All Forum Posts by: Adam Drummond

I am a Realtor in South Carolina.  I had buyers get a 203k loan years ago.  My only advice is to make sure that your lender has done a 203k loan before, and knows the process very well.  Our biggest issue was our lender advertised that they offered 203k loans, but when we got started we quickly realized our loan office was clueless.  They will require you to get bids from licensed and insured contractors for the repairs.  Most contractors i know are very busy in this market, and it might be difficult to get them to come out and quote you (considering the extra work involved on their part from the lender).  Best of luck.

Adam


Originally posted by @Ashley Huff:

First off, I wasn't exactly sure where to post. I felt this category was the best option since it will be people from my area who have already been through FHA 203k loan processes. Anyways...

We have finally decided to go with an FHA 203k loan to buy and renovate after strenuous eliminations of other loan options. I know there must be folks on BP who have gone through the FHA process (hopefully recently) which is why I'm reaching out to the community. I'm looking for recommendations, suggestions, advice, etc. in this area. We have our loan officer that we will be working with, and will be going through the pre-qualifying application process this week. We also have narrowed our property leads down to a handful that we would like to look at (most of them foreclosures or flooded because of Harvey), so we are going to schedule tours as soon as we can. We need to first know our steps to getting our (3) bids on the property we want to purchase.

Several questions:

1) How does the bidding process work? 

2) Any recommendations for contractors in the Southeast Houston area who have experience in working with 203k loans?

3) Do we pay out of pocket for a 203k Consultant?

4) Do we pay out of pocket for appraisals and inspections?

5) Are there any other out of pocket expenses besides down payment?

6) Should we have the GC, Consultant, LO and/or inspector with us when we walk-through potential properties?

Any and all information is welcome. Thank you BP community. 

I am in the process of dong my first brrrr property as well.  I called 20+ lenders before I found someone that will be willing and able to work with me (Sharonview Credit Union , if you want to google it).  The only drawback to refinancing so quickly is that the maximum amount they will lend you is based off of your purchase price, and not the appraised value.  They told me that if i was to wait 6-12 months, then they could finance 70% of appraised value.  I was also told by them that their limit is 4 total mortgaged properties per borrower.  Hope this helps.

Adam




Originally posted by @Wyatt Simon:

Hello BP Nation! 

My question is regarding the BRRRR Strategy. I have an equity partner that wants to invest in real estate with me and my thought is the best strategy would be to use the BRRRR Strategy.

However, my question with this after speaking with my lender is with the BRRRR Strategy, can you only refinance after 6 months of buying the property? That slows down my plan a lot.

Also once, refinancing will my partner be able to continue refinancing for future properties? I've heard that you can do this up to 10 properties, but I'm wondering with their debt to income ratio of that will actually work.

In the BRRRR Method is it usually a 6 month process?

Thank you!

I could use a little bit of help from fellow BPers. I have a piece of property that someone wants to move there mobile home on to and rent the lot. I have never rented the land before. I was wondering if anyone could give me info or had any contracts. Or at least an idea where I could get one?

Originally posted by @Andy Webb:

@Frank S. - agree with you on those points! Rather than work on my own houses during rehab though, I volunteer on weekends when I can at the local chapter of Habitat for Humanity and have picked up quite a bit of construction knowledge there.  I recommend this for anyone that needs construction experience - great way to give back.  I do some ongoing maintenance or repairs during tenant turns from time to time - also a learning experience, but I am trying to get away from that.  One bonus to the occasional self-repair: it gets me into the property to see what the heck is going on with my tenants.

We did buy a junker on some acreage outside of town which we decided to tear down - I have been taking the house apart myself when I have time, down to the slab - and that has been a learning experience, great work out and I would say pretty cathartic busting stuff up.  Just watch out for country snakes!

Originally posted by @Jacob Price:

Originally posted by @Adam Drummond:

I have done a few flips, and currently rehabbing a buy and hold in greenville, sc.  I do most all of the work myself, which is pretty slow going since i only have so much time to devote .  I enjoy carpentry, and the feeling of turning an ugly house into a nice property.   does anyone else out there do the work themselves, or do most people hire everything out.  Once my youngest son is in school next year... that will free me up more time to make more progress.  Just wanting to see how everyone else is getting it done.  Also, it seems when i do hire certain things out.. i am usually not satisfied with the results.  Thanks for the input.

Adam

 Also wanted to re-iterate something that I have been told and hear a lot. No one will care and put in as much as you for your property. So if their work isn't to the quality that you want. That's probably why. 

@Adam Drummond

We buy with hard-money and refi out typically within 3 months, so we do rate and term refi's.  No cash to pull out (except for a little bonus - max up to smallest of 2k or 2% of appraised or loan value, I forget which).

In your case, what are your future plans:  do you plan to hold this one for a long-time?  If so, a lower payment sure is great.  Are you planning to buy more houses and need cash to do so, then I would trade out the lower cash flow for higher purchase funds, up to a point.  Of course, do you have minimum returns you have set for yourself (e.g. 20% cash-on-cash return, or minimum dollar amount cleared per house)  - if so, how far can you push the cash out before you cross those thresholds?

@Adam Drummond

We buy with hard-money and refi out typically within 3 months, so we do rate and term refi's.  No cash to pull out (except for a little bonus - max up to smallest of 2k or 2% of appraised or loan value, I forget which).

In your case, what are your future plans:  do you plan to hold this one for a long-time?  If so, a lower payment sure is great.  Are you planning to buy more houses and need cash to do so, then I would trade out the lower cash flow for higher purchase funds, up to a point.  Of course, do you have minimum returns you have set for yourself (e.g. 20% cash-on-cash return, or minimum dollar amount cleared per house)  - if so, how far can you push the cash out before you cross those thresholds?

I work a full-time day job still and when we started, so did my wife, so due to a lack of time we have mostly hired the rehabs out to a GC. The one thing I like to do is the landscaping/tree trimming, which I will spend a day or two with on the weekends. We follow the BRRRR strategy, so a quicker turn at the hands of a trusty GC helps me get it rented and refi'd faster.

Andy