All Forum Posts by: Connor Hibbs

Hi Brandon,

At the end of the day it is going to be up to you for what you'd like to do. 

On one hand you could sell the property and use the funds from the sale to go and look for a new investment property as you move into your spot downtown.

On the other hand, by holding the property you are building equity and the property itself has likely increased in value over time and will continue to. The, around 5%, rate is currently lower than what you'd likely find now (rates are just starting to dip back into the 5's for investment properties), but I don't think that keeping your rate here should impact your decision. 

I would recommend holding and renting to build a portfolio, but I don't have all of the details and at the end of the day you should do what's best for you.

Hi Zach,

The best time to reach out to a lender is when you've gotten the rehab budget quoted by a GC and either have submitted your offer on the property or just received the purchase contract. Most contracts are 30-days which should not be a problem to close on time even if you reach out to a lender a few days after getting the contract.

Most lenders will provide 100% of the rehab funds, but they are not provided up front as they are released in draws. The easiest way to think of the draws is like a reimbursement where after you complete work on the property, the lender sends out an inspector to confirm that work has been completed then gives you funds according to what has been done.

You should be using a lender for the purchase as well since purchase and rehabs offer the highest % of purchase price. This will help you to complete larger chunks of rehab at a time while also letting you leverage your cash should another good opportunity for a project come your way.

The biggest killers that I've found for GUC loans to qualify have been:

1. Lack of exp or no exp. There are few lenders that can work with GC's that don't have any projects where they are on title even though they have been the ones building the property. I've noticed some lenders using heavy rehab experience recently though to help qualify a borrower.

2. Lack of liquidity from the borrower. There is no way around this one.

3. Projects not hitting minimum value requirements for land. There are lots of lenders looking for a min of 50k or 75k for the purchase of the land.

4. Lack of comps can be difficult. This doesn't occur as often but has killed deals before.

The last thing isn't as much of a deal killer as it is something that doesn't get brough up often enough, especially with borrowers who are newer to GUC specifically, but the time it takes to for GUC. Too many borrowers get plans from an architect then assume that the loan will only take a month to close. These can close quick with a lender, but only if the due diligence has been done in advance. Permits, Plans, Entitlements, Drawings, Rehab Budgets form the GC, should all be done in advance prior to reaching out to the lender if a borrower wants it to close quick.

 Be sure to keep in mind how long the project will take to complete when putting together your numbers and always include a contingency into your rehab budget. This contingency will protect your margins should the cost of materials go up, the project take longer (extra labor costs and extra monthly interest payments), or if there is originally unseen rehab to be done (mold, new plumbing/ electric).

Hello, I'm not the best source for design tips, but as a broker/ lender the biggest value adds that you can get on rehab projects come from improvements to the kitchen and bathrooms.

Hi @Gerard Scranton, most hard money/ private lenders won't be looking at your DTI for qualifying an investment loan. Typically, they'd be looking at your FICO score, experience, and liquidity to qualify you/the property.

Closing in your LLC will mean that the investment property does not appear on your credit. If you'd like some help with the investment property aspect of this I'd be happy to take a look. At 0 completed rehabs in the last 3-years you'd be looking at 75% of the purchase price + 100% of rehab with no prepayment penalty periods. Once finished then you'd be able to get a tenant in there and refinance into a DSCR loan.

Hi @Alex Komaromi,

I think the best way for you to go about this would be to put together a team. Once you narrow down a market that you'd like to get into then you should look to find a good Real Estate Agent to help you find good off market deals and other investing opportunities in the area as well as help to put tenants in your properties, a brokerage or lender to work with for the financing aspect (you may be better with a broker in this case as they can shop for the best loans for you as a Foreign National), and a local property manage to take care of the properties as you transfer to the refinance/ repeat aspect of the BRRRR strategy. Putting together a relationship with these three aspects will help you find properties, fund your projects, and ensure that the properties are maintained.

@Pat Quaranto With 0 experience you would likely be looking at 75% of the purchase price and 100% of the rehab. There's plenty of lenders who wouldn't mind lending to a first time investor, but they may restrict some of what you could do in terms of the project. For example if this is your first flip they likely wouldn't be lending for a heavy rehab project, conversion project, or ground up construction projects. You should be looking for a light rehab project that you can finish up quick and get some experience under your belt so that you can get better terms for those more aggressive projects.

Hi Diego, I'd be happy to help you get the right financing for your projects. For a fix-and-flip scenario your max loan amount would be based off your experience and can go as high as a % or purchase although it is more common to get 90% as the loan size is typically restricted by the percentage of the ARV for that program. I'll send you a DM to connect.

Hi Joon, as long as the property appraisers for 100k+ then I will be able to lend. We're able to go as low as 55k for a DSCR loan, but it's worth noting that typically smaller loans will come with higher rates than loans of say 100k+.