All Forum Posts by: Irma Leibas

You know Irma, I feel the same way.  I'm married, have three kids, and I live in an upper-middle class type suburb with the lawn and the white picket fence and it costs so much these days to keep a family there, it makes me worry about the future for my kids.  They will need to make double what my wife and I make to keep the same lifestyle.

Then I'll meet a 25 year old computer scientist on here (true story) and he has 180k saved and tells me he can get more don't worry, and I say what the hell did I do wrong?

@Irma Leibas Many of my clients that do mid to heavy rehab projects have contractor credit cards from Home Depot or Lowe's, which reduces the amount of upfront capital needed for the rehab.

You always will need more money than you think.  I recommend to any new clients I take on to have 50k to get started at the cheapest price points.  First, not many people get 90% on their first.  It takes the right borrower and the right project.  It all has to line up.  Expect 80% and maybe get 85% if you have a good deal and credit north of 720.

So on 80k that is 12k, then closing costs of at least 5k.  Now most new investors forget that they need to front the contractor like 10k to get started.  You do not get access to rehab funds until work is completed.  So your contractor will need money to buy materials and pay his guys for like 2 - 3 weeks so you can start unlocking the rehab money.  So right now we are at 27k and now you have all the holding costs - that's the loan payments, the utilities, the insurance.  Figure on a small loan maybe 800/month for 5 - 6 months?  So another 5k.  

So even on a small purchase of 80k and getting 85% leverage you still need to be 30k liquid to see the project through that's 37.5% LTV