All Forum Posts by: James Gates

Hey Josh,

If you are going to get a conventional loan during the refinance (which generally have the best rates and terms) most lenders will require a 6-12 month "seasoning" of the property. What that means is you need to wait a least 6 months before you can do at a cash-out refinance at more than the purchase price. If I would have tried to get a refinance during month 3 for example, the lender would have been forced to use the purchase price (60K) as the value of the house instead of the appraised amount (105K). 

So basically the property was purchased in cash from a wholesaler, and in 6 months I got a loan on the property to pull my equity out. Because I had purchased under market value and made smart improvements on the property, I was able to get all my initial capital back in my pocket and still have 25% "forced equity" in the value of the home. I bought the property with a partner, he had cash on hand and I had funds from a HELOC.

Hey Kathy,

 LOVE LOVE LOVE the idea and the hustle from your daughter. Such a smart idea to live like that when you are young and give yourself a financial runaway. I don't think I mentioned this in my post, but my wife and I currently rent two rooms of our home to amazing roommates, which just gives us that much more capital to invest in real estate for the long term. 

Difficulties: Taking the 1st step, finding a HELOC lender. Paperwork for refinance.

Easier than Expected: The closing process. Managing a rehab from a phone. Everything after the 1st step. 

Hey Andrea, welcome to Bigger Pockets!

Love your goals for financial independence, we all made mistakes when we were younger but the sooner you get on the road the sooner you can achieve your goal.

I also invest in Huntsville, I have 6 units there right now, so if you ever have any questions feel free to connect!

The team members did not know each other at the start of the project, but they were in communication with each other throughout the rehab period. My primary team member was the contractor. Accountability is huge. I would have biweekly phone calls with the contractor, and ask for an end of day report via text/pictures to check on how the project was coming along.

 Private Message!

 There was no original loan, the property was purchased in cash.

After the refinance, I owe 75% of the appraised value of the home, or $78,500.

 1) Yes, property management is a necessity if you want to scale your business.

2) Every partnership is different, on this deal both partners put up 50% of the capital for 50% of the equity. I found the deal and managed the rebab, but since this was my first investment property we structured everything 50/50. Could I have asked for more equity since I was putting up half the money and doing most of the work? Probably? Should I have? In my opinion, no. I had no credibility, I had never done this before. Don't get greedy. 50% of a great deal is better than 0% of no deal. I did not have enough capital to do this deal on my own, a partnership allowed me to get the ball rolling. 

 30 year fixed rate, amortized over 30 years. 

"The creme de la creme."

 Hey Rehaan,

The property would probably sell for just over 100K, which would be around 20K in GROSS profit, but with transaction costs and large taxes on flips/investment properties, we have no plans to sell. Our 5-7 year plan is to rent, collect cash flow, and reinvest cash flow. In the future when the principal has been paid down a little, inflation has eaten away the debt, appreciation (strong neighborhood) has lifted the value near 130K, we will "sell" the property with a tax-deferred 1031 exchange so limit our tax liability.