Real Estate Agent · Santa Fe NM · Member since 2017 · 29 posts · 14 votes
For the last four years, my wife and I have had slow, live in flips as our primary source of income, holding for long enough to avoid capital gains tax. I have 18 years construction experience and do most of the work myself.
We're nearly finished with our current project in Tucson and would like to move on to the Santa Fe, NM, area.
We have about $50K remaining on a private line of credit secured by the current project.
When we sell in Tucson we will likely have between $200-300k cash.
We have family members with $150-200K income and no cash who are interested in partnering on deals.
Our goal is to branch out into rentals, and to speed up our flips, no longer living in them. In a perfect world, we'd buy a multi-family to house hack, and a rehab project. If I had my way, I'd line something up in Santa Fe now, for a smooth transition.
I've never had a conventional mortgage, but I doubt we could get one. Could we get one in partnership with family members? Would it be easier to try for a commercial loan on something with more units? A down on something with 5 or more units would eat into our flipping funds. Is there another strategy I'm not thinking of that would be more profitable?
Lender · Mokena, IL · Member since 2014 · 1k+ posts · 261 votes
8y
Hello Mike,
You could easily leverage $200 - $300,000 into a 1M - 1,500,000M acquisition and rehab line of credit to give you more buying power. Use the line of credit to acquire foreclosed properties with as little as 10% down payment. Rehab the property, place a renter and refinance 90 days later based on fair market value and cash out your original down payment funds to use for the next property. Even with out W2 income you can refinance based on credit and cash flow of the property
Build a portfolio of buy/holds using strategy listed above...
Investor · Cambridge, MA · Member since 2013 · 264 posts · 104 votes
8y
@Mike Sanford I think if you reach out to enough banks in NM you will be able to find someone who will lend to you. (offer a high % down payment)
Find a real fixer upper and use your construction experience to live in fix.
Curious as why the move from AZ to NM?
Also if you are going the partner route and wanted to occupy you will probably have to pay some sort or rent or work something out as being the live in property manager.
Real Estate Agent · Santa Fe NM · Member since 2017 · 29 posts · 14 votes
8y
New Mexico, because I've always loved the mountains, trying to get out of the heat. We have a big parcel of land and a tiny cabin in Santa Fe and the long term goal is to build a house there.
Rental Property Investor · Independence, MO · Member since 2013 · 92 posts · 37 votes
8y
Hi Mike, I would recommend looking into a low down payment owner-occupied FHA 3.5% down payment loan, or a conventional 5% down payment loan if you are going to live in the residence. You can get these type of loans for up to four units for house hacking. This would save on cash and allow you to use that for your flip project.
Also also, if the property you are purchasing needs rehab, try looking into the FHA 203k loan where you can wrap some of the rehab costs into the loan. There's LOTS of red tape and requirements, and LOTS of paperwork for the 203k loan, so do your research and see if it's worth it to you. This is how I got started in real estate! I house hacked with a FHA 203k loan on a fourplex. Good luck!
Lender · Mokena, IL · Member since 2014 · 1k+ posts · 261 votes
8y
Hello Mike,
You could easily leverage $200 - $300,000 into a 1M - 1,500,000M acquisition and rehab line of credit to give you more buying power. Use the line of credit to acquire foreclosed properties with as little as 10% down payment. Rehab the property, place a renter and refinance 90 days later based on fair market value and cash out your original down payment funds to use for the next property. Even with out W2 income you can refinance based on credit and cash flow of the property
Build a portfolio of buy/holds using strategy listed above...