All Forum Posts by: Harry Metzinger

Thank you @George P. @Darren Eady @Franklin Romine for your insights!

That's a great strategy you seem to have George.

Darren, I am not using a private or hard money lender in this instance...it is all my money.  I was not planning on having a letter; rather, my statements would speak for themselves.  Is that not enough in your opinion?

I know we are stretching the original topic a bit, but this is all great information.  

One other question came to mind today - in your experience, does the amount of the escrow deposit make a difference?  I know many look at $1,000 as par for the course when purchasing with a mortgage, but with a cash offer, does it make any difference at all to offer a greater deposit - 2%, 5%, or more - of the total purchase price?

@Seth Nadreau @Jay Hinrichs @Scott Schultz

Thank you very much for your insights!  

As for proof of funds, a large part of my cash offer is a combination of HELOC funds and stocks that I would sell off. Therefore, only a small amount of the total purchase price is actually in my bank account right now. Should I have any reason for concern that a bank would not accept this as proof of funds? I planned to provide statements for the month that just ended showing that the stocks + HELOC limit is more than my offer. On top of that, the funds could be in my account quickly - within 48 hours - of an accepted offer.

When you have inspections done prior to the offer, do you already have a good feeling from the listing agent whether your ballpark offer is going to be accepted?  

Hi BP, I am currently evaluating a property where I know a cash offer is looked upon favorably compared to purchasing with a conventional mortgage. I am in position to make a cash offer this week. Since the process from offer to close could move along very quickly, my concern is missing an important step or two along the way. If my offer is accepted, obviously I need to have the funds ready, get an inspection scheduled, line up homeowners insurance, and establish escrow with a title agency. I am curious what other aspects of the purchase I need to consider? Also, have you learned any valuable lessons in instances where you purchased w/ cash (I am including private money, hard money, and HELOC funds when I say cash)? Thanks in advance.

Hi @Gina Aguilar, I do not know anything about this club, but in general, I would say you can learn everything you need to know through self-education and networking. I would recommend joining your local REIA and absorbing as much as you can through BiggerPockets blogs, forums, and podcasts before deciding whether investing in a $1,000+ membership/presentation is right for you.

Thanks for your insights @Elizabeth J Humphrey.  I understand the no contingencies part; but do buyers still have the right to back out of the contract during the 3-day attorney review period?  

It was in the back of my mind that this deal could fall through too.  You never know.  Certainly I'll be tracking this property to see if it actually goes to settlement.

Good luck to you as well.

Welcome @Harry Dolgin!  Good to see another Harry from NJ on the site.  BiggerPockets has a ton of information, so you've come to the right place.  I am a big fan of the BP Podcasts.  Josh & Brandon and their guests bring a wealth of information to the table while relating it to newbies like you & me.  If you have time in your car, think about downloading some podcasts for the ride.

@Anthony Yannucci @Richard Fields @Percy N. @Mathew Gunkel @Account Closed

An update in case you were interested - Freddie Mac countered my offer with a much higher offer on Monday.  At that point, the chances of reaching agreement on the property looked bleak.  I debated making a counteroffer given that there was not much room for negotiation from my initial offer.  On top of that, in November, an owner occupant backed out of purchasing the same property after receiving an engineering report on the property.  The engineering report touched on even more issues than what my contractor picked out when we toured the property, notably lead in the water and the presence of more mold than initially recognized.  I had my initial offer prepared before gaining access to the engineering report, so what little negotiating room I had left was basically gone after seeing the report.  Yesterday afternoon, the listing agent said that Freddie Mac accepted another offer.  While he could not disclose the proposed purchase price, he did communicate that it is an owner-occupant and that their offer was much higher than mine.  I have more peace of mind knowing that I didn't miss out on this property by $1K or $2K.  

Now the search continues.  I appreciate your advice and feedback.  I will keep the BP community updated on my future progress and hope that you will do the same.

Pardon me if this is a dumb question, but if you are using leverage for both the down payment and the repairs, what is your cash-on-cash return?  Infinity?  If not, how should I calculate it?

I am looking to utilize a home equity loan or HELOC for down payment + repairs on a rehab buy-and-hold. I have enough equity in my primary residence to carry out this strategy, and I have confirmed w/ a lender that in my personal situation, I would still be within acceptable DTI limits.

Hi @Steven Gesis, thanks for the advice.  Completely agree about being conservative in my estimates and adopting a team approach.  Just to be clear though, this is for an investment property, not a personal residence.  My understanding is 203k loans are ONLY available for primary residence properties.  If you have a different understanding, could you let me know of a couple lenders who provide such loans for investment properties?  Thanks.

@Mathew Gunkel, Steven's advice will be helpful to you.

Hi @Mathew Gunkel, a ha!  I remember meeting a Mat at Scott Good's July presentation but didn't realize that was you.  I don't think I got your business card that night so didn't know your last name.

Going the 203k route and "house-hacking" sounds like a great idea. If I knew about 203k loans a few years ago, I may have tried to go that route. I'm a big fan of the BRRRR strategy and if all goes well w/ the property in question, I would look to do a cash-out refinance a year after I close.

I was just at Monday's SJREIA meeting. Don't think I have seen you since July.  Will you be going to any SJREIA meetings in the near future?