All Forum Posts by: John O'Leary

Jason Goldfarb is a legend from that neck of the woods. 

1.) This has nothing to do with no fee's. Rehabbed comps, are rehabbed comps. As-Is comps are AS-IS comps. They shouldn't need to drive anywhere. BPOs for "Most" lenders have no fee's. If you have a rehab project and your lender is doing a full appraisal you're wasting time. If you plan to keep it, and your seeking long term debt the lender will require a full appraisal.

2.) No lender offers 100% for everyone so there would be major caveat to that. 100% of rehab costs are normal. If they are giving you 100% of rehab costs why do they encourage you to use private money in #3. Is the rehab dutch or non dutch?

3.) Why? In #2 they give you 100% rehab financing. 

4.) As should be with all lenders.

5.) This makes no sense at all. Lenders take back properties when the borrower doesn't pay.

6.) Insurance typically covers the loan amount and the lender will have specific guidelines. Sounds like you got the wrong policy and the correct one was more expensive. The lender isn't making money on insurance. 

It really depends on your strategy. If you're looking to buy turnkey, you might find a property that was previously used as a short-term rental (STR) but underperformed due to poor management or only seasonal use. This could be an opportunity to step in and optimize the property. If your goal is to scale while minimizing your initial out-of-pocket expenses, consider searching for off-market value-add opportunities via investor lift, or local wholesalers. These are properties you can rehab and furnish yourself, with the potential to refinance and pull out some or all of your initial investment. In Florida, coastal areas tend to offer the best opportunities for STRs, especially given the saturation in the theme park areas of Central Florida but I'll let the full time operators chime in. This is what I see on the lending side.

Hey Matthew!

Welcome to Orlando! I'd be happy to make any introductions to help build your team here in area, and plug you in to any of the meetups. 

Is this for a DSCR loan?

Most lenders will cash out at 75-80% (max) on the repaired value with three months seasoning. So if you buy distressed and build in some additional equity via the rehab you can cash out when securing the long term debt. The cash you receive from a cash-out refinance is not considered taxable income because it’s essentially a loan. You’re borrowing against the equity in your home, so the money is not income but rather loan proceeds that you’ll need to repay.

The pros of a cash-out refinance for most investors include the ability to build their portfolio and scale their real estate investment business.The cons could be trading a lower interest rate for a higher one and increasing your loan-to-value (LTV) ratio.

There are value add products for multi-family 5-20 units that do not use DTI to qualify. Build in some equity via rehab and then refinance into a DSCR loan.

CashGeeks is a good option for off market deals. They are also active in the JAXREIA.

The top notch call center like Lamassu charge $8-20K a month, but typically work with shops doing 10+ deals a month. I'd consider the leads better than warm. These services are transferring live owners who have agreed to a certain % of the zestimate. 

Congrats on being under contract! Dealing with older homes, especially those from the early 1900s, can indeed be challenging, especially for a first-time investor. Given the issues you've outlined, it's understandable why you could feel anxious. A leak causing water to flow under the sub-floor and into the crawlspace can lead to significant structural issues if not addressed promptly, and you’d likely need a plumber and possibly a contractor to assess and fix the damage. Replacing cast-iron piping can be costly and labor-intensive, and while the mixed plumbing indicates previous updates, you might want to get an estimate from a plumber to understand the full scope and cost of replacing all cast-iron pipes with PVC. The inability to scope the sewer line is concerning, as you mentioned, there could be blockages or other issues that need attention. A proper sewer inspection is critical to avoid future plumbing disasters. Cracked roof joists are a serious structural concern, and having a structural engineer or a contractor experienced with older homes inspect the roof structure is essential. They can provide a more accurate assessment and potential repair costs.

When dealing with homes from the early 1900s, it's prudent to overestimate your renovation budget to account for unexpected issues. Ensure that a structural engineer inspects critical areas like the roof and foundation, as their expertise can help you understand the true condition of the home and potential repair costs. As a first-time investor, you might find it easier to start with properties built after 1975, as building codes improved significantly around this time, particularly regarding wiring and plumbing, which can reduce the number of surprises and costly repairs. Ultimately, it's crucial to weigh the potential costs and headaches against the potential return on investment. If the issues seem overwhelming and beyond your comfort level, it might be wise to pass on this property and look for a newer one that aligns better with your experience and budget. Good luck with your decision, and feel free to ask more questions! GL