All Forum Posts by: Jonathan Mason

HELOC is what I have used so far.. Opened a HELOC on our primary to self fund our first investment in 2019. I'm now about to open another HELOC on that first investment property and leverage the combination of that and our primary to continually self-fund a BRRRR strategy from here.

Thanks @Scott M. this is my first of hopefully many many more BRRR deals. I started off investing in Real Estate in 2019 with a STR up north as a means to "house hack" a cottage for my family and I. However, it's been doing more than just pay for itself which has started to kick me into a growth mindset finally. I'm at a place in life where I have an expanding family and I'm ready to start building a portfolio long term.

This first deal I'm using really to learn. I've renovated personal homes myself I just obviously haven't had to rehab an investment property yet. If all goes to my plans though, I'll hopefully be doing a lot more after the first one. The continued education is more of a Pro than anything for me. I took real estate courses and construction management in college and loved it, I was too naive at that point to realize that it was a a viable option in life I should be taking.

It sounds like you took the exact path I've been thinking about.. I've been considering getting my Real Estate license as well as my Builder's license. Would you still recommend the same path for someone that is just starting out where you were those years ago?

Ha @Joe Villeneuve, not buying in RO.. I just use my insanely inflated equity in my personal home in RO to finance my own deals elsewhere.

@Joe Villeneuve Well, I'm planning on purchasing and titling through my LLC. City building department won't let me pull permits on a property that I'm not living in full time or planning to live in post renovations. I'll be opening all the walls and bringing everything to code and then drywalling and finishing, so the scope is large enough I wouldn't want to do without permits.

How else should I think about going through the process to avoid getting a builder's license? 

I'm preparing to go under contract on my first small BRRR deal and I'm curious how many investors in Michigan have their builder's license? I've been working on homes my whole life and the numbers are slightly tight on this one especially with material costs currently. The high end of some of the estimates from contractors would essentially put me in a break-even to very small cashflow deal, but if I could do a lot of the work myself, which I'm willing to, and then sub-contract out some of the trades, then it would save me considerably and it would cashflow nicely.

House has been vacant for years and is in rough shape so it's essentially a total gut. I'm also purchasing off a family member that didn't know what to do with it/wasn't ready to let it go when her father passed. Due to the familial dealing, she's in no rush which would allow to me to get my license. 

What are the pro's and con's of having your builder's license and investing full time?

I'm actually going through this right now on a property I'm trying to get under contract. Negotiating seller financing to purchase since it's under $50k. So there's options. 

I am currently looking for a lender that will do the loan for rehab and then refi to a 30 based on ARV 4 months from now when the renovations would approximately be finished.

Restriction on LTR for SFHs you will less often with a SFH than Condo's given the lending restrictions from financial institutions on Condo's on percentage of condo rentals vs owner occupied, etc. within that community HOA. That being said as Bruce pointed out, they could theoretically change to restrict LTR's as well, but I haven't seen that yet personally for SFHs.

HOAs are designed to be restrictive and maintain the community baseline standards for all and help maintain and improve property values for the community, but that sometimes removes a lot of freedoms as the owner's. Give and take for sure with a level of risk. 

Be careful. "We love the property".. Is this a full investment property or are you and your family planning to use it as well? Mixed use can make more sense under deed restrictions if you're looking to supplement the cost so you have a free place to vacation to and use in which case you should love the property. If it's purely for investing I'd find a different property or somehow guarantee that the deed restrictions can't be changed. Every HOA has their own bi-laws and approval processes from my experience. They would likely need to call a meeting and have the association take a vote to change restrictions. There should be parameters around how they should do that and how often those meetings should be in order to change the deed restrictions if the local city/county/state doesn't have issues.

The deed for my STR is also listed as residential and non-commercial. However, the neighborhood and HOA recognized the area for it's tourist attractions (in between two ski resorts, local beaches on the great lakes, etc.) and that owners would want to rent out their vacation homes. I can't have my rentals exceed my personal time on property annually to stay in good standing with the HOA. That means I can only technically rent 179 nights a year. That being said, the numbers in that area still work at my nightly price to easily pay for the monthly cost and substantially cashflow it even though I'm only letting it rent half the nights of the year.

Foremost and a personal umbrella policy.

All good points, appreciate the opinions.