All Forum Posts by: Hannah Simpson

@Hannah Simpson

I think you may be doing things a little out of order. If you plan on investing long distance; things will likely go much smoother for you if you establish your network in the area before actually putting in offers on houses. This includes creating a network of GCs or a boots on the ground that are able to see the property quickly and give an estimate on what the repairs will be. Once you have a rough estimate, you can access whether or not the property is still a viable investment and put in an offer accordingly. If your offer is accepted, then the seller will be locked in and you will have a period of time (usually 3-6 weeks depending on what you and the seller agree to) where you can order inspections, GC's, and any other in-depth research on the property you feel are needed. During this time, the seller can not negotiate with any other buyer so you two are locked in. This is the best period of time to get a GC to give you a full scope of work and bid that you can present to your lender. If you begin searching for GC's after the offer is accepted, you are essentially racing against the clock to get everything accepted and completed in time. You don't necessarily need an exact figure for your repairs prior to making an offer but you should have a decent estimate that you can confirm during the holding period. Having your team set and ready to deploy as soon as an offer is accepted will make this a much smoother process for you. You should remember this from the GCs perspective as well. If you have a GC that you have a previous relationship with and you have provided work for, they would be more willing to provide a quick estimate because they know a relationship with you is mutually beneficial. If you put in an offer and start calling random GCs afterwards who have never dealt with you before, there is no incentive for them to take you seriously as a potential lead and are more likely to decline if they do not have the time available in their schedules. Every town does have GCs, there are more in larger cities compared with small towns but there are plenty in small towns as well. The GCs in small towns may no advertise or may be smaller in scale and harder to find if you are in the area. This is another benefit to a boots on the ground team that is more tuned into the local market and is aware of who the quality property managers and GCs are in that area. 

Just be aware you will not find any GC's in Oklahoma.  They do not license them here.  Lots of folks do the role but it is not regulated by the state in any way.

Don't rush into a purchase just because you think it could be a good deal. Go walk the property with your contractors and get a breakdown that itemizes the work that they are quoting. If you can't find a GC that you feel confident in running your project, you may be a tad early in the process. I would also suggest doing your 1st flip driving distance to where you live. This way you can check on the project multiple times a week. Once you get your estimate from your contractor, then talk to your lender. There are many hard money lenders that BP recommends under "Build your team". From here, your lender will know what your budget will be and will be able to get you a loan based off of accurate information. Don't rush into a purchase without completing the necessary steps, especially for your first few. Good luck!

have you though about using a Hard Money loan instead? they are quick on situations like this, its really convenient for investors specially for flips, BRRRR transactions and more!

Ive done about 100 transactions in the last 2 years and all of them were investment deals, id be happy to chat with you and share what I know :) 

Hey Hannah! As a hard money lender, this is how we could handle situations:

Provide a borrower with a pre-approval, just as Justin had mentioned. When you find a property that you are in contract on, or want to check how much the total loan will come out to; we will ask for the Purchase Price, Rehab amount (This can be a rough estimate but will eventually have to be consulted by a GC), After Repair Value, and Exit Strategy. 

After gathering some preliminary information about the property and yourself (such as FICO and experience), we are able to provide a quote! Assuming that the deal looks good and the quote checks all of your boxes, we will order an appraisal, collect documents, and start getting all other processes in order to close. 

As Riley had mentioned, getting a loan conventionally can take quite a while, which is why some investors prefer (or require) a hard money lender to help on the financing side. Hopefully, some insight on the process helps your understanding. It seems the area in which hard money could help you is in the qualification process since there are fewer, "checks", to get the ball rolling.

Some investors I talk to already have a favorite GC they decide to work with, so maybe, it would benefit you to find a GC that you'd like to work with so you can move faster in the earlier stages if you find yourself in a similar scenario.

Yes, that's generally why they take so long to close. Any form of rehab loan there's more due diligence involved and more processes to go through to make sure that the loan you're getting is sufficient for the type of rehab you're going for. 

In our market, it's harder to find those properties unless you find something off-market or something that's been sitting awhile that they're willing to wait that long. But I also would make sure wherever you invest you find somewhere that has an adequate supply of contractors. You might get a good deal on something, but if you can't find good workers, it won't turn out to be a very good flip unless you yourself have a construction/flipping background.