All Forum Posts by: Alex Church

If you want to grow your portfolio fairly quickly, I'd recommend the cash out refinance. Even though rates are high, since you're not looking for a high LTV, you should have a good cash flow. You can refinance into a lower rate later on once rates go down. The more you build your portfolio, the more money you'll get to pay off the current mortgage while maintaining a profit.

Most of my clients like to cash out refi, use that money on the next property, cash out that one, use the money on another property, etc. Any good DSCR lender will make sure you're not losing money and will look at current rents + market rents to ensure you maintain a positive cashflow. The more you do this, the more the money will snowball and eventually you'll have more than enough to pay off the loans while keeping plenty in your back pocket.

Congratulations on paying off your debt, that's an amazing feeling!! You're definitely on the right path with having already contacted a realtor! As far as analyzing deals, your realtor should be able to help you run comps so that you can see what the return on investment looks like. A local contractor will be able to help you determine a rehab budget as well.

There are good hard money programs for first time investors as well. Depending on purchase price, rehab amount, ARV, etc., I've had a lot of clients who have been able to get 90% of the purchase price and 100% of the rehab budget financed without having prior experience.

You'll definitely want to get at least a rough idea of how much rehab is needed from the start. You'll want to have a good idea of what comps in the area look like as well, to see if the amount of rehab needed is worth it compared to the ARV for a good ROI. Once you have a rough idea of budget, you can get an idea of what you'd qualify for on a hard money loan. When you get under contract you can have a contractor help you fill out a detailed Scope of Work and then submit that to the lender. The Scope of Work does have to be done at the beginning of the loan process, though, once you start on the actual application.

Using your own money is always a good way to go, but, it doesn't give you much wiggle room in case something comes up and you have to use those funds for an emergency. I've helped several clients in the past who used their own money to start on a rehab project, and then end up running out due to something unexpected happening. Then they were in a bind and had to refinance and add the rest of the rehab budget to financing to finish the project, which of course slowed down the whole process. The vast majority of my clients who have large portfolios prefer to use hard money loans to keep their own money, and then immediately refinance or sell once rehab is done. 

For your first few properties, I'd recommend going for a property that only needs light-moderate rehab, as you'll need a higher down payment and have less financing options if the rehab budget is heavy (as in, if the rehab is more than the purchase price, or there's significant construction needed). Once you start getting more properties under your belt, you'll have an easier time should you chose to do more heavy rehab.

Atlanta is a GREAT market to invest in! I know there are a lot of good agents there that should be able to help you find properties. As far as financing, all of my clients benefit from hard money and DSCR loans, I actually am working on two with a Foreign National right now. What strategy are you looking to use to build your portfolio? The BRRRR method is a great way to build that up.

If the property doesn't need any major rehab, it's definitely a good idea to go ahead and fix the leak asap in order to close. If there are any issues on the appraisal, such as a leak, it is pretty common for a lender to require that be fixed before closing on a DSCR loan. Both Velocity and Visio are good lenders, and refinancing into your company's name is exactly what you should be doing as most lenders prefer to close under an entity. In putting the loan in your company name, you are open to more financing options.