All Forum Posts by: Doug Wright

If you submit an offer on a HUD home that doesnt meet their minimum net to HUD they should send a "counter offer" email that tells you what the minimum net to HUD needs to be.

Talk to local smaller banks and ask for a construction/rehab loan. You say you experience with rentals and Airbnb so if you own any you may be able to get LOC with equity.

I have found my clients and myself have had best luck getting loans thru "neighborhood" banks (4 to 5 total branches) or credit unions.

Depends on cash investment, time of holding, etc. I purchased a fix and flip with only 20k out of pocket. Bank financed remaining amount. Sold property within 6 months and made a 25k profit after all purchase closing costs, sale costs, holding costs, rehab, etc. So my return was 125% in 6 months. In my opinion this was a home run in my market. House ARV was 130,000. Now if I invest 20k out of pocket and had the property for 15 years I would expect to walk away with a lot more.

If you own a business in real estate and pay yourself a salary from the business you can avoid SE tax on flips, as long as properties are titled in your business name. You must pay yourself a reasonable salary for what you do. In your case it sounds like your CPA is giving you the correct advice.

The risk mitigation for me, in my opinion, is the expertise in my market. I have been a property manager for 15+ years as well as know all trades (roofing, minor plumbing, minor electric, drywall, paint, carpentry) from my years of working on homes. Have purchased 2 foreclosures for primary residences. First one bought in '06 and sold in '14 for 50% more than purchase. Bought second primary residence for 30% discount and this is what helped secure HELOC. Have used HELOC to fund 5 purchases. Two SFR, 2 duplexes, and one flip. Have paid it back each time and waiting to find next.

All valid points about not risking the home you live in. I decided to get into investments using the equity in my primary home with a home equity line of credit. Of course I eat breathe and sleep real estate, I am a licensed broker and owner of a management company managing over 100 rentals in the area so it was not that big of a "risk" for me. While I would not recommend it for everyone. I just suggested a HELOC vs a cash out refi as a way to tap equity without the added costs. Make sure you decide based on your comfort level. If the investment wont pay for itself and cash flow with 100% financing on 15yr notes, I do not buy. Not that I get 100% financing but when I run numbers I like to figure my mortgage at 100%.

Depending on the terms of your current loan, interest rate, payment, remaining term, etc. Instead of a cash out refi at current rates it may make more sense to get a home equity line of credit or home equity loan. Yes there is a little more risk with a HELOC due to fluctuating interest rate but if your current loan has low fixed rate and new loan would increase that it might be a better option.

This will be my third year investing. First year purchased a SFH and duplex. Second year was lucky enough to find another duplex and SFH to bring total to 6 units, also completed first flip.

This year looking for another flip as well as adding 3 to 4 more units to portfolio. 

Try River City bank. They are good to work with investors. Rates are a little higher than standard but origination and appraisal is easy. Cheap closing costs and not a lot of hoops to jump thru.

Check local banks, they are more investor friendly if you have a working relationship with them. I have financed multiple properties with 10% down and no PMI. The rates are a little higher than a "traditional" lender but without PMI it was worth it for me.