Nervous About First Deal

[Jeff Couch]

This form is great. I really appreciate all the great advice.

My wife and I are 33/34 years old and our goal is to be able to retire from our day job at or before age 55 making 15K+ per month from rentals (traditional or BRRRRs). 

I am currently hunting for deals that will cash flow $250+ with a Cash on Cash return of 11%+ in northern Tarrant County (Fort Worth, TX & surrounding areas). I am try to stay out of any D Class neighborhood. I would prefer something that is not a complete gut job for our first deal to to lack of experience and time to manage a full remodel.

I really want to use traditional financing since I am good buddies with a mortgage broker who has taken amazing care of me in the past. However the only "good" deals I have seem to come up with are through New Western wholesale and they need to close usually within 7-14 days. They seem like they have the market cornered in Fort Worth. I have some concerns that I wanted some experienced people on the forms to explain.

1. Does anyone have another wholesale company they trust and have used in Fort Worth? Or is NW the best to focus on? I am open to other avenues like D4D, but havens tried that yet.
2. With New Western, they require 5K down within the hour after your winning bid. What happens if the title is not clean at closing? Do you lose your 5k? What other complications are you exposed to when using this kind of wholesaling? 
3. With good credit and 50k+ liquid assets, is it common to have challenges finding a hard money lender?
4. I have read about loan seasoning requirements, but does that hold true on hard money too? Or can you get a HML that is 3-6 months then refinance using the 30y conventional?
5. I think my biggest fear is loosing out on the 5K earnest money to the wholesale house. Should I be concerned with that? 

Thanks in advance.

[Sam Elder]

Jeff - all great questions, and there's an abundant amount of information that I think would benefit you.  Question #4 is the one most in my wheel house, so I will start there.

The first step on this or any investment property mortgage question is to make sure that you are using a lender with proficiency in investment property finance and the ability to originate mortgages without overlays.

You mentioned "broker", and although your mortgage person may be best in class, you truly need an originator that can go straight off Fannie/Freddie guidelines.  A lot of what creeps in as far as no-nos is perpetuated by lenders with overlays.  Fannie/Freddie are VERY accommodating, and I have a great track record working with investors.

Rehab-to-perm is a GREAT program, and NW should be able to set you down this path.  This mechanism allows you to get in on on investment properties with a much smaller cash position.  On a straight mortgage purchase, you are looking at 15% down (but with a higher rate and MI), 20% down for an okay rate and 25% down to get the best rate, really.  You can work your way into a 25% down position with 10% down through a rehab-to-perm loan.  Again, NW should be able to help you or at least connect you with Sherman Bridge who has good options in that area.

Circling back to mortgages, though, ask your broker friend to detail their expertise in working with investors.  I'm not trying to poo-poo on that relationship.  After all, lending is a relationship business, but you have subject matter expertise or you don't.  I work out of Colleyville, but i have people from as far away as Houston that routinely call me for guidance on structuring, loan options and, of course, origination.

Arm yourself with a team of people that can get you where you want to be.  Yes, Fannie and Freddie are the least expensive path to home ownership, but the path from Point A to Point B can not only look very different depending on the specific situation, but it can also make or break your financial success in this endeavor.