All Forum Posts by: Kase Knochenhauer

@Abby Barnes - we've done exactly this numerous times. 

It sounds like the property in question is a single family home. In this case, the appraiser will use local comparable to determine fair market of the home. Make sure the house is completed before your appraiser arrives as they can't base appraisal on future state of the property.

For conventional mortgages, ensure you wait to complete the refinance process until you've owned the home for at least 6 months. That way, you can pull the full purchase price and rehab expenses, otherwise lenders restrict the cash out process to the original purchase price. (There are some back door ways around this but I'd try to avoid them).

I'd recommend meeting with a local credit union as we've found they typically offer the best rates and the best education for new home buyers. 

@D’Andre Legrand - more effective is a hard thing to answer. They are different though.

Delinquent tax lists indicate financial distress. D4D shows property distress. While they often overlap, they're not mutually exclusive.

While we've performed both in the Grand Rapids area, we lean heavily on sources we can pull automatically rather than having to manually drive as it saves time. For us, time is more valuable than money. I'd love to have more D4D leads but don't have the time to commit to performing this consistently.

As you grow your business, it's important to have various lead sources to ensure consistent deal flow and financial stability.

@Robin Morales - the perfect amount of cash is LOTS! ;)

However, you can get started with zero money or at least very little. Here are a few situations were we've gotten into a property with no money down:

1. We've purchased multiple properties on land contract with ZERO down. 
2. Partnered on flips or multi families for shared profit with ZERO down.
3. BRRRR with hard money then performed 100% cash out refinance for ZERO into the house.

Luckily, I don't need to write a book on this since Brandon already did. Check out "Low (and no) Money Down" in the Bigger Pockets Store. It's worth purchasing.

@Zach Gentner - very cool! That's pretty ideal for some private house hacking.

While I'm not an attorney nor specialist in the law, I think we can make a few a assumptions:

1. If you are purchasing with a conventional mortgage, you'll have to purchase in your own name. It will be up to you and your attorney if you want to quit claim the property to an LLC (only one LLC, not two) after closing. You'll have a legal hedge of protection, however, some argue that your lender could call your mortgage due (even though I've never seen this occur).

2. I own a few properties like this and we just have one insurance policy per parcel. 

3. A third barrier is to have a property management company run the rental property. That way your new neighbor won't know that you're the owner and will be less likely to knock and ask for things to be worked on. This is more of a convenience than legal protection though.

Nice find!

@Zack Thiesen - I've seen this situation a lot and luckily you have a few options:

1. Don't assume you won't qualify for a traditional mortgage - visit a local bank and walk through the necessary steps to either qualify or disqualify yourself.

2. Find a local commercial lender - they loan money differently than conventional mortgages and credit is more flexible. Additionally, contrary to popular belief, commercial mortgages are MORE competitive in terms of rates than conventional right now. We just were approved for a 3.9% 5/20 loan through a local bank.

3. If neither of the above options work (or even if they do) - approach future properties with the possibility of seller financing. I've put together various 0% interest seller financed loans and they are my favorite investments.

4. Finally, and often my least favorite, find a partner to invest with you on your current property. Determine proper ownership interest and spell out a really clear operating agreement to set expectations right. This can be very rewarding but has to be approached carefully.

@Justin Lane - based on my experience and location those numbers are too tight and wouldn't justify a purchase.

Seeing your location, I would guess that you could find a more lucrative deal. Most properties we purchase, we are able to pull 100% of our funds out when we refinance which means we need to buy our properties with this formula (70 ARV minus any repair costs).

I'd keep looking!

I love Misti Bruton the broker for AVO Realty. Her website is here:

https://www.greatertexashomes.com/

She's a personal friend of mine and is just a plain wonderful woman. Give her a call!

@Philip Johnson - bummer! 

I'd recommend approaching a family member or friend and bringing them in as a silent partner. They can provide the financial leverage and in exchange you can provide them a small piece of the cash flow (20% ownership or similar). I've seen numerous business partnerships like this where both parties are happy.

After your friend has refinanced the property, I'd recommend quit claiming the property into a multi-member LLC with an operating agreement outlining the roles and responsibilities of each member.

Talk to your CPA regarding tax consequences. They will vary for each party depending on how you set up your LLC.

@Jesse Mags - welcome to the world of real estate! :)

Read everything you can get your hands on. Buy both (and many more) and your returns will far out weight the expense! You won't regret it.

I read about everything real estate to offer a diversified perspective. The more you know the more places you can go.

Afternoon @Vincent T.!

Cost of sale - since your cost of sale varies by location, county, agent involved, etc - it's difficult to find a one size fits all solution inside a flip calculator. However, there are tools out there to help find your closing costs: try contacting your preferred title company to ask or this website: (https://www.titlecapture.com/app-new/premier-lakeshore/login)

Capital gains - these vary based on your income and you are personally taxed. You'll have to calculate this after the fact.

Flip profit - there's a calculator for that: (https://www.biggerpockets.com/flip-analysis)

With the previous two website you should be able to calculate everything you need (leave your rehab estimations).