Questions About..........
I have some questions...
1.If I want to refinance a property, does the property has to have equity?
2.Do you have to refinance with the same company that you originally got the loan from?
3.Does your monthly payments goes up when you refinance?
4.Does anybody know any compaines that do unseason refinance?
5.If a bank (not a HML) is willing to loan 80% LTV, and I purchase the house 60% LTV, what happens to the 20% difference at closing?
I am certain of a couple of answers for you, but not on others.
1. I think it depends on what you are refinancing for. If you are looking for cash out, then yes, you need some equity in that house - although I have heard of refi's that go up to 110% of the home's value - the catch is they expect you are putting that cash you took out INTO that property, thus increasing it's value and protecting their investment.
2. No. I don't think I have ever refi'd with the same company the original loan was with.
3. Again, it depends. If the interest rate is lower with the refi and you are taking no cash out, then the paymens should be lower. However if you are taking cash out and keeping the same terms of the loan (keeping the new loan term at 15 year or 30 year, just like the current one), then yes, the payments will go up accordingly.
4. Never done it... but somebody here should have.
5. I think it depends on a couple of factors - but somebody more qualified can answer this one.
Quote:
On 2005-01-16 13:08, focusonmoney wrote:
I have some questions...
1.If I want to refinance a property, does the property has to have equity?
2.Do you have to refinance with the same company that you originally got the loan from?
3.Does your monthly payments goes up when you refinance?
4.Does anybody know any compaines that do unseason refinance?
5.If a bank (not a HML) is willing to loan 80% LTV, and I purchase the house 60% LTV, what happens to the 20% difference at closing?
So whats the sense of refinaning, it seems better if you can get home equity line of credit....Line of credit seems better because you want have any season problems and it might be cheaper..correct?
Quote:
On 2005-01-16 14:06, focusonmoney wrote:
So whats the sense of refinaning, it seems better if you can get home equity line of credit....Line of credit seems better because you want have any season problems and it might be cheaper..correct?
It still depends on what you are doing with the $$. Personally, I love HELOC!
I believe there is still a seasoning - but (and someone correct me here) isn't it only abut 3 mos?
I would take your money and light it on fire right now.
You want to buy a property needing rehab site unseen!
I have some property that I'd love to sell you - it's Ocean Front and on the oustskirts of Phoenix. I'll give you a really good price.
I understand that my case is a little unusual, but I have heard someone who sucessfully done the same thing before... Not once, but multiple times....
So you guys think it is not possible to purchase and repair a property without in person??
Has anybody here ever done this?
Any idea is deeply appreciated. Thanks.
Never done it and never would. It is hard enough to rehab properties and not have too many problems when you can be there and see the properties and work directly with contractors let alone sight unseen
I did some research and I found that we can get an inspector that is covered with errors and omissions insurance and provide guarantee, in other words if there should be a problem arising and not in the report, we can have the inspector responsible for the repair. Isnt it true?
And contractors doing the repairs can also provide a manufacturer's warranty for their work, so isnt it possible for us to do this long distance, as long as everything is in writing and covered.
After having the place repaired then we can get a property management company to manage it... Something we can all consider the possibilities...
Just my two cents...
Invest in your business. Unless you're really, really trusting and carefree, nothing can substitute for a trip to the property to check things out. You may be able to line up several to see on one weekend, and it's deductible. Is it really so hard for you to fly out, walk through with your inspector and contractor, crunch some numbers, get a feel for the neighborhood, talk to local mgmt companies and make an offer (with whatever contingencies you need that won't kill the deal)?
If this isn't possible, at least for your first few deals, maybe you're better off with a REIT mutual fund or one of those NNN deals that aren't so hands on. Or, you could start in your own backyard. There are deals there, too, you just need to look more intensively, but at least its on your own turf.
To train for your adventure: for the next week, everyday take 10 pennies and throw them in the bottom of the pool. Dive in with your eyes closed and try to retrieve only the ones that are heads up. Every time you bring one up that is tails, have somebody hit you as hard as they can on the head with a 2x4, then give them $1000 and tell them to burn it in front of you.
That scenario would be less painful physically and financially then what you are setting yourself up for.
Quote:
On 2005-01-11 08:37, ruizhen18 wrote:
And contractors doing the repairs can also provide a manufacturer's warranty for their work, so isnt it possible for us to do this long distance, as long as everything is in writing and covered.
Not to be rude, but how old are you and how much life experience do you have? What good is your warranty going to do you when the contractor ends up being somebody that does crappy work and leaves your house in a state of distruction and then you have to sue him, all the while paying somebody else double to come in and fix what he broke?
You're counting on a one in a million deal where everything goes exactly as planned, everybody does exactly as they say they will. You've got a better chance winning the lottery.
I appreciate all of your inputs, I know that all of you meant well and for my own sake. However, not to misunderstand my idea, I am not suggesting to leave everything to the contractor and let them do their work at will without any examination afterwards...
Since, I do not have a lot of time on my hand, I cannot fly over when I think I found a deal, only when I am sure after crunching the numbers here and finished analyzing them. That is why, I am thinking of making use of an inspector and contractor to see how much exactly I need to bring it to a marketable condition....
When I have the numbers right, then maybe I would fly over myself to finalize and close...
The-Rehabinator,
I would not pay for any contracting work upfront, only for works that has been completed... Even though if I am there in person with the contractor, following them every second? And they are still doing a crappy work? Kick them out of my property? Have a fight with them? And ask them for my money back? I think this is not about being there or not...
I think contractor is supposed to be at our disposal and not us at their disposal?
Quote:
On 2005-01-11 10:57, The-Rehabinator wrote:
Quote:
On 2005-01-11 08:37, ruizhen18 wrote:
And contractors doing the repairs can also provide a manufacturer's warranty for their work, so isnt it possible for us to do this long distance, as long as everything is in writing and covered.
Not to be rude, but how old are you and how much life experience do you have? What good is your warranty going to do you when the contractor ends up being somebody that does crappy work and leaves your house in a state of distruction and then you have to sue him, all the while paying somebody else double to come in and fix what he broke?
You're counting on a one in a million deal where everything goes exactly as planned, everybody does exactly as they say they will. You've got a better chance winning the lottery.
An old rule of real estate is to never invest in property more than 1/2 hour drive from your house. I have broken that rule but not to the extent of going out of state. Try your home town market. Remember no market is perfect. If it is hard to find good deals, then when you do, selling will be a breeze. If cheap houses are common, then when you buy, selling or renting them will be a long term commitment, and a lot of work, not a quick easy flip. Buying in an unknown area is risky. In eastern Pennsylvania many real estate people advertise in the greater NYC area, knowing that people there will think prices are incredibly cheap. Only after the NYC people move to the area and then try to sell do they find out that they did not get such a good deal.
Yes, I agree that home market is better than anything else, but sometimes it is necessary to look beyond the home market, which in my case is absolutely necessary. Since I am located in the Bay Area, nothing here sells for under $200K and nothing here can cover the mortgage with rental income, there is a high imbalance between rental and the inflated prices, because of the low interest rate....
Nothing is easy in life, otherwise everyone would be rich, I understand this perfectly well. I would not jump into a market that I do not understand.
I have even considered relocating in the future, but not at the moment...
Although it would be more complicating doing this long distance, however I believe it can be done, since a lot of people own properties out of state...
In regards to repairs, I also have seen the same thing... This is no "mission impossible"...
I do agree it is better to visit the site at least once to understand the situation... Nothing is perfect in this world and I anticipate some problem to the deal, in fact I would be suspicious if everything was to go too smoothly....
But I do NOT agree with the highly exaggerated post made by The-Rehabinator....
FYI, I am only interested in properties that does not need major repairs only minors, and I seek only upfront quoted fixed cost for fixed repairs negotiated before work starts. Is this not possible?
[ Edited by ruizhen18 on Date 01/11/2005 ]
I'm not sure how many people you need to hear this from, but here's one more–Don't Do It!!!
Ah, if only it were as easy as this: we'd all be RICH!! After all of the above posts, though, it sounds like you still want to proceed with this deal(s). :-o
The ONLY way you could do this without visiting the property is if there is someone there that you can REALLY, REALLY trust to do your work for you, someone with your skills, or better, whom has your best interest at heart. A "buyer's agent" that you found on the interent is unlikely to be that person. Photo's cannot substitute for seeing it yourself. The reality is, you will have to go there, more than once.
You could put $ down on something that looks good, then fly over and see it, comp sales prices, check vacancy rates, actual rents, interview several management companies, etc. (and no, you cannot count on your "buyers agent" or the internet for accurate data here). Plan on two days unless you are really experienced at this. Best to meet the inspector there and go through it with them, then meet with contractors.
If the deal still looks good, fine; if not, you can walk away.
Even if the deal looks good, you'll need a really good management company if you want to avoid future trips and make any money. Better think about how you will find one, and how you will know they are trustworthy when (if) you do find one.
Better to invest closer to home, where you know the markets and the people.
Personally, I would have to see the property before even buying it, and as such am willing to invest the money and time to do this.
Suggest that at least on your first deals you take a more hands on approach especially if there is significant work to be done.
My 2 cents worth.
Yes, it can be done. I own two rental properties out of state, a triplex & single. I have visted the triplex but never the single family. I have an expert property manger (PM)/real estate broker, whom I have met once but speak to & email 7-10 times a week. My PM has two rehab teams & maint personnel to provide upkeep on the property & rent collection.
I rely on my PM to determine resale value, help calculate recurring costs & rental ease & value. I generally bounce this information off of other local realtors, the internet is GREAT for this. We purchased & rehabbed the triplex for about 60% of the FMA and the single family for 25% of FMA.
The only difficulty that I have found is turning on untilities and getting a good deal on insurance. I did get burnt on the rehab of the triplex. The contractor skipped out on us about 75% done. The new team finished the job for a few hundred more. I got buddies who got burnt in our home state, so....
Hope This Helps!
do it if:
you can afford to loose some money if the deal goes south.
do it again if:
it works & you have developed a trusted team including inspectors, lenders, mgt co's, repair/maintenance people.
don't do it if you can't afford to gamble away your money, because it is a gamble
if you don't take a risk that you can afford (and the potential gains must be worth the risks), then you'll miss opportunity.
one of my employees did what you are doing - and purchased 6 properties last year. but his family lives nearby the property & are the maintenance people, and he lived in the area in years past so is familiar with the real estate landscape (he's a real estate agent)
good luck and let us know what you decide & how it turns out!
Hey, since you're insistent on doing this, no matter what people say, let us know how it turns out for you, k?
Quote:I would not pay for any contracting work upfront, only for works that has been completed... Even though if I am there in person with the contractor, following them every second? And they are still doing a crappy work? Kick them out of my property? Have a fight with them? And ask them for my money back? I think this is not about being there or not...
I think contractor is supposed to be at our disposal and not us at their disposal?
All I can say is those comments show your inexperience with dealing with rehabing and contractors. You are in for a very expensive and eye opening experience.
My final advice would be to spend some time educating yourself to the vast amount of contractor/homeowner disputes that go on everyday because you are looking at the world with not one, but I think maybe 2 or 3 pairs of rose colored glasses on your eyes.
Good luck.
Well, butter my butt and call me a biscuit!
"I think contractor is supposed to be at our disposal and not us at their disposal?"
I am rolling on the floor laughing my big old posterior off at that one!
I am a roofing contractor, and it can be very expensive to take that approach with me. And I'm one of the good guys. The scum will just abuse you and NOT call you in the morning.
If you want to consider business relationships arrogantly in terms of who is at your disposal, you should also have mega "disposable" income. 'Cuz the glow in the sky will be your cash burn.
Yes, the Rehabinator offers a little drama. Yes, he walked all over you. Don't let that dissuade you from heeding his input, because, as usual, he is quite right. And it was FREE.
When the contractors start walking all over you, it will be anything BUT free. Despite the success stories you have devoured, the margins in this rehab business really aren't large enough to support long distance dilletantism.
Can it be done? Sure it can.
And I am holding a Powerball Lottery ticket. It CAN be a winner. I'm not betting the rent, or burning bridges in anticipation of riches. I know the odds.
You should too.
Bon chance,
[addsig]
ruizhen18,
In 2003 I did just what you are looking to do. I did not set eyes on the property (a duplex) until 5 months after I owned it and after one side was rehabbed. I had a very good bird dog, a good realtor, a home inspector and a good contractor to do the rehab. The contractor is now essentially my manager.
For one thing, the numbers should be outstanding. Before closing, you should have a rehab contract ready to be signed after you close. Since you are local and if you are interested, send me a PM and perhaps we can talk on the phone.
Regards,
Ed
Ruizhen,
Why the rush to invest out of state? I live in the Bay area as well, and sure it seems so much "cheaper" to invest elsewhere. But as someone who started out just like you, I can assure you that if you spend the time needed to really LEARN the business and DO it HERE, you can and will find deals here as well that will be much more suitable. I know because I did it and still do. Be very careful with the "grass is always greener" mentality... it's an easy excuse for those looking for a quick payday when they don't really know what they're doing. Profits from real estate can be made ANYWHERE, but when you add the elements of long-distance + rehabbing + inexperience, you are begging for disaster. Any of those elements on their own are very tough, let alone ALL 3! If you're serious about real estate, please take a little more time to learn the ropes. Just my two cents worth...
Investing out of state that cannot be avoided, I own a house here in California, but no investment properties, because of the market condition, I have studied and analyzed some markets out of my state, and I agree I would visit them sometime in the near future...
But how do you suggest I go about visiting these places, how and when should I be there to supervise, I cannot be there all the time while the contractor is working.... I cannot leave my job, can I?
The-Rehabinator and others that advises me to go visit, please explain.... How should I do this in order to avoid any disaster?
ruizhen,
"The-Rehabinator and others that advises me to go visit, please explain.... How should I do this in order to avoid any disaster?"
How can we tell you how to proceed in an endeavor with a very, very high risk of disaster, and how to succeed at it? How can we tell you to manage your time or be in two places at one time. Well, most of us can't. So we give the best advice we have to offer. "You can't. Don't proceed."
No one is maliciously trying to dump on your dream.
Question:
How and why is it you have determined that real estate rehabbing is the best investment vehicle for you at this time? There are many other avenues for investment in real estate with lower risk than what you propose. Real estate oeprations investing, REIT investing, buying mortgages, offering hard money come quickly to mind. Typically these approaches would require less or no time on-site.
edmeyer offered to speak with you regarding his successful experience, and if I were you and had such a kind offer, I would immediately avail myself of his input.
He mentions, "For one thing, the numbers should be outstanding. " This comment helps his credibility somewhat.
"OUTSTANDING" numbers. Focus on that. Usually "Outstanding" numbers are not found on the multilist, because the local competition is all over such properties quickly.
How can you do this without adequate time? Just like boylightning posted: If you are working with cash you can afford to lose, try it once.
And like jam said, let us know how you make out. I have been wrong before, usually with my own money. I truly hope, if you decide to proceed, you make me wrong with YOUR money.
BTW, Julia Roark is in the Bay area, and she says there IS money to be made. If you are overlooking these opportunities in your locale, how will your vision be improved from a distance?
Good luck in making decisions that are right for YOU.
[addsig]
Ruizhen18, you might want to reread all the warnings given, including Rehabinators which are NOT overstated IMO; i.e. everyone here is TRULY trying to help you avoid almost certain pitfalls if you operated this way.
I've got over 20 years experience as designer/builder/contractor/investor, and I can still tell you that the few times that I choose to hire any work out is almost never hassle-free. It takes know-how to inspect a job, management to followup on the repairs, ongoing maintenance to keep it under control, and someone who cares to do this all when it counts.
What you really need is a good partner; and limit your search - if you're determined to invest outside your home area - to areas where you have a trusted friend or family who you could split tasks and profits with as a real partner in this, and realize that they're going to be stuck with most of the real chores. You say you don't have much time - yet this is a little commodity you tend to need in this business! IF you are still hell-bent, at least buy something brand new, quality construction, with a good broad warranty, and find the best local management company you can who will do everything, and be prepared to pay 7-10% of the take.
have you ever thought of the stock market... or poker.....