All Forum Posts by: Pete M.

Yes, you can hire an appraiser. If you're buying with leverage, the lender will almost certainly require an appraisal to establish the as-is value and the ARV before closing. You can get a good idea of the ARV based on research, but your lending options will be tied to the appraiser's value. I initially evaluate a deal based on the agent's CMA, but you can be screwed in the end if the lender's appraiser thinks differently.

No, property does not need to be 100% vacant to BRRRR. If looking at an SFR, I want it to be vacant so we can immediately start rehab and reduce the time our money is "stuck" in the property. Inherited tenants just seem to go badly. For anything with more units, you could always use income from other units to help defray the holding costs while you rehab and reposition the property, and cycle through the units. There's no right or wrong answer to this, it's more specific to the strategy that best fits the property and your goals.

If you're using financing, then the "true ARV" is whatever the lender's appraiser says, because you're dependent on that to ultimately do your refi. Keep in mind if you use financing to purchase the property, and then refi again, you take the risk that the second appraisal will not match up with the first.

Take a look in the local KC forum here, you'll see several posting regularly.  DM me and I can also pass you along a few names.

Things are all over the map right now with private funding, due to COVID. My go-to is doing 80% of PP, 70% of ARV max; 10% interest with 2 pts, 3mo interest in escrow (for bridge loan, long-term private notes are completely paused still). Track record definitely helps.

You may be able to find better terms with local lenders; find FB groups for OKC and get plugged in, they're often in those groups too.

@Nitin John Abraham

Lot of good advice on the thread already, especially about trading out some of your SFRs for 2-4 unit buildings.  Conventional money is cheapest, but you may be able to find private lenders (don't necessarily have to be local to KC) who won't care about your citizenship.  

You could also get married and have up to ten properties in your spouse's name, too. ;)

Bingo. You can BRRRR anywhere with access to the right deals and right team on the ground. I'd look at the city fundamentals more when deciding where you want to go. Not to say I wouldn't invest in StL (I used to live there), but I think KC has a lot more going for it.

@Chris Wunder  Are you referring to bridge loans, or longer-term notes (3-30 yrs)?  Private lenders typically do bridge loans as interest-only, but those are going to be higher interest (think 8-12% right now), and typically only for 12mo, possibly with a fee to extend.

I've done longer-term private notes with local banks that are interest-only for a certain period before converting to P+I, but I want to say I've heard of others (pre-COVID) doing 3-5 yr interest-only notes typically with local banks/credit unions.  Not sure what you'd find today for those offerings, though.

@Chris Wunder Caveat: I'm not a CPA by profession, this is best discussed with your CPA.  Traditional LLCs are treated as disregarded entities, meaning the taxes just pass through to your personal income via a K-1.  LLCs are primarily for legal protections (if done properly), not for tax purposes.  S and C Corps are different.

Also keep in mind that if you're using traditional conventional financing with the note in your name, and then you transfer the title to an LLC, you may be at risk of having your note called due because of the Due-On-Sale/Alienation+Acceleration clauses. Not to say it will happen (many do exactly what you're planning without issue), but could.  I believe if the note was underwritten by Fannie Mae, they do allow you to transfer title to an LLC without issue, so long as the LLC is owned by same person who's on the note.  But again, you're best off asking a savvy professional lender, which I am not. :)

We've used Melissa Lirley with Kansas City Title & Lee Ann Avalos with AlphaTitle for closings on investment properties.

Good luck!

Lots of good advice on the thread; your specific circumstance will dictate the best option. Most likely you'll want to look at doing a rate/term refi into a conventional mortgage. This will likely lower your payment, get rid of PMI (it's called MIP under FHA, but essentially the same thing), and free you up to do another FHA loan (you can only have one active FHA loan to your name at a time). FHA rules were changed regarding MIP, so anything with <10% down now has permanent MIP, regardless of term.

https://www.fha.com/fha_requirements_mortgage_insurance

Seems redundant, I know--point taken.  With that said, I've gotten referrals that didn't turn out so "good" before...

And thanks for the referral!