All Forum Posts by: Aaron Hale

Thanks for your input @Rob Mcclellan. I”m not sure what all this talk about selling is about. So the project went over budget. It earned us at least a Bachelors of science in what not to do your first time out. Regardless, we own a terrific property which is currently free and clear in a great location with renters standing by. 

Our , my wife and I, day job is a chocolate company. We financed a company vehicle and were going to pay it down with seasonal income. However, that went into the property, hence the higher DTI. A portion of the cash-out was to go to paying that off.

The original ARV was based mostly on an average of online sources; Zillow, Trulia, Redfin, etc. I know they can be very inaccurate but after a closer examination of the specific neighborhood, comps nearby, and the updates we've done including increasing square footage, we are confident it will appraise much higher. $225,000 may possibly be optimistic but the comps don't lie.

We fond the renters who have been qualified through a friend. The friend is a doctor at Akron General and one of the renters is a 1st year resident. They plan to stay at least 3yrs during his residency.

If you know any lenders in the area who may let me pull some of the equity out of this property, I’d appreciate the lead. 

Hello. BP,

We’re scraping the bottom of the barrel to get this project to the finish line but are coming up short and I’m worried about what will happen when I apply for a cash-out loan. Let me give the scenario and I’d love to get some feedback....

In Jan my wife and I were the winning bidders on a house in North Canton, OH at auction for $64,000. The ARV was estimated at around $165,000 leaving us a total budget of $115,500 according to the 70% rule. Leaving $51,500 for the rehab. We'd saved up $32,000 and were planning to use HML to fund the rest of the project.

We'd planned on titling over the property into a LLC after everything was said and done to make refinancing on a traditional mortgage easier not realizing most HMLs only want to lend to corporate entities. As closing was drawing near and no funding was available, we tapped into our other business's coffers to complete the purchase in cash. This meant we were also on the hook for the entire rehab project for the most part. We then completed the title over into a LLC in the hopes we could still curry favor with HML with no luck.

Then, over the course of the last 5 months, the scope of the project grew to twice what we had estimated as everything that could need replacing did. This is a stark example of the importance of getting a thorough inspection! Everything including much of the framework had to go! To date the total project is nearly as much as the original ARV. We're tapped out and looking for small business lines of credit or personal loans to get us to the finish, but lenders are hesitant because of our moderately high DTI.

I'm resourcefulenough to scratch together the rest of the project money. My question for the forum is; are we going to have trouble refinancing the property if we're having trouble getting $15,000 small business loans now? Our adjusted ARV is closer to $225,000, all pure equity, because of all the necessary updates that needed to be made and we already have renters waiting to sign a lease for $1435 (+$45 pet fee) which is $250 more than our original rent estimate.

We’re in FL but I’m tempted to fly to OH and hit up every small bank and credit union in the area in person to plead our case. What are your suggestions? Any help would be great!

Aaron 

Hi, @Angela ComisThe change of perspective from renter to landlord is mind blowing isn’t it? Congratulations on making the leap! Best of luck! 

Well said, @Hadrian AyyubLife is all about perspective. Our greatest challenge is often our own mindset. 

 Thank you. I was actually thinking along the same lines. I didn’t clearly express my query. I wasn’t thinking of renting to them for $1250 but considering a small discount from the market rate for a 3yr lease. I responded to the wife (attorney) clearly explaining the reasons for the difference between the “shooting the breeze” figure and the rate based on market research. 

I did, however, offer them a $20/mo discount simply because I didn’t want the cost of vacancy or marketing,but they would still have to pay a $45/mo pet fee for their 6Lb toy pet something or other. No extended lease was offered. She immediately agreed.

I fully intend on adjusting the rent in one year to market rates -$20. By the way, the attorney has already been a bit neurotic about getting the application completed, viewing the property, and moving in even though rehab isn’t complete. Hence, no 3yr contract.    

Hi, @Brian Riveraand thanks for your service. I medically retired from the Army a few years back after my injury on deployment.

You've got a few things going for you already. For one, the retired pay will make breaking into a new career field such as REI easier.

It's also handy to have your license and access to the MLS.

One thing I always mention to the active duty/vets here is, though it's not for everyone, house hacking a multi on a VA loan has got to be the quickest way to enter into REI. Active duty have the added benefit of BAh.

Regardless, I wish you all the best!  

Hey All,

I've got a little situation that I could use some input on. We are about to complete renovation on a SFR and are nearly ready to place a tenant. This property is in my hometown and a friend recommended a couple that would be perfect for the place. He inquired about the estimated rent to which I responded that it would possibly be in the range of $1250-1350 with the caveat that we haven't completed our market research for the area for the appropriate rent rates and that it was a very rough estimate.

During the renovation, we came across many ways in which we could make upgrades to further increase the value and the rent potential. After doing our market analysis on comps in the area and speaking to various agents and a couple PMs, we have concluded that $1455 is more accurate for this area.

We just told the prospective tenants of the rent, we are getting, “But we were told $1250...” These  prospective tenants really are the model applicants, a doctor and a lawyer, and would possibly sign on to a 3yr lease. 

This property is a very nice suburban location with great upgrades. It would no doubt fetch what we are asking if we chose to market it to the public, but I’ve also got to consider vacancy, marketing, etc if we don’t place these applicants.

I don’t mind making a small concession to keep them attracted, but would would you recommend to keep them on the hook? Thanks!

Haha! Nice reply, @James Wise. Yes, I was attempting to welcome Mr. Doughty but there seems to be some glitch that isn’t allowing me to tag two people named James in the same message. 

...or, most likely the error lies between keyboard and the seat with the blind guy. 

Welcome and congratulations on getting started @James Wise!  

@Spike Scarberry I’m with @Dawn Brenengen on this. While it is true that a savvy investor can make any market work in their favor, a new investor in an unfamiliar territory will have a longer learning curve. 

If your job is transferable or mobile, great! You will be able to keep your current income stream while learning the new locale. Many on these forums have recommended not quiting the 9-to-5 until the REI income matches or, better yet, doubles the income from the day job.