All Forum Posts by: Ben Sears

It sounds like you may just be shopping for a refinance in the wrong places. I've never run into an issue with rates regarding personal vs. LLC. I will say that generally rates will be higher on secondary or investment properties in general. Secondly, if your HML requires your property to be in an LLC aren't you negating that by taking the property out of said LLC? My advice would be to sit down with a few loan officers and simply tell them what you're trying to do. Let them tell you about their products. Keep scheduling calls and meetings until you find what you're looking for.

It sounds like you may just be shopping for a refinance in the wrong places. I've never run into an issue with rates regarding personal vs. LLC. I will say that generally rates will be higher on secondary or investment properties in general. Secondly, if your HML requires your property to be in an LLC aren't you negating that by taking the property out of said LLC? My advice would be to sit down with a few loan officers and simply tell them what you're trying to do. Let them tell you about their products. Keep scheduling calls and meetings until you find what you're looking for.

@Parker Doyle start with the single family rehabs and leverage your contracting education to get your feet wet. Make some connections with contractors, lenders, realtors, etc. then go for the multi-plex. You might have an easier time convincing a private lender or loan officer to give you some money with some experience in the SFR market.

@Eugene White I think you'll get a bunch of different opinions so I'll share what works for me. I have two accounts, a business checking and a business savings or escrow account. I pay all of my general business and construction expenses out of the checking account. I take my rent, insurance money due, security deposits, maintenance/CapEx/vacancy and deposit it into the escrow (savings) account. I make withdrawals from the escrow on a monthly basis for property management fees and rental maintenance. I use excel to keep a ledger on each account. This ledger tracks how much i have in escrow for each category. It was a pain to set up but I find that it's much easier than opening ten different bank accounts.

@Jot Singh

1) Yes and no. National banks (BBT, Wells, etc.) typically require 6-12 months seasoning before they will refinance. My local community bank requires no seasoning and will refinance the day after I purchase if I wanted to. Locate your community banks and make friends with the loan officer.

2)Yes. Typically banks will lend between 70-85% of ARV. Figure this into your rehab costs if you want to do a true BRRR. Take your ARV, multiply by your banks loan to value percentage, subtract your purchase costs. This is your rehab budget.

3) I can't comment on California. I'm as far away from there as possible!

@Ivan Diez-Canseco I really enjoyed the Millionaire Real Estate Investor by Gary Keller. I have a shelf full of books but this is a good general investment read. 

A typical roof with architectural (asphalt) shingles has a life of approximately 25-30 depending on your locality. Determine the age of your house. If it's within the last 35-40 years and the roof doesn't look new then there's a near 100% chance that it's the original roof and should be replaced. To answer your question specifically, look for loose or curling shingles, discoloration, particles stripping from the shingles and falling in the gutters (they look like tiny pebbles), streaking, or roof leaks inside (a very late sign). 

My opinion on the plumbing is to rip it out if you are doing any type of substantial construction. There is no telling what people have done over the years to piece it together. The last house we did had a combination of PVC, PEX, garden hose, radiator hose, and duct tape (no lie!). 

On the electrical side, I'm always suspicious of 100 amp service and un-grounded electrical outlets. Open your panel and locate the main breaker. It will be stamped with either 100 or 200. 200 is standard and 100 means your property is likely under-serviced. Additionally, houses built before 1970-ish may have aluminum wiring. It's not the end of the world but it's something to consider. I would suggest finding a dependable plumber and electrician. Pay them $100 cold cash to come out and give you an honest opinion on your property. Ask tons of questions. In this business you only learn by asking. That way you'll know what to look for next time. 

I want to hear from all of the experienced investors. In your opinion, what is the strategy most likely to make your business explode in growth in the next few years? Is it rentals, syndication, lending, a combination of several different things? I'm currently holding some rentals but looking for the next "direction" if you will. What's the general consensus provided that funds were not a limitation? 

@Eddie Gonnella it's tough I'll admit. I actually just sat down to plug in some receipts for this week so you caught me at a good time. At the moment we're $1945 over budget (original budget was $60k and I'm at $61,945) so I'm pretty happy with that. I have a fair amount of contracting experience so I'm fortunate to be a good estimator and have a good idea when my contractors are off the mark. My advice would be to talk to your contractors and get good estimates. Not only this, but show up when they're working and learn some things about the trade. Good contractors are happy to show you how they figured their price and what is involved in the job. I budget all of my projects in Excel. I've never been fond of the big fancy project management programs, etc. I have my spreadsheet set up exactly how I want it and I know how much I've spent to the penny. I break my jobs down into "estimates" at the initial walk through with "actual costs" to follow. We review all of these numbers to figure out where we were over/under and make adjustments for the next project. If you need some specific help feel free to PM me!

@Anna Gogos I just had a conversation with my lender this morning on almost the same topic. We're in the middle of a remodel on a SFR and two more properties fell in my lap in a package deal. I called because I figured that there was no way they would lend on two more mortgages. I was wrong unfortunately. My advice would be to search out one of your small community banks and make friends with the loan officer. Often you'll be able to get a protfolio loan and wrap all of your properties under a single mortgage. You'll be amazed at the difference between these banks and the national lenders. Similar to my situation, you may find that the lender will take into account your entire business and personal financial "situation" rather then simply basing your repayment on a credit score. Let us know how it goes!