All Forum Posts by: Anthony Vann

I would say it's possible but very challenging in today's market. Because inventory in our area is low, the prices are high. When you do the refinance the new bank only gives you 75% of the appraised value, so you have to get a very good deal on the front end to make it work. Make no mistake I just did a very profitable one last year but they're are becoming more rare because of how hot our market is right now. Between the two cities I would say you have a much better chance in Richmond than in Virginia Beach but that's because Richmond is a much smaller market than people think. 

This is a question that no one can really answer who's not very familiar with your market you've got some good general advice.

#1 Have patience. It's more important to get a good tenant in than just any tenent. I've made this mistake before. It's not pretty

But the thing that stuck out to me is that if a potential tenants thinks its more than normal than it probably is more than normal. For example, in the neighborhood where I rent my houses no one has a credit score above 620. If they did they could just buy a house. So I pull the credit but don't really use the score. I'm more concerned about evictions. I don't care if they didn't pay a cell phone bill or something like that. Now, this is a B/C area so that's expected. If I had a rental 20 minutes away in an A/B area than I would definitely be using credit as a criteria. 

My point is look at what other landlords are doing to get a feel for what's the norm in your market.

I've only been investing for 3 or 4 years but I am amazed at what people are paying for houses. Not investors but the end buyer. Keep looking, keep learning, keep networking, and eventually it will pay off. I just closed on a deal from a wholesaler last week. I'm not even sure when I met him. Its going to cash flow very well when the reno is done. Deals are still out there just much harder to find.

I'm not a lawyer and you should ask one since protected classes do vary from state to state. But as a general rule I just tell people "___ is just one of many deciding factors but everyone is welcome to apply and we offer the property to the best tenant." I don't get into specifics. A landlord in my area was sued for dicriminating (she didnt want people with kids I think) and she was fined 25k and forced to sell all her properties. I'd rather be safe than sorry. I will be honest and tell people if I already have strong appplications already though.

In the current environment, you're going to have to do a lot of shopping. I just closed on a refi in December and every bank I talked to was doing something different.

I don't think anyone is doing 80% anymore so max is 75% but most of the banks I talked to were at 70%. Some, like Primelending, wouldn't use ARV because it was a rental property. They would only do purchase plus renovation cost.

I ended up using Lending Home. If you PM me I can put you in touch with the account manager I used. They're a national (I think) private lender that will finance into a 30 yr. They are expensive but when is private money not. They did give me 75% ARV and because it was such a good deal the numbers still worked.

Good luck!

From the realtors point of view, they only get paid when you buy something. If you don't have the ability to buy then there's no ability for them to get paid. So, it's like asking them to give up their time (which could be spent with someone who can buy) and money (gas if they're driving around to let you into the properties) for nothing. Remember, these commissions are what pay their bills every month.

A lot of sellers also don't want people in their house if they're not pre-approved. If it's not vacant they have to pack up themselves and sometimes kids and find some place to go for 30 minutes while you and the realtor walk through. 

There's lots of research you can do online. Realtor, Trulia, Zillow are all good sites which can give you an idea of what's available and what people are paying in your area. The pictures will show you what is standard for you area in a rental vs. flip and at different price points.

When you're ready the realtor probably has mortgage people they work with or go to you local bank and get that pre-approval letter. At the very least they can tell you what you need to work on to get approval for the number you want. 

I use sheet vinyl for kitchens and bathrooms. Glue it down and it's done in 30 minutes. Cost is great too. Last time I used it is below: 

You definitely want to get a real estate attorney. If you plan on continuing he or she will be a vital part of your team. Most people have given you the biggest reason: protection. You want someone to sue the LLC not you personally if it ever comes to that. That way if they win they can only take what's in the LLC not what you personally own. I'm not a lawyer but that's how mine explained it to me.

One other benefit I haven't seen anyone else mention is private money. Some private money/hard money lenders can or will only lend to a business not an individual. This might just be a rule in my state so check it out in yours.

I've used the BRRR strategy multiple times with some success. Covid made it harder because banks tightened lending for awhile earlier in the year. I don't know if this varies by state (I'm sure it does to some degree) so call around and ask some folks in your area but this is what I found.

1. Conventional banks are still hesitant to lend on investment real estate at this point. They will do a refinance after the six month seasoning period (that hasn't changed) but only up to purchase and renovation cost. In other words, ARV doesn't matter as much as it did pre-covid.

2. Many private money lenders are now requiring some sort of seasoning period though the time varies. Most are less than six months but you pay for that with much higher fees, interest rates, and points. Cash flow has to be strong in order to entertain this option.

3. Things are moving slowly so expect delays. There are a lot of people doing refinances and some courts are closed or working different schedules so it takes longer than usual for things to get recorded, etc. At least that was my experience. My last deal took a month and a half to close.

A few banks I've worked with are: 

PrimeLending (conventional)

Lending Home (private lender with 30 yr option)

Visio Lending (private lender with 30 yr option)

I think your market will provide you with a lot of these clues. I look at other people's rentals all the time to see what they're doing and what is "standard" for the area. For example, all of my rentals have laminate countertops. The newer laminate that looks like granite but it's not. None of my rentals have a dishwasher but they do have washer and dryer hookups. In my area, the dishwasher is not a big priority but everyone wants to be able to wash their clothes at their house. I would start looking on Zillow or Apartments.com at the rentals in the area in your price range. What are they offering?

The biggest drain over time is going to be vacancy. If you don't have a unit that is up to par with everyone else then vacancy will become an issue sooner or later.