All Forum Posts by: Andrew Lapham

@Mark Nolan

Mark, thank you for the warm welcome.  I always check the blog page for new uploads.  It is probably my number one spot for new knowledge.  Thanks again.

Andrew

@Dorothy Ma and @Bill S.

From what it sound like it seems like I could be spinning my wheels going down this route.  It seems like I would be way in over my head and the juice wouldn't be worth the squeeze.

Bill I did go back and listen to the Podcast and you are right. I misinterpreted what he said and thought that he was rezoning SFR to additional units. That being said, his partner was still going to the city to get the approval to add on additional units.

So to break it down very simply, if a property is already zoned for two units, lets say a duplex does the city just need to grant a building permit to add additional living space? And if I am understanding what Dorothy is saying, this is very different from rezoning a SFR in a neighborhood to have additional units.

Appreciate the information and the informative conversation.

@Jonathan Harris

I appreciate the knowledge and insight.  Looks like I might be spending a weekend wading through some heavy paperwork.  It sounds like if it falls into a zoning variance it wouldn't be worth the effort or time.  Thanks for the info.

Andrew

I was listening to the newest BP Podcast (218) and the guest, Erik Stark was talking about an interesting strategy of seeing hidden value in properties that you could potentially re-zone.  He discussed re-zoning single family properties into two or three units.

The trouble was his partner in the business dealt with most of the city and rezoning issues.  He didn't really discuss the actual process.  For a newbie (no deals), in an extremely competitive market (North Denver) I would need to understand the process of rezoning myself.

Where is the best place to start in understanding the re-zoning laws?  Is it similar to getting an addition on a house permitted or totally different?

A quick example would be a picture of this house listed. It is listed for 235k on the MLS. The numbers wouldn't really work if this was a SFR. But the ability to add a legal, rezoned studio in the garage might make the deal a little more appealing.

Appreciate any thoughts and just looking for some hidden value that other might not see.

Look forward to the conversation.

Andrew

@George Taylor  

That is solid advice for a young, new investor. I hadn't really thought of utilizing a HML, from the perception that there would be now way they would lend to someone who hadn't done a deal before. I appreciate the insight.

@Jared Bouzek  

All around awesome advice.  

It is great insight that providing receipts for all renovation costs could potentially have a factor into the ARV for the refinance. I just assumed they utilized comps sold within six months to determine a fair market value.

I will also dive deeper into the tax benefits of rehabs and the mortgage qualification factors that rehab costs can have on your DTI. It is something that I have been a little worried about in qualifying for a refinance after a year of seasoning a future investment property. Our family DTI right now is 28%, based solely on the mortgage payment on our primary residence. I feel like we might be creeping up on the 43% if we were to refinance.

I had another question that I have been researching in terms of a calculated DTI that a lender like yourself might be able to answer. What is the norm for factoring in the cash flow to your overall income of the rented property that you are attempting to refinance on? I have read that some lenders will take 70%-80% of that cash flow amount, some will not factor it in at all and some will factor the entire amount into your income. Is this lender specific or is there a standard across the industry that I am missing?

Again, I appreciate all the advice and it is invaluable to hear from a lender on the specifics of a potential refinance.

Andrew

@Bill S.

Great advice.  I have already seen the trends in myself of staring at the numbers too long.  I am taking Statics in school this semester (right down your civil engineering alley!) and sometimes it feels like I am analyzing a truss system when I am looking at deals, rather than just running the simple numbers.  Hopefully I find a healthy blend of both the analysis side and the real estate "street smarts" side.  I assume most of the successful pros use a balance of both.  Thanks again for reaching out and I am excited to be here.

Andrew

@Dmitriy Fomichenko

Thank you for reaching out and these are all of my go-to areas for knowledge.

I listen to a new BP Podcast every day on my commute in the car.  Brandon and Josh are quite the tag team.  I am also halfway through the beginner's guide.  My next step is purchasing Brandon's book on Rental Properties.  He promotes it so much on the Podcast I feel like I have to!

Again thank you for the time and advice and I also wish you the best.

-Andrew

@Richard Jahnle - 

All great advice.  I have read a few stories of private lending from family and friends going really bad.  My plan to mitigate this risk, from the minimal knowledge I have is to:

1. Fully understand the ARV's in the areas. If you're pretty confident in your calculated/ estimated ARV after repairs, you should also be pretty confident that once your refinance you will be able to repay friends and family.
2. Line up the refinance before borrowing from friends and family.  I plan on talking to some local banks and lenders to see how viable a refinance will be after the rental property seasoning period with my families current financial situation.
3. Check and Re-check the numbers on the deal analysis.  If I am super confident on the cash flow after expenditures (loan repayment, cap-ex, vacancy, maintenance), I don't think that the refinance will be too difficult to obtain.

Good luck with the BRRR strategy and thanks again for the advice.

-Andrew

A reply from the BP community manager on my first post!  It doesn't get much better than that.

@Mindy Jensen thank you for the great advice about the area and the local market. From what I have seen you are completely right about Longmont. You can't find anything for less than 200k. My real estate agent had mentioned considering Greeley and after listening to BP Podcast 215 the idea of student rentals didn't scare me as much. That 0% vacancy is attractive. I look forward to future correspondence and hopefully meeting you at a local REIA meet up. Take care.

@Dan Mackin  - I appreciate the welcome to the BP community.  I will absolutely head over to the Erie meet up and pick the brains of some of the seasoned pros.  Look forward to seeing you there.

- Andrew