All Forum Posts by: Jimmy Suszynski

It would be for more than just a line of credit; I plan to use hard money and long term rental financing once I am past the limit for personal mortgages. Is there any benefit to building a "history" if all of my properties have equity, cashflow and my personal credit is sufficient? I'm not sure what lenders look at when dealing with entities. 

My naivety tells me that if I form an LLC on the 10th and go to a bank for a business loan on the 15th that there would be some resistance.

I found this thread doing a search for Pittsburgh...I'm not sure who Jeff is but I sure as hell hope he followed through.

On the Real Estate Rookie today (Episode 21), Felipe mentioned routing cashflow from his personal properties through his LLC to start building history to qualify for business lending down the road.

I am going through the process of forming an entity now, what would routing this cashflow look like? I have scoured google and BP but can't find an idea. Maybe I'm not using the correct verbiage.

I was imagining owning the property in my name but using the LLC as the property manager that collects the rent?

@Grace Green I want to throw my hat in the ring as well. I had a potential partnership fall through recently and it woke me up to how few people I know outside of my social circle. Not many have any interest in real estate and the one that does has completely different goals than I do.

I’d love to meet more like-minded people and hopefully I can help you guys out in some way!

When you purchase with "cash" it can mean you are using hard money, private money, personal loan, secured loan, actual cash, etc. It just means you're not using a traditional 15 or 30-year mortgage (or other traditional financing used to purchase real estate). 

If the process takes 6 months, you make whatever debt-servicing payments you need to during that period of time. An example I am going through now:

- I am using $35,000 private money that I am going to pay back when I refinance the property in 6-8 months. I will be paying back $38,500 (10%, interest-only, tacked on to the end)

- I am using a secured loan on my own money for the rehab. It is amortized over 5 years so the payments are $370 per month.

- Taxes & insurance will be approximately $120 per month.

Now, when I refinance, I will have a mortgage payment of around $280/month, plus taxes/insurance (insurance is less because the property will be occupied). Overall, my monthly debt payments went down in this scenario.

If you use all of your own cash or private money that doesn't require monthly payments, you'll go from no payment to some payment so your monthly payments will increase significantly.

You can also BRRRR a property that you purchase with a traditional loan if you can get the house for a great price, add value and refinance for 70% LTV you will end up having a larger mortgage than when you started so the payment will increase.

An example of this would be:

- Find a property off-market from a motivated seller. They're asking $100k, you offer $70k and they accept. The value of the property is $110k so you already have equity. It's a large 2 bed, 1 bath so you add value by putting in a 3rd bedroom and 2nd bath and upping the curb appeal. The market appreciates and the ARV is now $150k and you're all-in for $110k. You can refinance for the full amount and pull your money back out. The original payment on the $70k loan was about $350/month, the new mortgage payment on the $110k loan is over $500/month.

As you can see, it always depends on the specific situation. Typically, moving from one mortgage to another will increase your payment whereas refinancing to pay off more expensive money will reduce your monthly payment.

@Whitney Hutten They are C/C- areas sandwiched between B and D neighborhoods--the way that Pittsburgh is setup (anyone from here please chime in) is that the areas being gentrified do so one street at a time. Streets on/near public transportation in the east end, for example, along Braddock Ave. Houses people bought 6-8 years ago for pennies have been rehabbed and have appreciated tremendously. Three-four streets away, those houses have already been turned. I'm looking in the 4+ streets away zone. They've been let go for decades and need full rehabs but have the potential to appreciate. (I'm hopeful) 

@Andrew Postell I copied and pasted your response and put it at the top of my google doc with lender notes in it.

@Shawn Ackerman I started contacting lenders mid to late March. The smaller ones haven't been so interested especially given how new my current mortgage is and the investor-types don't lend that low.

I have made a few major improvements (kitchen and bathroom, galvanized to pex plumbing and wiring) on the unit I'm occupying so maybe paying for an appraisal in the next couple of months will help the LTV?

I've talked to 5 local credit unions, unfortunately, I didn't have a relationship with any of them prior to having the conversations. I've had calls with some of the "investor-friendly" lenders that use private money, but haven't found anyone that will go under $100k. I spoke with two loan officers at the big banks that I met while financing the FHA duplex I'm currently living in. I split my monthly living expenses with my long-term girlfriend and between her and my tenant, I don't have to pay anything towards my mortgage--I do put a lot into that account to build a large reserve since it's an old building.

The reason for the lower cost is my ability to refinance. I'm not sure how long until my tenant's rents count favorably against my DTI ratio. I do need to talk to more lenders, the covid situation is probably affecting their comfort levels to lend as well.

@Andrew Postell I haven't been able to find money to use. That doesn't mean I won't and don't plan to give up, I just don't want to spend the next year looking for enough to buy and rehab a 120k property when I have enough to do a 30-40k property; I would rather not put everything in and it get stuck. (Would take me a couple years to recoup). It's tough for everyone right now and I do think some people I know would be willing to invest but until the pandemic and uncertainty clear up.

My personal finances are solid—it will still take me a couple years to save enough to buy and rehab a place with 100% cash.

I’ve exhausted every person in my life to try and find money to use (I come from a very poor family and haven’t lived in this city for long).

I have enough in cash + 401k loan and a personal loan to buy and fix up low cost, smaller houses in “C” areas. The rent to total value for the properties in question come out to 2-2.5% but the appraisal value for these homes aren’t high enough to refinance out of.

Has anyone made a real estate investors living off of sub-50k houses? My hometown is full of these too. An example property is a recently renovated house with a long-term section 8 tenant in it. The asking price is $26k, the rent is $575.

I found a dilapidated house for $11k that will rent for $850. If I can keep the total cost under $50k the numbers would work, but I haven’t found any companies that will work with low priced properties; most require 100k or higher appraisal values.

@Andrew Postell

If I use a personal loan to buy the property, would I still be able to refinance? If they include the personal loan payments (high interest, short term) my DTI ratio goes to hell. But, the cash-out would be to pay the personal loan and the cash flow from the rent should decrease my DTI.

I’m having a hard time finding a lender to answer these questions, in the Pittsburgh area (if anyone knows of a good lender I’m all ears).