All Forum Posts by: Danielle Hammond

Hey - just curious - I have a really creative commercial lender here in Marquette that has helped me get a few deals done. Wasn't sure if you guys already had a commercial person in the meetings? You could hold some sort of a Q&A one day with him, and he could give some tips or pointers on things he can get done. I know he does a lot of SBA loans as well, and helped a client of mine purchase a resort last year.  Not sure if that's something you'd be interested in, but let me know and I can give him the scoop. :)

@Anthony Katsonis the 203k process was AWFUL!!! took us 100 days to close. I read about it in the bigger pockets book, then reached out to every lender up here - Either they had never heard of it, or told me it did not exist. I decided to do a google search to find a lender that did them instead of local. I found one in Florida, huge mistake. They were ordering appraisers from 10 hours away, everything took way longer than it should have. I needed a licensed contractor to do all the bid work, and they were all over priced. Painting and sanding floors isn't something you need to hire out, but bank required it. They even required a lead paint certified painter to go over any chipping (we don't have any up here... I had to pay for my contractor to take an online test LOL!) . Bringing a house to FHA standards is fine and I get it, but I can paint my own door trim. LOL!!! It was a pain- but it worked, and I learned SOO SOO SOO much from it. The value of the people I met and the things I learned was worth more than the equity we built in our home. ALSO NOTE!---- ONLY $1,000 of my OWN personal cash was used for closing costs. The 10k was all borrowed and rolled into the mortgage. I did not have 10k on hand.

hey thanks! It isnt very common- the house had froze so all the pipes blew, floors were ripped out , no one saw potential. Small house so not much work. Bought another last month for $14k - I will have to post how I got that one haha. 

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $11,000
Sale price: $49,900

I used a commercial loan and borrowed $41k
I only paid $800 Cash out of pocket on closing costs, I paid myself back that amount when the loan came in.
11k purchase + 20k expenses = 31k

I have $10k left in the account and will get another $4k at closing after fees.

Approx $14,000 profit

What made you interested in investing in this type of deal?

Very low purchase price, minimul cash needed.

How did you find this deal and how did you negotiate it?

Sat vacant for a long time, I offered the seller what he wanted & needed to get out quick. We both did well.

How did you finance this deal?

It was tricky. I needed quick cash to get a fast sale, not wait on appraisers and mortgages. I got the bank my car loans are through to give me a personal loan for $11k (took 2 days). Offered him cash. Then went to my commercial lender with the home in my name now, and the estimates with recent sales. I showed him the potential value of 50k and he loaned me 85% of that value against the house. With about 42k in hand I paid off the personal loan and hired the work out. This took relationships.

How did you add value to the deal?

I made the home meet FHA/VA/RD requirements. Working with a lot of first time home buyers and knowing they have very little options, I knew this would help someone out.

What was the outcome?

I knew based on comps the house would sell at 50k. I priced at 52k for 2 weeks thinking I would get a 50k offer. I got nothing. I reduced to $49,900 and had 6 buyers and an offer that day. I knew the value before I went in, and it all worked out. Homework.

Lessons learned? Challenges?

Organizing the work.

Plumbing and heating was first, good choice.

Drywall and paint next - good choice

Flooring last- good choice.

The timelines took WAY longer and I didnt think of the finish work. I ended up learning to cut trim on youtube. I forgot to paint baseboards before the flooring went in. Carpet took 2 weeks... what I thought would take a month took 4. Doors are a way bigger pain in the *** than I accounted for. All doors.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I represented myself and the seller through the transaction. My lender is a great asset.

Investment Info:

Single-family residence fix & flip investment in Gwinn.

Purchase price: $45,000
Cash invested: $10,000

Currently living in house- market value $85k

What made you interested in investing in this type of deal?

Low money down, low monthly payments, nice family home and street

How did you find this deal and how did you negotiate it?

Foreclosure, listed for over a year. I low balled- it didnt work and I played near full price. Still a good deal

How did you finance this deal?

FHA 203k

How did you add value to the deal?

Finished a bathroom that was gutted. Sanded and finished original wood floors (1905). Updated kitchen counter, appliances and flooring. Paint and some bedroom carpet.

What was the outcome?

House is great! We were very lucky on a lot of aspects. Like previously updated wiring and metal roof.

Lessons learned? Challenges?

Lending was a challenge - but worked.
Living in a demo with kids is hard.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

This was the first deal I did once i earned my real estate license and represented myself. I would recommend myself to everyone I know ;)

When I applied for my 203k loan, the lender I went through told me I had to be a first time home buyer. One of my clients (I am a Realtor®) is using a Fannie Mae loan and their lender told them they had to be a first time home buyer as well. I asked him to clarify on this for me, and he stated that, "you must not have purchased a home in the past 3 years to be considered a 'first time buyer'".- So technically? At the same time, I have clients who used a VA loan to purchase an owner-occupied duplex and are now using a VA loan to purchase a single family home while keeping the loan on the 'now investment' property- duplex. SO- I really do think it depends on the specific loan and the lender you go through. Find a good lender that is willing to work with you and can get creative!!! lol.

Another thing to keep in mind about the 203k is that the work must be done through a contractor. So if you are hoping to save money by doing all the work yourself with your handyman pals- it may not be an option. If you have a good, reliable licensed contractor- it is a wonderful option!

203K is for first time home buyers, and you have to occupy the home for 2 years, (From what my lender told me, not sure if I can refinance sooner to get out before than or not, but I don't need to).

That being said, I did use a 203k loan to get into my first home/investment. Being new to Real Estate I wanted to learn more about the process- my loan took 100 days to close, yes 100 days- BUT that was because I had a BAD lender, had to fire a contractor at one point and start over, and appraisers were booked way out in my area. Other than that the loan itself is GREAT... But try to work with a Local bank if you go this route, there is a lot involved. We didn't have any local lenders that offered it and I used one out of Florida for a deal in Michigan- It wasn't a good mix. Nine months later, my contractor still has not been paid 50% for his labor.

Whether you do a Bank OR HML - I think it is WHO you are working with, not what their title is. Is it time sensitive? If time is of the essence, then spend more on the HML and get it done. If time is NOT as important, go to a bank and save money. Right?

I love the ceiling fan off to the side of the light fixture in before pics! Lol! Great job.. awesome/affordable/bold move on flooring- turned out great! 

@Jerad Gardner- It is a single family. Another thing I didn't mention is that it had to be owner occupied- So we are living in the home while renovating- It is my first one, so building equity and credit, learning the ropes, living there for 2 years, then selling and using the profits/experience to move forward onto bigger deals. I THINK (not sure) you can do a multi-family, as long as you live in a unit... They offer other FHA loans for owner occupied multi-family homes. I would just go talk to some lenders (ones that offer FHA) and hear out different options from them- That's where I started- no one offered the 203k.. other lenders told me this wasn't even a loan anymore (it is)... so I had to go through a larger bank from across the country to do the deal... If you go to Prospect Mortgage page- they have a lot of videos on 203k loans that helped me out a lot.

oh and I chose my own contractor.. but they have to be certified through the FHA - or willing to fill out paperwork to get certified. I fired my first contractor (then his boss fired him)- and lost a month in the loan process... find someone that will get in fast- and submit propper bid fast!