Need Guidance
I own a property in NC that was primary residence, will be available to rent Mar. 1. Tweaking it now to get maximum rent. Area is growing up rapidly. In VA currently, looking for 4 unit to purchase on VA loan from veteran family member. He will live in one unit and rent the others. I have power of attorney for him. Also looking at SFR in VA, have potential buyers waiting(2). How should I handle all of this, LLC, property management in NC? I want to hold on to this NC home for at least 2 more years while the area grows and then maybe sell. My thoughts are all over the place since I am working in two states. I am still a newbie by all means and everyone around me is negative regarding real estate which fuels my fears. Any mentoring or guidance out there?
You must organize your thoughts and ask for advice or guidance one property/situation at a time.
Your post mentions:
1. Property you own in NC.
2. VA loan income property to purchase.
3. SFR in VA.
4. Business structure.
Any one of these topics, or each one individually will provide a subject for discussion by those of us who are optimistic about the future of Real Estate investing.
The magic word is FOCUS on one thing at a time. Bring it down to bite-size pieces and it may not seem so overwhelming.
[addsig]
You are right, I have been saying that word "FOCUS" quietly in my head for the last few months. I did not want to deal with all this at one time which is overwhelming me but family situations are demanding that I do. What is the best way to advertise the NC property to get a tenant by Mar 1? Sec 8, classifieds? Should I try to handle it myself or hire property management? My VA loan family member has never used his VA loan benefit and wants me to handle it and wants to live in it. What legal structure should I use for this? Should I keep these properties seperate or get an LLC? I have 2 families that also have guaranteed rent that I could purchase SFR in virginia that I am passively looking for deals. Should I include these in LLC later? Thanks for the response. Staying focused is a full time job right now!
Hey Lee,
There are a number of companies that do self directed iras. Most of them have web sites that will answer most of your questions. I have my IRA at Entrust Texas out of Houston. Now they have an office in San Antonio. They are all over the country, though. You can do a google search for the national company "Entrust" or a local one in your area. They have a number of different scenarios on how your money can be used.
Since I now borrow from a several private money lenders who have their money in self directed iras, it is my goal to enlighten others about self directed iras so that more folks will be able to purchase real estate or lend me money from their ira. [ Edited by joel on Date 02/01/2006 ]
Thanks Rick!
I would prefer to invest in my own projects rather than lend money to others for their projects. Can that be done that you are aware of?
You as an individual can not benefit directly from you 401k or IRA. So your IRA can not lend money to you. But your IRA and you can partner in a project. But you both will have to come up with the money for the project. It is not an acceptable partnership to say that the IRA will do the money, and you will do the work. As a matter of fact, I think you are not allowed to do any of the physical work - and most definately you can not get paid for your work - if you partner with your IRA.
Donny, Are you planning on holding the property and renting it out or selling and taking the profit to buy another?
My lender typically asks for copies of our leases in order to count our rental income. So if you are going to hold your property and rent you will need to have a signed lease before supplying your loan officer with income docs. Of course, you may be able to get a low or no-doc loan but they are a little more expensive.
As far as when the loan officer tells you that your debt to income and risk factor are too high - it should be when you first supply them with that info. Do not accept a pre-qualification letter as a commitment. Press for them to look at your debt to income before you pay any fees.
Jim
jimandlacy-
Thanks for the info. I plan to hold and rent for the long term. I guess what I am worried about is that my income is pretty low and after buying a few properties will this low income hurt my ability to qualify again (even though I have income from rental properties)?
jimandlacy-
Thanks for relaying your story. Very helpful information, definitely something (no doc loan) to think about considering. As far as conventional loans, is it possible to hop from property to property (live in them, then rent) with low income w/ rental income to boost DTI ratio?
bump
Thanks for the infromation NewKid. Did the mortgage consultant ever say that you had too much debt in loans (for rental property)? And if so, what did you do to solve this problem??
Only once. When I was purchasing my fourth primary residence (in 1984), the mortgage broker told me that I did not have sufficient income to qualify for the loan. I asked my father to co-sign with me so that his income could be used to get me over the DTI hurdle.
That was several years ago. And it has never been an issue since. As you get more investing experience you will discover that a high net worth, a lot of liquid assets, and a solid track record of success will often persuade the lender to make the loan even in spite of a DTI around 50%.
NewKid & rgreene27 thanks for the advice and information! Good stuff! I have a better understanding now.
ttime,
Is this the article you are reffering to:
http://www.consumerlaw.org/news/ForeclosureReportFinal.pdf
It is being used by various states to pass laws to curtail or stop creative real estate investing. Here is a link to the Michigan Attorney General and how they are using it.
http://www.michigan.gov/ag
John $Cash$ Locke
[addsig]
What ethics? The only ethics you can be responsible for is your own.
Yes, many in this industry are crooks. No two ways about it but so are many folks in other industries.
I do not do preforeclosures or foreclosures because I never made anymoney. I always felt too sorry for the homeowner and ended up doing the work for nothing. Then I started feeling that a lot of people bring this on themselves and could not sympathize very much so now I do Bank Owned or abandoned/distressed properties.
I say a lot of folks bought it on themselves because some of them 1)never made any attempt to work something out with the mortgage holder when they started having financial problems, 2)never did anything when the notices first started going to them and 3)in some cases they knew they could not afford the home to begin with.
I think all you can do is do everything all legal and above board, treat folks the way you would like to be treated and you will have a good reputation.
Don....
I own a gun…. I actually have bullets in the gun…. Those two facts don’t make me a murderer.
Just because you buy houses and buy houses in foreclosure doesn’t make you a scam artist… If you are worried that somehow a reputation will be harmed by all of this publicity then on your bandit sign advertise…
“I buy houses and encourage legal representation”
The people in foreclosure need our help they must have our help… Or they will lose their houses to the one group trying to put us out of business….
The problem with our industry is that we do not have the powerful lobbies that the lenders have and consumer protection agencies do…
If you read the article and it scares you reread it....
There is noting in it that worries me or makes me leery of buying a house in foreclosure… I am not leery because I practice my profession legally...
Incorporate the article in your buying presentation, as it is a very powerful article when discussing buying a sellers home in foreclosure... Use it to your advantage when the seller is on the fence as to which one of you to choose..
If you’re supper concerned than have them sign a copy of the article indicating they have read and received the article.
The only thing you need to be cautious of is adhering to the laws as they change…
Again use this to your advantage…. Maybe run ads that say
“Free consumer protection foreclosure report published 2005 by national Consumer Law Center…
Trap the pre-foreclosures prior to them going into foreclosure…
_________________
Michael Quarles
"Marketing is the key to Successful Investing"[ Edited by IBuyHousesInc on Date 02/02/2006 ]