All Forum Posts by: Jeremy England

Part of the costs are escrow deposits.  I'm curious if this is a requirement or is it bank specific.  about 1000 of the charges are escrowed taxes and insurance.  I've already paid the taxes for the year and owe one more payment to the insurance company for the year (up to august 2019).

Survey is in there too, is that necessary.  Thats 400 more dollars.  

So 6 months back I bought a sfh with the intention of giving this brrrr thing a shot.  I wanted to end up having zero dollars of MY MONEY in the project.  Hasn't worked out that way mostly because of the refinancing part of the strategy.  

Bought the property for 62000 using a sofi personal loan. I estimated the ARV to be 100,000. (I got the loan for 100,000 because I intended on buying another foreclosure at auction for cash and did not know how much I would need) The targeted house did not make it to auction and I did not see any other houses I thought were good deals at auction. So now I had this 100000 loan and needed a place to buy.

I found a house that I'd had my eye on a while (since it was auctioned) and I bought it from another investor 

There were a couple unexpected cost over runs but nothing too bad.  Roof cost twice as much as estimated, and I had to put french drains in the backyard due to lack of adequate drainage, and a driveway had to be removed (it was buried).  So the project costs were about 3000 more than i anticipated on the project for a total of 16000

Got a tenant using the qualification standards that many other investors use and that has worked great.  Got the place rented for 1000/mo.  by a well qualified tenant who has is johnny on the spot paying rent.  She's been there since september.  

Im creeping up on the 6 month seasoning period so now I'm getting ready to refinance.  I've been paying 1590/mo on this 100000 loan since July.  The principle is now 78000.  (The sofi loan is a 7 year amortized loan and we paid a lump sum back that wasn't used in construction).

So, I start shopping for lenders for a permanent mortgage and am disappointed how much lenders want in fees, closing costs.  

Called quicken loans (that's who my personal home is with) and they wanted nearly 7500 in fees and closing.  This is for a 75000 loan.  3700 of that is origination charges.  2.5 points and then a bunch of fees.  And a rae of 5.5.  Well those terms looked terrible to me.  

So I went to a local credit union here and the fees were much lower, however, still higher than i anticipated.  Plus they want 6% .  Fees and origination were about 1700, but the overall closing costs and escrow are still going to be about 8000 because they want me to payoff the sofi loan at closing.

I still have one other bank to speak with about a commercial loan to see if the closing costs could be less, which I could have used this option immediately but it was a different amortization than I originally planned.  The commercial loan is a 20 year loan with a 7 year balloon.  

Seems any way I go, no way I get all my money back out of this project.  I'll own the house that cashflows (eventually) with 25% equity but I'll end up with several thousand of my own money in it. Its tbd how much but probably in the neighborhood of 5-7k.  

sell the house to another investor.  Assuming you have the equity.  

I've made all most of my long term savings just on buying and selling my personal residences.  I bought, lived, sold for profit.  Over and over.  Probably made about 250,000 tax free just by doing that over the past 20 years.  I would have had  to live somewhere, and its always been cheaper to buy than rent in my experience.  

Plus you learn all the maintenance tasks and acquire tools to save you money.  

So that's my take, buy your personal residence.  

I think for your first project you just have to dive in.  Maybe your numbers don't come out exactly as the books or podcasts say, but the lessons you learn on the first you apply going forward.  

Risk v reward is the equation. What if it all goes wrong?  Can you sustain it financially?  If the answer is no, be more conservative, if the anwer is yes, go for it

If its close, just do it and see how it goes.

Started in this business 15 years ago and took a hit in the crash of 08, now i'm 40 and just got back into it.  Aquired a rental and looking to do more soon.  

I'm also a leo, so i know what you guys mean.  

Nothing wrong with buying 4 plexes, but from what I gather, small mf is what every investor wants.

So they are going for a premium v sfh.  Least around here.  

A guy i know wanted 150k for a dump triplex that needed 30k of work, all to get 1800/mo in rents.  I'd be paying more per unit in that neighborhood than 3 sfh.  

I'm seeing that across the board around here.  

Don't look past the sfh, other investors are 

I thik it depends on how comprehensive it is.  

If I were building a new house, I would require my first draw after i poured the foundation, another at dry in, another at frame inspection, another after paint, then the final after punch list.  

How much are you doing

Why wouldn't you want them knowing?  Seems to me a contractor is more likely to offere you preferred pricing if he believes he will get repeat business.  

Ofcourse that probably isnt' true for your first project.  But going down the road,

Word of caution, be sure you are partnering for the right reasons.  Back in 05, I had a homebuilding business and partnered with a friend of mine.  Problem was he didn't bring anything to the table.  I supplied all the capital, knowledge, and did all the leg work as far as contracting, and was the only one who had any business sense.   

he was a friend and should have just stayed a friend.  Not a partner.  Turns out he wasn't a very good friend either because he took money from our business accounts

I had to get the partnership disolved and get him to sign off on that.  It was a nightmare.  

So before you enter into legal agreements with people, just make sure each person is actually contributing to the partnership, has the same risk, same goals.