All Forum Posts by: Justin Green

@Cody Steck Yes it does need to be a SFR not multi-family. My property just happens to be titled as a SFR.

@Rick Beringer  to answer your question.

I was under the impression that if the property was listed as "Cash or Rehab Loan Only" that meant that no bank would issue a traditional mortgage for the property. Is this not the case? 

From a brokers standpoint cash is not always the case. Usually something is wrong with the property that is obvious for an appraiser to catch therefore causing financing and repair headaches that can kill a deal. I have started using a homestyle lender for some of my listings that are cash/rehab only terms. Its all a matter of what the appraiser calls out in order for the lender to fund (3 weeks into a deal). Many just don't want to headache and put cash only terms. Cash always demands a discount also. Cash can = hard money/private money too. Get a guy that knows that on your side and you can make it work. Good luck

I am currently in process of using the Homestyle loan as an investor buying a duplex using hard money to acquire and Homestyle as the takeout refi.

My goal is to have $0 cash into the deal and come out with a cash flow of $500 a month and 100K in equity. Rehab is huge about 75K. Working on hard estimates now.

I am just starting the Homestyle loan process.

Looking for insight and happy to hear other options. Thank you all in advance.

Next move- Buy and hold duplex rental buying 50% of ARV 225K to 450K. Rehab 75K cashflow $4-500 a month doing my own PM using conservative rent numbers. This is a fairly good deal and cash flow for my area considering no cash in. No seller carry. Seller wants funds now. My options below:

Option 1

HML short term loan. Rehab financing 40 days after acquisition to wrap repairs and HML payoff in take out loan. Investment renovation financing can go to 75% after repair LTV. HML adds 6-10K to borrow the 225K ( I may need some cash in depending on HML 10% or less) Take out loan ends up about 325K PITI $2100 a month rent $2500 I will push for $2800 at first an tick down. May push rental rates higher if I chose some higher end finishes. Targeting upper middle class rental market. This option put little to no cash in on the whole deal with 25% equity for another exit or next acquisition.This is a 2 step deal so double finance fees.

20 doors in 10 years is my goal this will make 3.

Option 2

Pull equity from rental and primary residences both have close to 100K-125K each going to 75% LTV rental and 85% LTV primary. This would tap all available equity I have right now and I still need rehab capital. Renovation loan would take out the HELOC as well. I dont have the cost of the HELOC currently, estimate 7K. This does transfer risk to my 2 properties during HELOC should something go bad. I can get out of the duplex fairly fast and not take a bath I am a broker.

Bottom line. I need 225K to acquire get title in my name then renovation loan to take out. I am told lender can take out renovation within 40 days. I am moving forward with the backend loan now to ensure I dont get stuck with the HML or HELOC or whatever source of capital I use.

I appreciate feedback.

Thanks guys. Taking on a partner to flip is an option although I don't like that much personally. Also I am a buy and hold young guy so the sale will be many years down the road. I do have a good amount of funds in my 401K but also being a W2 employee at the moment does not allow self directed IRA.

Also self directed IRA would be great for retirement not the next few years. All cash flow and profit would be right back in the self directed IRA, that's OK if I build another portfolio inside the IRA but I wont see that for 25 years without penalty.

Question for the BP forum? What do you do when you are tapped out of liquid cast to jump on a deal? This is for general knowledge and also evaluating my situation question. Say you have a seller that wants out completely ie No seller finance. You want to jump on the deal, get the seller their funds and have capital for rehab. This is for buy and hold. Obvious choices aside, Hard/Private money, Seller Carry, wholesale, contract carry, Investor cash...

What are some of the most creative deals you guys have pulled off?

Matt,

I also went the Pro Schools route. It was a great mix of online and in person education. That really helped with asking and expanding on certain subjects. I also travel for my 9-5 . I recall testing day chatting with a few other newbies and talking about where we all went to school. I went in feeling very confident and easily passed. I heard of some of the schools just sending you links to print off all the matter on that subject the school had. You get what you pay for. Yes Pro Schools is more than others. I still occasionally thumb through my textbooks or jump online to get a quick answer to some subject. I also work with Randy he is a great guy. I did not know of hooking up with a brokerage before paying full price for tuition. The real education actually starts when you start doing deals. I recommend taking a 100+ year old house for your first listing to get thrown right into the fire with lots of problems for extra experiences, JK you can ask Randy about some of my listings. School was much easier as goes real life.

I am in the early stages and building a portfolio of buy and hold properties in the metro area. True most stuff already public listed at a good price goes very fast with multiple offers. There is a small window of time before stuff goes public that a good deal can be had. Early on I am happy to cash flow very little with delayed gratification later on. The 1% rule, I have yet to see someone pull that off here, Maybe Mike has heard of it happening.

For a comp I am considering one that has a heavy rehab cost with a $150 a month cash flow to start based on self management, high rehab estimates capex, and low rent projections. that way most errors are in my favor with multiple outs. I have a goal of 20 doors in 10 years. And the above is just rough numbers worst case.

I deal with the "metro ring" in pricing everyday. The rental numbers are also relative. The further out you go the less the numbers are.

I look at it if I can start out making a few hundred a month I am happy with that. Build up a large emergency fund. Over time your investments will work for you.

@joseph ball I would love to do some of the smaller number deals. In my area especially the metro area you cant touch dirt for less then 100k. I actually sold some 50x50 lots for 170K each for vacant land. The Market here starts at about 200K. Average purchase price is 250K for a 3/2 1200sq ft in metro area or $150-180  a sq ft. (unless you get a smoking deal off market)

The numbers are way to tight to rehab and flip this. I would hold for the long term. Buy and Hold rentals are my game. I am a broker so I have some savings from that not counted in the numbers above. Cash flow from the beginning is a good deal and should grow in the future.

Mainly this is a 100% finance deal setting aside all available capital for rehab. This is a small deal for the area. Likewise I am blown away hearing some properties are picked up for 30K. Its all relative to your market. the 100K rehab costs are hard to swallow and I am overestimating to be safe.

When both parties agree to enter into contract, after the counters on initial price. Agents change to pending ASAP after they have a accepted offer.