All Forum Posts by: David Quan

@Elenis Camargo

Thanks!

@Elenis Camargo

Awesome post and congratulations on your success!! That sounds like a great beginning for you guys.

Can I ask you where you found a lender for the first HELOC on your rental property? I've called around and all I've been getting require me to live in the property as a primary residence to get the Heloc.

@Andrew Postell  Can I ask you about a couple things from my conversation with the local lender?  It's a community bank that is pretty well known in the area.

Update:  Class A is required for the first few deals to prove our abilities.  That can be negotiable later.

They said it depends on the numbers of the deal, but they fund up to 70% of the acquisition and 100% of the rehab.  The acquisition number might be more if the price is right.  But this is for flips.  They said that they typically don't like to fund the acquisition on property we keep as rentals.  Do you know the bank would fund flips all the way but not be as willing for fix and holds?  (By the way, I am talking to the commercial lending side).

We want to BRRRR to build the equity and cash flow then move into multifamily. We can flip our way into it and try to 1031 exchange but that may be walking a tight rope if we don't have deals lined up. We might do the first few deals as flips to build more capital as well but just wanted to know the line of thinking in this case.

You could also pay for an appraisal yourself and have them estimate the value based on what repairs you’re going to do. That should give you a good idea and it will be worth the $450 or so if you’re going to pay cash. 

One of the good things I've learned when borrowing the money from HML or portfolio lender is that they require the appraisal beforehand so you know the potential ARV.

I sat with a HML recently and where I'm at, it's 10% interest with 2% points paid at closing. On $100,000 it's $875 per month interest only payments and the points equal to $31 per day. No credit check.

Hope that helps!

@Andrew Postell

Thanks for the info Andrew. Your shared intellect is very useful and I've seen you on other threads. Much appreciated. I will shop around banks and also connect with more REI groups. Most of them are meeting again after the 1st of the year.

Thanks Shawn.  Down here in Virginia, there are contractor licenses like Class A, B, C with A being the highest level.  To my knowledge, the licenses are determined by years of experience and how much total value a contract can cost. Im sure there are more things to separate the classes. 

Going to doing BRRRR investing.

I spoke with a local bank because I’ve read about portfolio lenders are not subject to the 10 mortgage max, cheaper than hard money, and want to establish a relationship for long term.

They said that they require a Class A contractor to rehab the properties.

Is this always true or can it be negotiated if we do a few deals first?

@Josh Johnston

Agreed to everyone's posts. Just to share a bit of experience I've had very recently as I'm new to real estate investing and putting together the pieces now for my plans to BRRRR

Earlier in the month I got preapproved with a traditional lender for a Conventional 30 year.  In Virginia it’s right at 4% with no points.   Make sure that your credit score and debt to income is good before you start so you know you’ll be able to refinance. I was able to ask the lender about the limit and indeed it is 10 loans under the rules. 

Yesterday, I sat down with the Exec VP of a community bank that has a great reputation in the area and are portfolio lenders. It’s exactly as @Andrew Postell explained.   It’s a 20 year loan with a 5 year call.  As of yesterday, 6% interest.  About a 0.5% point at closing. Interest only payments. 
They will want to develop a relationship with you, be high in community involvement, requires you to bank with them on the business side bc that’s where you’ll get your draws should you use them for the acquisition and rehab. None of those are bad things. 

We are comparing it with Hard money just to get all our options and definitely cheaper. They will run your credit and require a personal financial statement. Hard money will not. 

And you can move it over to a conventional refi with unlimited number of loans.  
 
I need to confirm, but I believe they require Class A contractors. 

My question:  If you can start out with a portfolio lender to build the relationship, keep it all in house for leverage, and use OPM (not family and friends just yet),  would that make the most sense?

Thanks for the response Aaron. My partner has a license and can prepare the contracts. I totally get it though for agents.  Low pay and lots of work.  

This particular property wasn't from the MLS. We either found this on a pre-foreclosure or a short sale. I cannot remember off the top of my head.