All Forum Posts by: Chris Bounds

@Eric Armstrong Traditional banks will typically only loan up to 75% for an investment property. I have not ever pursued a 1st attempt conventional for an investment property, but it's my understanding that the property must be fully rehabbed already. In other words, it needs to get the ARV necessary to make the 75% work. Going private first then refinancing avoids the down payment requirement.

Alternative: Maybe get the seller to owners finance the property to you for 6+ months (longer is better) and you find other funds for the repairs. Talk to a mortgage broker to see how that strategy compares to using HM. From what I've been told, as long as the HUD was done properly then it will work the same. Or you can do a lease option, but the rules on th

@Eric Armstrong

I commented on the strategy you are looking to use here.

In a nutshell, you can use private funds (such as hard money) to acquire a property. Once the repairs have been made you can then seek to refinance through conventional funds. If you purchase the property at a good enough discount you can actually end up having little to no out of pocket expenses through that process. That is the simple version, but there is a little more to it than that.

Find a reputable hard money lender in your area. Let them know what your strategy is. They should be familiar with it. Some companies call it a Temp-to-Perm program. Once you've been pre-qualified ask them for a mortgage broker referral that is familiar with that strategy as well. Contact them and get pre-qualified. If they both pre-Q you then go out and find a deal!

PS: Even if that is your intended exit-strategy it is smart to work in 2nd and 3rd strategies as well, such as wholesaling it, listing it with a realtor, or partnering up with someone with great credit That is important just in case the refinance hits a snag. Having reserve funds is a must as well.

Originally posted by @Andy Collins:

One thing that was mentioned that goes against my experience, you can refi based on the new appraised value only if you can show you have made upgrades to the house,

That may be true. My experience has always included a lot of repairs. If you're buying a house that literally needs zero repairs then you're probably better off going conventional route with a higher down payment.

@Lataya Spikes Yes, I have used [REMOVED] several times before. They may not be the cheapest place in town, but they are a very experienced hard money lending group with a lot of resources to help you with your deal whether it's rehabbing, wholesaling, or flipping as a rental. They have monthly free investor meetings that I recommend as well. Ask for Erick when you call in.

For the record, I have no ties to [REMOVED] other than being a customer.

Good to know - thanks!

Congrats on the milestone! I am frequently recommending BP podcasts. Keep up the great work!

Abel Vazquez I personally consider HM cash. It's just not my cash. I'd say 95% of "cash buyers" are really using HM or other private funds. I know what my HM company likes though so I'm comfortable knowing my funding is secure. Having an inspection clause just in case it doesn't work out with the HM lender is a good idea. Worst case, try and wholesale it to another investor!

Jon Holdman seasoning is needed for cash out but not for a clean refi. Technically if no repairs are needed you can file the refi a few days after the initial closing. [REMOVED] here in Houston has a great "Temp-to-perm" program for investors that follows that strategy.

Oops. Note to Admin. Joshua Dorkin Using the iPhone app when clicking reply again it looked like I was editing my first comment but it actually posted the entire message again.

Yes you can refinance immediately after repairs (if any) are completed to bring it to ARV. You can refinance up to 75% ARV so if you bought the house cheap enough you can refinance with little to no out of pocket costs. The downside to this is paying closing costs twice. As long as you factor that into your costs when you buy it's a good strategy to use though. Be sure to find a good mortgage broker that understands this strategy before you buy. Your hard money lender should have referrals. Also, generally speaking using hard money can be considered cash but technically it's an asset based loan. Most sellers won't have an issue with it, especially with a pre-qual letter.