All Forum Posts by: Geordy Rostad

@Lydia Kay

This all sounds scary and overwhelming but these are the sorts of things you should be prepared for in real estate. Here's how I would approach it:

1) install new splashblock or diverter at the bottom of the downspout and make sure the water is being diverted away from the house from now on. Make sure any other downspouts that go into the ground are free and clear. Usually they are not. Often you are better off just diverting the water away from the house with a splash block. Make sure all of the soil is graded away from the house. If it's not, you probably need a french drain and some catch basins.

2) put a dehumidifier in the damaged area. Run it for days/weeks or whatever. Dry it out as best as possible.

3) depending how much rot there is, some you may need to pull out and replace and some you might not. You might be able to get away with just sistering some joists in certain places. 

4) fix the floor and continue your remodel.

Could you take a couple of pictures and post them here? Is there a sufficient crawlspace?

You should call up some handymen and carpenters in your area and get bids. This should NOT be insanely expensive. By your description, it all sounds pretty fixable but it's hard to tell without seeing pictures of it. Is it a beam that is water damaged or is it a sill plate that sits on top of the foundation wall?

Try not to get too discouraged about this. First thing right away though is to fix up those downspouts and make sure any water intrusion stops asap.

@Jerel Davis

It could be a regional custom or it could be common and I just don't know.

One of the HML's here doesn't care what you bring them as long as you have 25% cash in it. They don't mind taking them back when it turns sour.

Another one says "we aren't like those guys, we've only taken back .5% of all our deals".

One I'm working with now asked for pretty much all my docs just like a bank but the application was pretty simple. It was sort of a grueling qualification process but they are 10% down and charge 10% interest which is lower than the first two guys I mentioned. I'm sure they saw that I have 15% reserves and just didn't mention to me that it was any sort of requirement. 

They make their own rules. There's not really a standard.

@Molly Pomerleau

It depends what your goal is on the BRRRR. If you want something that you can pull most of your money out and still cash flow a couple hundred bucks, that looks good. If you absolutely need to pull every cent out, that might not be good enough.

Have you gone to a lender and asked what the rates and terms are for a non-owner occupied cash out refi? I talked to one of mine today and he said 5.375% at a 70% LTV. Do your numbers all still work if that was the rate and terms you had to use? At 70% LTV, you could only pull $112k.

It's hard to tell what you are including in expenses. Do you have tax, insurance, property management, capex, repairs, and vacancy rate all accounted for?

Are you factoring in closing costs, loan points, property inpsection, etc as well?

@Jerel Davis

Any number of things can not go quite as planned with a flip or buy/hold. I totally see the HML's perspective. On the other hand, they should have made this clear to you right up front when you first talked to them about terms.

Not all HMLs will have this requirement though. You should shop it around a bit and try a couple other lenders. 

Hi @Account Closed

Did you ever pull the trigger on this? Why or why not? Did you find something else? Somewhere else?

@Heyward Lovett

Are the tenants paying all of the utilities?

How about yard care?

Insurance is missing from your expenses.

@Arta Montero

You probably won't find decent returns within the Portland city limits. You might want to look a little further out until the numbers start making sense. Try Vancouver, Hillsboro, or Oregon City maybe?

I love Portland, I try to visit every chance I get. I wish I would have bought a building there years ago. Definitely cheaper than Seattle still but not cheap.

@Sean Keating

My dad just found that one for me the other day. I haven't really dug into it yet. Some of it seems pretty overpriced but there are a couple of deals on there (just not around me).

@Patrick Jung

Cash out is probably a better way going forward. If you do HELOCs, they can screw your credit up if you borrow 100% of them just like maxing out a credit card. The flexibility of a HELOC is nice but they shouldn't be maxed out long term.

How long have you had the 80% loan? Seasoning is different for different banks. Sometimes it's 6 months, other times it's 12 months. Before the seasoning period, they only want to give you original purchase price. After that, they will base off of appraised value.

@Charlie Moore

Have you considered hiring a property manager to be the bad guy?

Is the rent on those two at market? If not, you should raise it. 

Are they in a lease or month to month?

You should also switch them to a payment system such as:

https://www.paylease.com/corp/payment-processing/

https://www.dwolla.com

Cozy.co