All Forum Posts by: Jay Baxter

This is amazing info, thank you so much to @Richard Scholtz, @Mark Gallagher, and @Jason Green for taking the time to respond. One follow-up question I'm still struggling to understand. I got the impression when talking to the lender that if I take out a loan and have a lien on the property that can be refinanced, when he comes in to do a refinance I'll get the best deal on a conventional 30 year. If, on the other hand, I use cash or HELOC, there is no loan on the property to refinance and he can only do a cash-out... which, if I understood him correctly, means then I would have the 6 month seasoning period, lower lendable LTV and higher rate because I'm doing a "Cash Out" rather than a "Refinance". Does anyone have any experience with this?

Thanks for the response, Jason. The banker probably did say 6 mo's rather than 12, I'm rattling off a phone conversation from memory. My real question and concern is: Will I really have to use hard money, private lending or crowd sourcing instead of simply paying cash if I want the best rate, 30 yr term and 75% of appraisal? I was disappointed to hear it b/c I don't want to eat the points and interest if I can avoid it by paying cash or using HELOC $'s.

Hello everyone, 

I'm a new investor buying in Birmingham, AL and I'm trying to get my financing sorted out before I buy any SFRs using the BRRRR strategy. I had a great conversation with a knowledgeable mortgage banker tonight, but thought it'd be wise to validate his advice with experienced investors here at BP.

The wife and I recently paid off our primary residence. Our plan was to use our HELOC to pay cash for properties, rehab them, place a tenant, and then finance them with a lender to pull 75% of the appraised value back out. Once we have our cash back (or as much as we can finance out), we'd rinse and repeat.

However, the banker told me this strategy wouldn't work unless I let each property season for at least a year. Even after seasoning, he explained I might only be able to get out the price I paid rather than price paid + rehab, meaning the bank is unlikely to allow me to pull 75% of the appraised value out.

Instead, he suggested I use a hard money or private lender as long as we can do the rehabs quickly, 30 - 90 days (which I'm comfortable we can do). That way a traditional lender can do a fannie or freddie loan to "refinance" the private lender. I'll get a great rate on a 30 year term and can likely do 75% of the appraised value even if that's more than I put into the deal.  

His opinion was that using a hard money or private lender so there's a loan to finance was the best way to go if I want to accumulate properties quickly on the best terms as long as I don't mind having them in my name. 

Can anyone opine on using a hard money or private lender versus using our HELOC? Has anyone run into this problem using their HELOC?

Thank you!

Jay

@Clayton Mobley  I found the thread I referenced in post above.  Clayton provided a very cool zip code breakdown for potential investors. 

https://www.biggerpockets.com/forums/311/topics/22...

Thank you so much for all the free info, Clayton, it is greatly appreciated.  I've met quite a few newbie investors here in Birmingham, and I'll certainly point them to this thread and others I've seen you post.  I particularly liked your Birmingham zip code breakdown, that was really helpful when I was trying to figure out which areas I should research first.  Do you happen to have a link to that post? I wanted to link back to it here, but couldn't find it. 

Thank you!

Jay

Thank you, Ken, I'd never heard of Hotpads. I'll be sure to check it out. 

Hello BPers!  I'm considering spending the $200 annual fee to get a pro subscription to Rentometer Pro.  Does anyone have any experience or feedback on this site and the accuracy of their rent estimates?  This will factor into my buying decisions, so I hate to waste the $200 if their rental estimates and analysis are weak.  

Also, what's your favorite method or site for estimating monthly rental income potential? 

Thank you in advance to helpful responders!

Jay

Thank you, @Dave Williamson, great info!  

@Dave Williamson

Hello everyone, 

I thought I'd start a fun thread tonight, and thank you in advance to anyone that participates.  Please share your BRRRR success stories to keep all us newbies motivated and hustling!  I've been driving for dollars and researching my target areas all day, and I plan to do the same tomorrow. My brain needs a break and I need some motivation.  :)  

Thank you BPers!

Jay

@Jarrod Cook and @John Patton  Thanks for the responses!  That's basically what I'm asking, I'm trying to learn the areas, so I came up with those A, B and C designations based on my discussions with the local investors I've met.  It's pretty amazing how different the same areas can be viewed by different investors. 

Let me phrase the question a different way to avoid confusion -  I'd like a mix of SFRs in solid cash flow neighborhoods and some SFRs in good neighborhoods that are in the path of progress.  I'd like to avoid C and D areas (no Section 8 and no war zones).  As far as I can tell, some good places to start for path of progress with a little cash flow are Gardendale, Irondale, Pinson and Pleasant Grove. However, I'd also like some strong cash flow properties, and it sounds like for those I should be searching in Center Point, Hueytown, and Huffman.  Are these reasonable expectations for the areas I've listed?

Thanks!

Jay