only if it is still there that is. I will start the retirement process next June and look forward to getting my feet wet soon after that. I could definitely use the wisdom and experience of a mentor if you didn't mind.
I almost changed my mind about retiring and staying in for 30 years…I’m not sure what the heck I was thinking! But the Boss ( wife) and I have came to the conclussion it’s time to move on. I’ll miss it, but I am looking forward to new challenges and a different life style.
WIth that said, we are ready to start a new life in REI, and if you have any advice or help it would be greatly appreciated when the time comes.