All Forum Posts by: Don Pham

@Andrew Postell I'm about to close on a property in a week, and I want to make sure I've done things correctly. 

1. Write up a note from my LLC and myself for the loan 0% interest, 12 month term, 70% of ARV

2. Have the closing agent/title company file the lien with the closing

3. Do the rehab

4. Get an appraisal

5. Apply for a rate/term refinance

The questions I have are the following

1. Does the lien need to be filed with closing or can I have this filed after the fact, if it's a single loan?

2. The property is in an area with low sales volume. I have concerns about appraisals coming in where I'd like them. What happens if appraisal falls short of ARV? Is the limit still the lower of purchase price or appraisal?

Hello all! Quick question--do you guys rent before refinancing or vice versa? i.e. does the fact that a unit is occupied increase the appraisal value of the property (or maybe reduce it)? Thanks!

Hello BP community! I will be closing on my first deal in a couple of days. It's for 3 properties, (2 duplexes and 1 triplex) 7 units total. They are in a low-income area (opportunity zone), fully rented. One unit is completely disgusting (the inspector couldn't stay inside long enough to do a full inspection--non of the tenants are on written leases, and I hope to get this one out shortly after closing. Two tenants have been there for over 10 years, while most of the others have been there 1-3 years. I have secured new leases with 5 of the tenants. 

This deal was purchased cash (originally 256k for all, but negotiated down to 226k after inspection), and I planned to simply refinance--the numbers look very good, assuming I didn't massively mess them up. The units all need some level of work, though some obviously more than others. My question is: should I try to BRRRR the property instead, or simply refinance ASAP? There are a lot of factors, so I'll kind of give the larger factors.

Rents for the 2/1 are currently 575-650, and I've seen them go as high as 900 fully rehabbed and slightly larger. The 1/1 are currently 500, and I've seen them go as high as 600 fully rehabbed. For reference, section 8 is about $1250 for 2 bedrooms and $1000 for the 1 bedroom. 

The roof on 1 property need replacement yesterday, one should really be replaced soon, and one is in good shape despite being extremely old. 

I don't see much value that can be injected into the kitchens. 

The bathrooms can use some work (either refinishing the tub and tile surround or replacing the tub with a single piece tub and vinyl surround). 

Flooring is old school tile, and 1 unit has carpet. 

Five of the units have fuse boxes.

They can all use a paint job.

I imagine a lot of the rehab work would be a pain with tenants in place, so I could just rehab as they go vacant, but then at which point should I refinance? 

Sorry if the thoughts weren't all organized--it was probably a bit out of my depth to take on a large project as my first deal, but it seemed like it would be worth it.

And help, general or specific, would be much appreciated!
  

Hello fellow BPers! I'm looking for someone who can write an insurance policy for properties located in Belle Glade (three properties total). The insurance broker I've been working with is saying none of his carriers wants to write a policy for Palm Beach County. Today is my last day of inspection, so I'm really under the clock to find out if this IS insurable or not.

Thanks!

If you and your dad are partnering for the long term, you guys may want to consider putting it into a revocable grantor trust where you guys can amend the beneficial interest where needed. If you are considering this route, seek legal counseling, as I'm just a guy on the internet that has watched a bunch of YouTube videos by Clint Coons :)

@Andrew Postell I think I just came across a deal that'll be my first attempt at this--so glad I came across it first!

I want to add a bit of a reality check. FHA and VA low and no money down loans are great. However, those who rely on them as a point of entry into real estate are going to find that it's not going to benefit them as much as you think. TL;DR FHA/VA is great to use for deals, but they need to make sense under other financing scenarios anyway.

Here's what I mean:

If you NEED a loan with a low down payment because you don't have the start-up capital, chances are, your disposable income isn't that high. If your disposable income isn't that high, you're not going to have a hard time qualifying for the properties you want. Without getting too technical, the size of the loan (and therefore the monthly payment) is inversely proportional to how much you put down. Therefore, you will likely need the income from the other units to qualify for the loan, therefore you NEED to find a good deal, or it's a no go anyway. 

And quite frankly, if you're able to find a good deal that can do that, you won't have any issue raising capital to partner on the deal, removing the NEED to go the FHA/VA route in the first place.

From what I've learned, if you find a good deal, partners will come. Pitching deals to potential partners will also sharpen your analysis and communication skills. 

@George Blower, thanks for all of the nuts and bolts! I was familiar with them, but it's good to have them reconfirmed with the same understanding. Cheers!

@Kevin Tran My assumption based on:

"And you want that note to be pretty close to 70% of the ARV for the property if you don't want to bring any money to closing. 70% will allow you to roll in your closing costs. If you want it to be at 75% just keep in mind you would need to bring your closing costs out of your pocket to complete the refinance."

You'll file the note to be 70% based on the market value, which should be corroborated by the appraisal.