All Forum Posts by: Alberto Camacho

Speak to local lenders to find programs available for your situation. You might be eligible for a HELOC.

Typically a HM loan is done when a conventional lender wont and\or when the ARV allows you to roll in repair costs. HM lenders have programs that lend 70% or 75% on the ARV. On a conventional normally they wont roll in repairs so we end up with additional out of pocket costs.

Consider a property with 100K ARV and a purchase price of 50K. A HM lender will loan you 70K. You would buy the property and have draws on the remaining funds to pay the contractors. Once completed you would refi with a conventional loan at 75% LTV or 75K. Using HM you could potentially be out of pocket with 0 costs with the right deal.

HM does have its own fees. What out for back end points, inspection and draw fees. If done incorrectly you could be stuck in HM with a much higher rate. Holding costs are something that can kill profits quickly. I know of one investor that didn't do as originally planned and the ARV at the refi came in low.

No offense to the group here. My experience has been investors with limit funds usually lack sophistication. Qualifying investors for a syndication may present a challenge.  That being said I am interested in the offering. :)

 My sentiment as well. I realize its owner financed but 15K is super low.

 A deal of this size relies less on credit rating and more on liquidity, experience and creativity. If you want to go big I'd recommend joining a syndication with a seasoned investor that is open to showing you the ropes. You'd be passive but it gives you time to grow your funds while you build your experience. Work your way up from there and you'll have your own 600 unit deal in no time.

BTW a syndication could be done with the deal your looking at right now. A deal of that size needs capital to keep it a float when a surprise hits. Find yourself a lead and you'll be on the fast track.

I recently had to answer this same question for myself. Do I buy 4 SFR or go multifamily? I had planned going class c so the hassle factor didn't play into my decision. It seems to be a concern of yours. Is that why you're thinking of those higher end rentals?

I feel higher end renters while they take better care of the place they also tend to expect more. Not sure how that plays into your thinking. I wanted to throw it out there just in case. 

Trying to hold high end rentals will need deep pockets. A single vacancy will drain funds quickly. In comparison vacancies in multifamily are easier to absorb due to its scale.

A 30 unit multifamily @ 1.5 mil implies you’re buying at 50K a door. Buying at that price point is a challenge in the current market. It can be found but it’s going to take time to find and even more time to turn around. Recently I was looking at a 21 unit @ 30K a door. On paper it was making $50 per door monthly. The reality is it was losing $30 per door monthly. It would lose even more during the first year.

Smaller multifamily owners are looking to 1031 into larger investments. Since finding deals are tough they are just staying put.

I chose multifamily. The ability to increase value in multifamily puts me in control of my investment. I just have to invest in the right deals.

Best of luck with whatever you decide. 

Welcome to BP!

I can't speak of Austin but in the DFW area 100K with little rehab wont be easily found. At least not for any property I would consider managing remotely.

Up the ante a bit and I'm sure you'd find something worth taking on. Most of the homes I run across are in the 80K to 100K with 20K - 30K rehab and little equity capture. They typically flow in the 300 range. Feel free to reach out to me if you'd like some help.

-Albert

What about inspections and draw fees? Are you working with a conventional lender for backing out of the HML? For pre-approval do I have to walk into the office to fill out an application or is there a online version?

CNC Electrical Services, Chris is an excellent electrician that works with investors. 

 Hi Alex, 

Welcome to Texas and BP! It happens I'm a also a Brooklynite. Hitting my 2 year mark in the DFW come September. Coworkers still poke fun of my "How you doin". Feel free to hit me up. Glad to help where I can.

Do you work with conventional lenders? An extensive line of credit could leave one stuck in a credit line and unable to qualify out. Similar to a buyer maxing out their credit cards while doing a rehab. What is the interest rate after the first year servicing the line of credit?