All Forum Posts by: Jason Hirko

If it's too good to be true... but in this case a $1,500 up front fee sure doesn't sound like a good deal

Hi @Jay Callerton welcome to BP. I think your plan sounds reasonable, but let me give you one warning. A 'conventional' lender, or really any lender, is not going to want to see that you have borrowed your down payment, and most won't fund a loan as such. My advice would be to save as much as possible until you have the 10k, rather than paying down other debt. Then once you have your first rental, pay down your other debts.

You also mentioned being OK with some cosmetic fixes... you might need to get a lot more comfortable with more than cosmetic fixes in order to really maximize your return. On your $50k house, if you can buy it for $30k, put $10k in it, you can refinance it all day long, take your down payment back out, and do it all over again.

@Jackie P.

Bare land with no improvements? That's way high for that area. More like $1-2/foot. That intersection isn't really southwest though... It's pretty much central SA where there's not big development like what is going on on the southwest side  between 410 and 1604. If you were taking about outparcel on 1604 on the SW side, you'd get $6 all day long.

you said it was listed online on a local tax auction website, so does that mean that they're auctioning it off for backed taxes? I'd go to the family, find out what other debt they have on the house, then offer to pay off the taxes and give them cash up to your max price in exchange for the house. If they don't take it, ask again the day before the auction.

My first step is always going to the front door and asking whoever lives there if they want to stay and rent.  If not, call the sheriff.

the link didn't work for me... But as for not having an LLC set up yet, it takes like 4 minutes to apply and the state can usually turn it around in a day or two. Don't let stuff like that be an excuse or you'll never move forward

@Sharee Mason what your lender is probably talking about is for the down payment, traditional lenders are required to know where your downpayment came from. So if $19k magically appears in your account one day and they see that's where your down payment is coming from, they'll want to know where. Generally this is to make sure you aren't borrowing it from someone who isn't co-signing the loan. If you're planning to use hard money for the down payment, they're likely to consider this gap funding (because that's what it is) and some lenders won't do a deal if they know there is going to be a second lien on the property. If this property needs some rehabbing, you might be better off using the HML for the purchase, do the rehab, and then refinance with your current lender.

I bought a bunch from HUD back in the day www.hudhomestore.com

MLS can still be a good source if you know how to filter out the wrong things

@Carolyn Keller unless you're targeting drunken college football fans (which I'm not knocking, if that's your angle) I wouldn't skimp that much on the furnishings by going the thrift store route. You can buy decent stuff online for about what a few month's rental on furnishings will cost you (figure about $500/month to rent a 3 piece bedroom set, couch, loveseat, dining set, and a couple of lamps). 

I had a good client ask me the same thing last night on a flip he wanted to do. The purchase price was $150k, rehab $50k, and ARV was $300k. I told him I'd lend him $180k (90% of purchase and rehab) but he needed the difference. He asked if the owner could hold back the $20k from the sales price, and for the same reasons already mentioned, I had to say sorry, but no. We kept discussing it, and came up with the following solution from him. My client and the seller set up a joint venture, they both co-sign on a loan, I'll lend the $50k in rehab (I'll do 100% because the seller is pledging the house as collateral), then when it sells, the loan gets paid off, the seller gets his $150k for the house, and then they split the profits equally. That's how a lender can get creative and still be able to stay in business.