First Time Buyer/Investor

[Jay Johnson]

I need advice…I am buying my first investment property in May and will put it under a new business. I got laid off from my job and have been unemployed. However, I have savings and an inheritance I can use ,but I am not trying use all of my funds. I am a first time buyer of any home. It’s a big risk I am taking and totally NERVOUS!

A lady is selling her father’s home for $35,000. She said her father has a lien for $31,000. She selling as is.. I had a Plumber, Electrican and Contractor that I know to look at the house. They all told me to get the house. First time dealing with a title company. I’m calling them to see what’s the process of title transfer and to just to make sure there are no other liens on the house. I want to buy, rehab and either long term rent or short term rent(airb-n-b).

The question is how do I get funding for rehab if I am not employed? Should I buy the house in cash and use that as collateral to get money to rehab? When I am rehabing what type of insurance should I get? Is there a special homeowners insurance for investment properties during rehab and after(renter)? Also as far as business structure should I put the business in a holding company? Or a just a LLC as property management company not sure because my whole purpose is to be working for the business. I know a lot of first time buyer loans want you to stay in the home. I don't need to stay in the home. Any suggestions for first time buyer loans? I just don't know what route to take and so confused. I am still researching before jumping. Any advice is helpful and thank you in advance.

[Mike Klarman]

It's hard to secure funding for these small deals. First, the loan amount will be small and secondly the projects are usually upside down meaning the rehab is more than the purchase price. If you can get the home worth 100k at the end you can cash out with a DSCR loan after 3 months.