All Forum Posts by: Emmanuel Ola

Currently, my wife and I own a house that we purchased for $346,000 (4 beds, 3.5 baths) 7 years ago in California, which is now worth $606,000. The house is approximately 2,556 sqft. Recently, my wife and I came across a new home under construction, set to be completed early next year. This new property is roughly 1,600 sqft, with 3 beds and 2 baths.

We see this as a unique opportunity, especially considering how rare it is to find this price for new construction in the California market. We've decided to make the new construction our primary residence after the purchase. Initially, we bought the larger house 7 years ago because we had family members living with us at the time. Now, however, we no longer need that much space. Most importantly, we view this as a strategic move to grow our real estate portfolio. The plan is to move into the new home, live in it for 2 years, and then repeat the process of purchasing additional properties.

Additionally, while we continue to build equity in our current home, we plan to rent it out. The rental income will more than cover the mortgage and still provide positive cash flow, which is rare in the California market, making this a great opportunity for us.

However, underwriting has expressed concerns about us moving from a presumably larger home worth $606,000 to a smaller one worth $376,000. My loan officer agreed that providing a lease agreement before closing will help, but I also need to provide a solid reason for why we are downsizing to this extent.

What reasons can I give for making such a significant downsize? Is there anything specific I should be looking out for?

Hello,

I am in the process of purchasing a property for $160k and plan to put 30% down with a DSCR loan over 30 years. My goal is to pay off the loan within 5 to 10 years.

I’ve spoken with a broker and received the following quotes. Which of these scenarios do you think is best, considering my intention to pay off the loan sooner?

Scenario 1:

• Rate: 9.375%
• Monthly Payment: $1,185.31
• Closing Cost: $12,768.53
  • Broker Fees: $2,417
  • Lender Fees: $2,170
  • Cost to Buy Rate Down: $0
  • Escrow Fees: $2,797.50
  • 1 Year Hazard Insurance: $1,044
  • Impound Account: $1,598.04
  • Appraisal Fee: $500
• Down Payment: $48,000 + $10,526.54 (30% down + closing costs)
• Total Cash to Close: $58,526.54

Scenario 2:

• Rate: 8.875%
• Monthly Payment: $1,144.87
• Closing Cost: $12,768.53
  • Broker Fees: $2,417
  • Lender Fees: $2,170
  • Cost to Buy Rate Down (1%): $1,120
  • Escrow Fees: $2,797.50
  • 1 Year Hazard Insurance: $1,044
  • Impound Account: $1,598.04
  • Appraisal Fee: $500
• Down Payment: $48,000 + $11,646.54 (30% down + closing costs)
• Total Cash to Close: $59,646.54

Scenario 3:

• Rate: 8.625%
• Monthly Payment: $1,124.87
• Closing Cost: $12,206.54
  • Broker Fees: $2,417
  • Lender Fees: $2,170
  • Cost to Buy Rate Down (1.5%): $1,680
  • Escrow Fees: $2,797.50
  • 1 Year Hazard Insurance: $1,044
  • Impound Account: $1,598.04
  • Appraisal Fee: $500
• Down Payment: $48,000 + $12,206.54 (30% down + closing costs)
• Total Cash to Close: $60,206.54

Scenario 4:

• Rate: 8.375%
• Monthly Payment: $1,105.03
• Closing Cost: $12,768.53
  • Broker Fees: $2,417
  • Lender Fees: $2,170
  • Cost to Buy Rate Down (2%): $2,240
  • Escrow Fees: $2,797.50
  • 1 Year Hazard Insurance: $1,044
  • Impound Account: $1,598.04
  • Appraisal Fee: $500
• Down Payment: $48,000 + $12,768.53 (30% down + closing costs)
• Total Cash to Close: $60,768.53

Which of these options do you think is most suitable, given that I plan to pay off the loan sooner rather than later?

Thanks!

Hi everyone,

I live in California and I'm considering investing in real estate in Shreveport, Louisiana, especially since there's been recent news about the popular musician 50 Cent investing heavily in the city. With his involvement, it seems like Shreveport is gaining momentum and attracting new investments.

1. Is this the right time to invest?

2. Which areas of Shreveport should I focus on for the best returns?

I'm particularly interested in cash flow + long-term appreciation, but I'm also open to short-term gains if the opportunity is right.

Any insights, personal experiences, or advice would be greatly appreciated!

Thanks in advance!

I’m a new investor myself, based in Bakersfield, and I’ve focused my investments here. In my opinion, Bakersfield remains one of the most affordable cities with a population over 400k, especially compared to other cities in California. No matter where you invest in Bakersfield, property values are likely to appreciate. If you’re unsure, just take a look at Zillow or Redfin to see how much homes here have appreciated over the last five years. Like any other city, it’s all about finding the right deal. Feel free to connect if you’re interested in Bakersfield—I’m always looking to connect with like-minded people.

I eventually used a DSCR loan. Will close in few days.

Thanks so much for your input. We have the same concerns and I am hoping we can get more responses from the veterans here. Thanks again. 

Quote from @Robin Simon:

More recent California DSCR Loans and California Hard Money Loans funded by Easy Street Capital!

💵Just Funded💵🧊California BRRRR Loans🧊
$848,810 Hard Money Loan for the first steps of the BRRRR Method (Buy/Rehab/Rent/Refinance/Repeat) on a duplex in Lawndale, California! Experienced Real Estate Pros lock in hard money for a light rehab of both units - should be a quick BRRRR!

💵Just Funded💵🛠️California Fix And Flip Loans🛠️
$104,000 Hard Money Loan for a fix and flip investment in Bakersfield, California! This investor with great cash reserves locks in funding for the purchase of this 1912-vintage SFR (quick close) and will self-finance the renovation!

💵Just Funded💵
$320,250 Cash-Out Refinance DSCR Loan on a Single Family Rental in Ridgecrest, California via @Zach Edelman! A great BRRRR execution - borrower secures 75% cash-out refinancing within 7 months of purchase - rented & cash flowing! Ready 2 Repeat!

 Hello Robin,

Let's connect please. Thanks

Hello BigPocketers,

I’m seeking advice on the best way to approach this situation. I recently purchased a 0.42-acre piece of land for $90K. Directly across from it is a vacant 8,000 sqft lot listed for $75K. Considering the high prices of other lots in the area, many have said I got a great deal.

The land I bought has a 2-bedroom, 1-bath house that was listed as 550 sqft but is actually 750 sqft; the records just weren't updated with the city. Fortunately, the city has given me permission to rehabilitate the house, which I plan to use as an Airbnb. My wife and I already have two new constructions we rent out on Airbnb, netting us over $4K monthly after expenses. We believe rehabbing this house could be a great addition to our portfolio.

I’ve consulted several architects who’ve indicated that I could potentially build up to seven 1,250 sqft homes on the lot. My plan is to use all seven buildings as short-term rentals (Airbnb). However, if short-term rentals are no longer allowed or become less viable, I’m prepared to switch to long-term rentals.

Funding the entire construction at once is a challenge, so I'm exploring the best strategy. I've found a reputable builder who quoted $110K to rehab the burnt house, including expanding it to 1,200 sqft. The comps for a 1,200 sqft house in this area range from $250K to $300K, which would give me a minimum of 25% ARV after rehabbing the house. I've also been pre-approved for a $125K HELOC against my current residence, which I plan to use for the rehab and landscaping. My idea is to refinance after the rehab, use the proceeds to build the second house, and repeat the process until all seven homes are completed. Essentially, this follows the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method, but with the twist of continually developing more homes on the same piece of land.

Do you think this strategy makes sense? I’ve considered a construction loan to build everything at once, but the stringent conditions and potential delays make me hesitant, especially since this would be my first time seeking such a loan.

I would appreciate any advice on the best way to make this work. Should I proceed with the HELOC and refinancing strategy, or is there a better approach?

Thanks!

 I agree. Thanks

 Thanks for your response. You're right about the amount not worth pursuing in court. I'm just pissed with the seller's agent for not disclosing and wish they can be punished for being dishonest.