All Forum Posts by: Alexander Flores

@Christopher Stacy

You make a lot of assumptions in your post which I think are leading to your analysis paralysis. REI is a numbers game and the BRRRR method really relies on the refinance aspect since without getting enough of your money out you have to wait to get another property.

People dwell on this and everything but I feel as it is the same thing as flipping. If you can't sell a flip for what you are projected then you also will become stuck financially, the same way a refinance hinders you're BRRRR empire.

Wholesalers need a return on their mailers and other forms of advertising to stay in the business and be able to scale. If you're not getting the right return, then your business suffers.

If you can't scale your business effectively then the growth will be stunted. It doesnt matter if you use the BRRRR, flip or wholesale. It isnt even REI specific. Every business has the same issues at real estate investing.

As far as the debt worry, if you're not into risk then you wont be able to scale as quickly as people who do not mind it. Every business has debt. Amazon has enormous debt. Tesla is a giant bundle of debt. A business owner who rents a warehouse, has inventory and pays employees salaries have debt. If you're worried about carrying debt then REI will stay as a way to help with you're retirement. If you want to scale a REI empire then debt is your best friend. This assumes you dont have bottomless pockets of money.

Just my opinion!

@Heather Willenbacher

The timeline we have done is as follows.

Get approved through HML for x amount of money.

Find a deal and offer using a proof of funds from the HML.

If the seller accepts we go under contract.

We need to send an itemized list of repairs to our HML.

HML sends out their appraiser and inspector, if everything is good we close.

Begin the rehab, asking for a draw each time the repairs are completed.

Refinance once the property is rented.

We do buy and hold for now. Our HML covers 100% purchase and rehab costs. We pay for rehabs upfront and are reimbursed when they're inspected.

@Jake Evans

My first deal was with a HML and I hadn't done a deal before but I was knowledgeable since I was researching REI for over half a year before I even though about dipping my toes in the water. I was honest with them and showed that I was eager to learn. If they asked me something I did not know, I researched it right away and returned their calls/messages ASAP.

Also the deal had a lot of room for error. My debt to income was 10%, I had a full time job and lived at home. They knew if I didn't pay or abandoned the deal, that they could still make money on it.

At the end of the day it is a numbers game. HML are not in the business of flipping homes or doing what you're doing, they are in the business of lending. It is a calculated risk for them and you need to make sure the rewards outweigh the risks.

Bring your financials, financials of the property, comps on the property, your multiple exit strategies. They will probably ask you what if scenarios on the deal.

@Eugene Carelli

Not all loans have due on sale clauses.

There are lenders who will lend a 30 year fixed to an LLC.

You can own a property in your personal name and use insurance coverage to protect yourself.

Before you even think about refinancing, make sure the property is a good deal that cash flows. The rehab has to come in at or under your budget. The ARV must come in correct or you won't be able to refinance anything.

Speak to a RE lawyer about protecting your rentals and personal interests should something happen. Having a property in an LLC does not guarantee that you will be 100% if something happens either. Shop around to different lenders and find one that will lend a 30 year fixed to an LLC. Search the forms for others who have asked the same question you have and you can find a plethora of knowledge.

@Colleen Rogenmuser

We use Rehab Financial LP, they're just west of Philadelphia.

I believe title insurance is void once ownership changes to another person. For example, if you buy a home and transfer it into an LLC where you are the owner the title insurance should still be valid but if another person takes over a deed, title insurance needs to be rebought.

That is how it can work in NJ at least I think.

You may run into problems with getting an FHA loan since you already have a loan on a home. There are ways around this issue.

No one will be able to answer this without knowing more about the numbers. What would your PITI payment be after you refinance? What are market rents in your area? Are you going to self-manage or hire a PM?

There are a lot of variables but the short answer is that anything is possible. I would make sure not to over-leverage myself in your scenario.

@Daniel Pitner Of course! If you can keep it as a rental I'd go that route.

@Ashley Russell Did the property appraise for 145k or you can refinance out 145k? If it refinanced for 145k, then 70% would only be 101k so not sure how you can get out 26k. Paying closing costs is a cost of doing business. Look into getting a HELOC on the property, let's you leverage more than a cash out refinance but you only PAY for what you use and WHEN you use it, unlike a refinance.

@Ben Williams

If you assume the mortgage, then what the old owner does is irrelevant I am pretty sure.

If you have the deed in your name and assume the mortgage, the old owner's actions have nothing to do with the property anymore.