All Forum Posts by: Jimmy Suszynski

Gabriel, I am in the middle of a BRRRR right now. ARV is ~$90,000, I need $64,000 to get every penny back.

I called dozens of lenders, local portfolio up to national. I found a couple of local lenders that will give me a home equity loan on a rental property without any seasoning (they do require an appraisal). I found a couple that will do 70% ARV, 80% ARV residential cash-out refinances after waiting for 6 months (the property is in my personal name). I found a couple that will do a lower LTV cash-out at a bit higher rate through their commercial lending departments.

The best rate/term I found was through OwnUp (google them). They matched me with a lender offering an 80% LTV cash-out refi at 4% amortized for 30 years.

It took a few weeks of calling around to find the different options. Many won't touch stuff below $100k, but for every 5 that don't, there is one out there that does.

Hey Julie!

I just went through finding a lender to do a cash-out refi on an investment property in my name via OwnUp. It's an online mortgage broker company that builds a profile and gets the information from various lenders based on your needs and comes back with rates and terms. I haven't closed on it yet, but I recommend them. I dealt with a girl named Katie and she was very helpful and answered all of the million questions I had throughout the process. This was for a non-owner-occupied property and I was able to find a lender out there--you should have no problem finding a cash-out for your primary residence. The seasoning period is 6 months for Fannie/Freddie. Any sooner and you can't take cash-out and they're required to use the previous appraisal.

I have no affiliation or anything with OwnUp, I just found their customer service to be excellent and their user interface painless.

 His policy clearly states that he intends the 1031 exchange to go away only for those investors whose annual income exceeds $400,000. That is an annual PROFIT exceeding $400,000. How many BP members fall into that camp? How many people, in general, fall into that camp?

@Clayton Hepler

I have two properties in New Castle and am interested in getting between 8 & 10 over the next 2 years.

I do not have a PM lined up yet (self managing these two) but will need one soon!

Also interested in buying.

@Jake Arnold PM’d !

@Todd Pultz Series LLC's are not legal in Pennsylvania but I guess the nested LLC idea that @David M. mentioned is more on target. It is a hypothetical scenario at this point, I just didn't know how to tap into the $20k of equity here and $30k there without selling them all or having them under a single entity to borrow through. The scenario you mentioned is what I was trying to achieve but not sure that it is possible in this state.

Ultimately, I'd like to keep my branding consistent down the road. Maybe a management LLC makes the most sense but I'll have to iron out those details with a knowledgeable CPA. I appreciate the responses!!

@Jessica Schenk

This is exactly what I did over the past year. I bought an outdated duplex in an appreciating neighborhood with 3.5% down. I grew up in construction so the repair work has been all done myself and am self managing since I’m house hacking.

When you put 3.5% down, you'll be stuck with PMI for the life of the loan unless you refinance out of it. So, you can either for appreciation through rehab or wait for the market to appreciate and refinance. Or, you can put 10% down now and once the LTV dips below 80%, the PMI will drop off. Depending on the market and what value you can add, this might happen while you guys are still living there.

Reducing or eliminating your rent/mortgage is great but you should still make sure the property’s bank account is increasing every month to account for future repairs, vacancies, cap ex just as you would if you weren’t living there. Those reserves become your new rent. Still less than you’d pay renting I’d assume.

House hacking the duplex has given me a lot of experience I could not have gotten if I chose to save for another year and buy a property purely as an investment. I highly recommend it and wouldn’t change a thing.

@Adam D Rinehart As far as the business Line of Credit is concerned, if I were to hold each property under its own LLC, would I be able to use the equity in those properties for a single line of credit? I planned to have a parent LLC be the sole member of each property-specific LLC (except for those I am working with a partner on).

@Adam D Rinehart

This would only allow you to use commercial lending for the refinances, correct? I have looked into the long term rental loans available only to entities and the rates are much higher amortized over shorter periods.

I haven’t been doing this long at all, but so far these numbers make properties that work using personal, conforming residential financing not work from a cash flow perspective. I know this means I just need to look and work harder to find deals that work.

Investment Info:

Single-family residence buy & hold investment in New Castle.

Purchase price: $39,766

Foreclosure listed by Reverse Mortgage. Purchased for $36k, total purchase including closing = $39,766.

Incurred additional costs during rehab when I discovered that the bathroom walls/floor were rotted due to leaking shower walls. Added time and money to the overall scope.

Tenants pay $905/month + all utilities - I pay for trash at $16/month.

Anticipated cash flow is $180/month including property management though I plan to manage until I reach 5 units.
Goal CoCROI = infinite.

What made you interested in investing in this type of deal?

I wanted to try the coveted BRRRR strategy on a property bought purely as an investment. This property is lower cost and only a 1,100 SF, single-story home so maintenance shouldn't be too big of a problem. The neighborhood is very predictable - the ARV and rents are stable and the demographic is older.
I wanted something I could put my hands to work on and learn from experience. I've done flips before but nothing for myself.

How did you find this deal and how did you negotiate it?

I saw it listed on the MLS in the middle of the quarantine period. The price was high but I analyzed the numbers anyway. I determined what I could pay to make the deal work and forgot about it. I got an alert that the price had been cut and immediately reached out to the listing agent. My uncle went and walked through and estimated rehab costs (he's a contractor). I made an offer the next day.

How did you finance this deal?

Personal loan for the purchase price - the high-interest rate was built into the analysis.
0% credit card offer for the materials - the offer is good for 14 months, if SHTF and I can't refinance, I can always take advantage of a balance transfer to another card to restart the clock for a few hundred bucks.
Contractor in the family for labor & materials that he provided - I offered him 10% interest for anything he provides. The bill is due when I refinance the property in February.

How did you add value to the deal?

I added a 1/2 bath and installed tough flooring throughout to allow for small dogs and cats. When I listed it for rent, I had far more inquiries than I expected. I took a step back and relisted it at a higher price point. I still had a lot of messages but less applicants qualified due to income requirements. I interviewed a handful and picked an older couple who felt like the best fit.

What was the outcome?

I am still waiting for the seasoning period to end to do the appraisal/refinance. If it appraises where I'd like, I will be able to pull out everything I put in. If it comes in a bit low, I will still come out with a high CoC ROI.

Lessons learned? Challenges?

Plan for the unexpected to happen and keep the timeline modest. If the bathroom didn't end up being rotted, I would have gotten the tenants in on time. Since I needed to redo the whole thing, I had to push their move-in date by 2 weeks and lost the first month's rent. Could have been much worse.

Don't rely on family businesses to do work. If my uncle did what we agreed on, bathroom would have been discovered the weekend after closing, not a month later when I found it.