All Forum Posts by: Josh Sicotte

Hi all,

I was hoping somebody from my local farm area of Knox, Blount, Sevier Counties may be able to provide recommendations for an honest contractor who has experience working with rehabbers and would be available to provide rehab estimate costs. Multifamily experience would be a big plus as that's the market I'm currently focused on. I'm more than willing to pay for their time. I can perform a relatively thorough video walk-through and upload it to my Dropbox for them to view and give a roundabout estimate. J Scott's book on Estimating Rehab Costs has been great, but as a novice, there's no substitute for experienced professionals in my opinion. 

My wife had a pretty big surgery and haven't been able to attend the past couple of KnoxREIA meets but hope to attend this next one if my schedule permits. Hopefully somebody may be able to provide some recommendations. 

In the meantime, any recommendations would be greatly appreciated. Thanks!

Had him approach me about a potential deal last week, was wondering the same thing. Can't find any info on the guy and has no references.

I was going to try to calculate the average cost per sq.ft. for houses in the neighborhood and estimate a price that way, but there's no recent comps within the general neighborhood. Hopefully MLS may provide better data.

I agree, Redfin is the best MLS alternative platform IMO. Yeah I did try running some comps on Redfin, but there's nothing coming up in my particular area. 4/1's around the same same range from 40k (bad part of area) to 110k (better part of area) in the same zip code. Average for the zip code is $85k. That's kind of how I arrived at my $85k estimate, as my area is kind of in between. I'm going to try to work with my realtor and see if MLS may give better, more reliable data.

I'm also having a hard time with this, mainly because it's a unique situation. All tax records (any record for that matter) say the house is a 3/1.5, 1200 sq.ft. and last appraised by the county at $70,900. The thing is, it's actually a 4/1.5. It's in a "C"ish area with lots of rentals, most of which are students as it's very close to college campus.  I have a really good idea of what I'll be able to collect for rents and at the price I'll be able to get it for it sounds like a good deal. 

However, having a hard time finding comps for a 4 bed in the same area, especially around the same 1200 sq.ft. size. Prices swing pretty drastically, even for the 3/2's. I know comps aren't always the best way to determine a home's value, however, getting a fairly accurate appraisal may make or break this deal for me. I'm estimating an ARV of $85k (doesn't need much work) and may even be appraised much higher. However, I don't have much data to back this up, other than Trulia/Zillow's estimate of $82K as it stands now. There's a couple 4/1's about a mile away selling for around $120k, but a mile in this area can be a night and day difference.

I have a problem spending $400 for an appraisal just to know if it's "withing the range I expect", as I'm sure I'll be having to have it re-appraised again shortly after purchase upon refinancing to a 30yr fixed note. I'm planning on being able to obtain an 80% LTV loan and if appraisal comes in way under my estimates, my cash flow #'s won't be drastically effected, however, I'll be paying a lot more cash out of pocket.

Any advice on situations like this? 

Thanks Thomas, appreciate the advice and offer. I was under the impression it wasn't rented yet, but I guess there's long term tenants already they're paying $900/mo. I think the ARV is pretty accurate, nearby 4/2's with slightly higher square footage are $100k and up.

Working with a wholesaler and have a solid deal on the table...

I'm looking to pay cash on a 4/2 SFR @ 64k + 4k rehab + 1k for inspection/appraisal/title search (all in at 70k total) using a partners' home equity loan in order to lock in on deal. Once acquired (currently rented at 900/mo w/ long term tenants) and I have appraisal done, I expect ARV to be around 85k. Possibly a little more or less. Area comps are pretty sporadic.

I then want to refi with the goal of as little money out of pocket as possible. 

If I can get a refi @ 80% LTV at the 85k, that's 68k and around 2k out of pocket (+ home equity loan payments + interest) to pay back partner.

85% LTV would be even better. That'd give me a loan of $72,250. That would be no money out of pocket and cover the 2 months or so (seasoning period) of home equity loan payments plus a little reserves. Granted it would slightly affect cash flow but I'd still be well within my criteria.

Anyway....

Any recommendations of lenders who will refi non-owner occupied SFR's at 85% LTV? Or at least 80%? Also, what kind of rate can I expect? 4.5ish? And what kind of points/fees are typical. I'm in TN if that matters. Any advice or referrals to lenders you know who lend at these kind of rates would be super appreciated! Thanks!

Needing some advice on a potential deal that was presented to me by a wholesaler I recently met through my local REIA. My plan is to keep property as a buy and hold.

Here's some basics of the house: 

Located in south Knoxville (for those familiar with Knoxville, just south of the Henley St bridge). While it's in a "C" area, it's located less than a mile from UT and downtown. It's a 1200 sq. ft. 4/2, however, tax records indicate a 3/1.5. Taxes are $894/year Built in 1999 and house is in pretty good shape, doesn't need much work at all, mainly cosmetics. High estimate, maybe $4-5k rehab costs to add more value to property thus allowing for slightly higher rent. I would certainly do the due diligence of having an inspector check out property before committing to anything to get a full scope of any issues needing to be addressed. 

Wholesaler has it under contract and is wanting $64k for it. The ARV is around $82-$88k. Hard to pinpoint solid comps in the area as they swing so wildly, but somewhere in the range of $94k.

So here's my potential plan:

A partner I'm working with owns their home outright and is willing to get a Home Equity Loan for the full purchase + rehab costs, for an all in cash purchase of around $69k. Plan would be to complete the simple renovations, find a quality tenant, then refinance to pay off the HELOC. Comp. rents in the area are $900/mo. However, being in such close proximity to UT, it's possible it to rent it by the room (say $300/room), thus collecting more like $1,200/mo.

My main question is, once the property is rehabbed and rented, what's the best way of getting it refinanced and what kind of loan/rates would I be looking at? What LTV% for investment property will banks typically loan on? County has it appraised at $70,900 (as of 2013). If I were to have it appraised and now comes in at say $85k and now have instant equity, will a bank give financing on say 80% of that 85k? What about 85%? At 80% LTV, this would give me a loan of $68k, enough to pay back the Home Equity Loan and essentially acquiring the property with only $2000 (Plus holding costs of Home Equiity Loan + extra interest to money partner). 85% LTV would be really nice as it would give me more wiggle room with extra unforeseen expenses/costs and perhaps need no money out of pocket.  

Seeing how I have little experience, I've got nothing to compare it to. Does this seem like legit deal or is is wishful thinking? Is an 85% LTV common?

Here's a link I included to my rental analysis and assumes a purchase of $64k, ARV of $85k, LTV of 80% and includes taxes, ins., management, etc.. Tenant will assume all utilities. 

https://www.biggerpockets.com/calculators/shared/408703/7be98a82-09de-4af0-b855-a0f8b86182c4

Any input or advice you may have would be greatly appreciated. Certainly, working with a wholesaler, time is of the essence. Also, is it common to negotiate the price with the wholesaler? While I think it's a fair price, would it hurt to offer a lower price? I don't know what price he's got it under contract for. Thanks!

For those in the Knoxville'ish areas, just wanted to share my experiences about the Knoxville REIA and recommend any current investors or aspiring investors in the East TN areas (Knox/Sevier/Blount/Jefferson/Anderson) who are serious about getting into REI to attend a meeting if you have not already. First timer Non-Members only need to pay a $20 fee. Meetings are held once a month (typically on a Tuesday night @the Holiday Inn on Cedar Bluff) and are truly an incredible opportunity to network with others in your area. Trying to find a wholesaler? Need a Broker? CPA? Investor savvy Realtors? Hard money guy? Maybe just get advice from a seasoned pro who's done lots of deals? You'll get to meet them all. They're starting to roll out a "deal table" where investors will have the opportunity to buy/sell their deals and if nothing else, get some constructive feedback. The content discussed during the meeting is very interesting. One thing I really like is the meeting starts out with current local market data. What's going on in the area? What are the numbers showing, etc. This puts you ahead of the curve in anticipating what's to come at a local level and is another tool in helping you plan your strategy. @Victor Jernigan is the founder/facilitator of the group and is an incredibly intelligent guy and seasoned investor. He's got an old school, Harvard professor like feel about him but uses tried and true methods and is always glad to share his knowledge (in my opinion this alone is worth the membership fee). Both complete newbies and seasoned investors alike can benefit from the content and topics they discuss. 

The guest speakers they have are great too. Topics are interesting and diverse but relevant. Tonight, we had the opportunity to meet and hear from both Jake Stenziano and @Gino Barbaro (truly rockstar RE investors and authors of Wheelbarrow Profits, featured on BP Podcast 182) as well as one of the areas top commercial multi-family brokers, Steve Goldman of Goldman Partners Realty. These guys are absolutely killing it ! They had a wealth of information to share about their stories and were super open to answering questions and giving 1-on-1 advice before/after the meeting. 

Also, after talking to Victor tonight, it sounds like they're in the process of rolling out some new analysis calculators (not that BP hasn't been great in developing several already). He's always looking for feedback on what kind of content people are wanting to learn about to continue providing the best content. 

Another great thing I like is that KnoxREIA isn't always trying to sell you something (from what I hear many REIA's are notorious for this). You pay the membership fee (either per meet or annually) which is a great value for the network and knowledge you gain, not to mention it gets you many other perks.

All in all, while I somewhat consider BP to be the bible of real estate investor education, KnoxREIA is able to provide more on the local level and highly recommend people in the area check it out. They provide you with the local resources and knowledge you need to help you build your REI business and will meet a lot of awesome people! Being a newbie myself, I can say it's a very welcoming gathering and feel right at home with those sharing the same passion for REI that I do.

And for those wondering... no...I was not paid or given any kind of incentive to write this review. This is my truthful 2 cents. Just felt the need to give credit where it's due. Hope to see you at the next meet!

KnoxREIA website

Welcome Dave! I too an a newbie ramping up my education before diving in. There's a KnoxREIA meeting tonight at 5:30 @ the Holiday Inn on Cedar Bluff. There's gonna be some great guest speakers. It's only $20 for first timers. Attend if you can, you're sure to meet a lot of like minded investors who have great advice. Good luck!