All Forum Posts by: Cameron Pendergraft

You could make an amortization table in excel and show them the total amount of interest they could make on top of the sales price by seller financing. If they don't want to hold the note over 15/30 years, show them how much interest they'd make on a 30 year am/5 year term loan seeing as you're paying mostly interest on front end anyway. That wouldn't be beneficial to you however having to pay the first 5 years of a note twice after you refi. I'd just make the schedule and play around with it to see what could work best for both parties but only after seeing if they'd be open to seller financing.

If you're buying directly from sellers with seller financing then I would assume first you sign the purchase contract and send it to title to have title work done. Then, rather than going to a bank you would sign a promissory note and have that filed as a lien on the property. The process I'd imagine is roughly the same except the seller is your financing rather than the bank. Your name would be on title so X years down the road that wouldn't be an issue for refinancing. If you were instead trying to do some sort of lease/option from the sellers on the front end, that would be different. In that case, your name wouldn't be on title.

Edit: *promissory note with the seller*

Whereas I believe money and lending has become a bit of a commodity that should be shopped, there are other factors that go into picking a lender than simply interest and fee pricing in my opinion. My current lender wasn't the cheapest lender that I spoke with but he was fairly close and he has the capability to fund 10 residential loans for me rather than capping me at 4 like I'm assuming most other banks would. 

Also, building that relationship might mean sometime in the future that rather than getting a flat no that my banker could give me tips/suggestions on how to restructure a deal to get it to go through. I doubt I would get that service if I continuously price shopped.

I don’t want to be the guy to take the wind out of your sails but I doubt it’d be terrible if you took your foot off the gas and spent this saving period working on your processes and getting your business built on a solid foundation. You obviously don’t want to over-leverage and over-expand and create unnecessary risk. Still remain diligent in deal search though because I believe if you have the deal, the money will find you.

@Dennis S.

My wife and I just put a duplex under contract which will be our 2nd and 3rd units and our agent was extremely quick getting our quote request back to us. Please PM if you'd like his info.

Cameron 

Is the property owned free and clear? I don't know what your transfer tax would be if you had to pay it but one option would be to create an llc owned 50/50 by you and the seller. He deeds the property to the llc and you fund the llc with the cash for the rehab.

@Charles Kiser

Is the $650 market rent for the area for those units? Are the units individually metered for utilities? I would determine what type of financing I would utilize for the purchase and compare the PITI to the net rent the three other units would bring in to determine if the rents could even cashflow the monthly payment. I would try to determine every additional expense that the property will have so you can include that in your analysis as well.

I've forgotten where on the site I've read this but I've seen a safe estimate of $10,000 in reserves per property until you are to the point where you're making enough cashflow to fund major expenses from monthly cashflow. At that point you can lower the percentage of dead cash you have on hand relative to the value of the portfolio. A smaller portfolio will take a much harder hit cashflow wise if one property needs a new roof than if a larger portfolio had one property needing the same repair, so it'd be prudent to keep a higher reserve rate at the beginning. 

As far as what percentage of cashflow to hold back for future capex, here is a great reference.  https://www.biggerpockets.com/renewsblog/2015/10/13/real-estate-capex-estimate-capital-expenditures/

If this is your first eviction, you should definitely consider consulting an attorney first but here is a  link to some Missouri statutes as well as a link to a site that sells eviction kits if you really need to do it yourself.

Cameron

https://www.landlordguidance.com/eviction-notice-f...

https://www.nolo.com/legal-encyclopedia/overview-l...

@Will Gile

Once set up, you wouldn't pay interest on the heloc until you tapped into it and drew money out. You would be paying back interest and principal starting day one if you did a cash out refi. You would also have a higher interest rate I believe on a heloc and the bank would have more power on calling or canceling the line if a down market were to occur is my understanding.