All Forum Posts by: Brennen Thompson

Hey dude! 

Best advice I ever got: Jump of the bridge and figure out how to open the parachute on the way down. 

That said, I don't recommend running out there with no money and no time invested into this, but I think that your strategy is fantastic. In fact, it's exactly what I did. The key is going to be pulling trig and sticking to the strategy when things get hard. 

In the meantime, continue stacking cash, devouring info, and telling everyone that thinks your crazy that their time would be better spent worrying about their W2!

Based on my experience with both of these products, these would be my concerns: 

1. You're going to need at least 20% (maybe even 25% at this point) equity in your property if you want to refi out of FHA with a conventional product.

2. Love the thought of the quitclaim, actually wanted to do the same lol. My fear in doing so is that it can trigger the "due on sale clause" in your lending contract. Our loan amount was for nearly a million dollars and I didn't want that kinda problem in my life so we left it alone. 

3. When your credit is solid (I suggest checking out Jack McColl), your bigger hurdle with DSCR is going to be the DSCR itself. A lot of lenders are getting stingy on this (and many of these loans are going away). Anything less than a 1.2 and you're rate/points/LTV are gonna be insane

Might be a lot of legwork, but you could always put together a packet/zip folder for each of your flips... Something along the lines of: 

Basic flip details (PP, rehab cost, what the property sold for, etc.) Before pictures/videos and after pictures/videos. By going this route, you don't need many technical skills. Canva has templates for the basic flip details and you can always outsource the picture and video editing. All you guys would have to do is paste in the info, do some legwork with your phone, and make it all look pretty! 

The first time or two might be tough, but after you workout the kinks it should hit everything they want to see. 

William nailed it... So long as the intent is there and you can prove it, you should be fine. 

Earlier this year we were discussing FHA loans and the "live in" requirement with a lot of people in FL and the overwhelming majority got started in their investing career with these loans without ever living in the property. All of them had their mail sent to the unit and gave the tenant occupying the unit the rundown (typical FL stuff lol). Not necessarily the route I would go, but if those guys got away with that, I'm pretty confident that the "FHA police" William mentioned won't give you too much trouble!

Hi! 

Depending on the rate I would also look into hard money. Rates are high right now (about 12% with lower experience), but similar to what Ash said it might make things easier if you're able to use the lenders cash for the rehab. I know that you said that you've got enough to cover it, I just like to have more cash on hand than less given the current state of the market. Rehabs can also take a little longer or cost a little more than we think so having the extra cash on hand helps me sleep at night. 

If you need any hard money recos feel free to DM me, we work with them pretty regularly! 

Rent by the room all day! Your cashflow vs renting out to a single family will be significantly higher. A little more work for you, but in the long run, it'll make you a lot more cash. 

At the end of the day you're going to have to do a little cost benefit analysis on what works best for you. 

Michael is right in that it's going to be tough to cashflow with rates as high as they are right now (at least, unless you're willing to put more of your own cash into the deal). 

That said, investing in southern CA is not out of the question. We made our first investment in CA and it's been a major success. You just might have to get a little creative (for example, using a small multifamily as a vacation rental to generate more income). 

Hey dude, 

We recently took down a 15-unit apartment complex with the same issues... popcorn ceilings and wood panel walls. I suggest getting rid of the popcorn without thinking twice, the stuff makes a mess and no one likes it anymore. The wood panel is a much more difficult question primarily because: 

1. Ripping out the wood paneling/disposing it is costly and drywall/mudding and taping for an entire complex is going to hit your rehab budget hard

2. I don't have intimate knowledge of your market and what type of finishes you can get away with

We elected to rip out the wood paneling and install drywall only because we are doing a complete re-wire as well. That said, the comps in our area, along with the cost savings of keeping the wood paneling, justified our original plan to keep and paint the wood paneling. 

My best advice - check out the comps and be honest with yourself. If you can still hit the $1,045/unit number with the wood panel, it's a no brainer to paint over it for now and possibly update each unit individually as tenants move out down the road when the comps justify it 

Hi! 

I had many of the same concerns before I purchased my first property. A few things that helped me get over my fears: 

1. An agent that I trusted - Think of it like finding a good partner. Are they going the extra mile for you? Are they answering your questions quickly and thoughtfully? If so, you've probably got someone worth bringing home to mom and dad 

2. Checking off all of my boxes - What are market rents? What is my monthly payment going to look like? What utilities am I going to have to pay? How much is insurance going to cost? Doing all this work prior to closing is exhausting, but it'll help you sleep peacefully at night 
3. Bank's won't lend if you can't afford it - When you get a pre-approval, a bank won't take a risk on someone that can't pay their mortgage every month. If you got approved, purchase a property, and all hell breaks loose, you should be able to make the payments until you can figure out next steps

The biggest thing to remember is that you're going to make mistakes, it's inevitable. You don't know what you don't know and the only way to learn is by getting started! 

Hi! 

I can't speak to SF, but I formerly lived and LA and had a very similar issue. A few things that helped me make a decision: 

1. If I continue to pay rent, I'll never get that money back. If I own a property, I can essentially use it as a savings account... You pay down your mortgage every month and some day you've got all of your capital back
2. A home appreciates (usually at greater/equal rates to other investments). While renting, I couldn't take advantage of the appreciation 
3. Owning a property gives me options. I.E. If needed, I can always sell, refi, or rent the property down the road 

At the end of the day, I like to think of purchasing a primary residence like I would a high interest savings account - after a few years all of your money will be accessible, the value will increase somewhere between 8%-10%, and you're not locked in for life.