All Forum Posts by: Justin Bock

@Don Konipol

Most condotels in MB CAN bemanaged by the resort or building but it’s optional.

The average mgmt fee is around 40%.  You can choose private management that averages around 20-25%.  The only drawback is you lose the marketing aspect of people going to the resort website or calling directly and making reservations.  Private property management would place guests through their own means (website, VRBO, TripAdvisor, etc).   I found that private PM probably averages about 10% less in gross rents but makes up for it with 50% lower costs.  We’ve owned 2 properties there and have experience with the PM I mentioned above.  Thanks so much!

So, I'm looking at purchasing an ocean view condotel in Myrtlebeach with a local property manager I trust there (I'm out of state). I've never done a JV or gone in on a deal with anybody before.

It's a smaller purchase (under $100K) and she was looking to kick in $10K where I would put in the rest for a 50/50 equity split.  She was willing to property manage for free until I got back at least 1/2 the purchase price back plus reasonable interest and then manage it for 1/2 price after that.  

I was thinking about doing something like a Kevin O'Leary deal on Shark Tank.  Where I fund the entire purchase and she property manage it until I get 2-3x the purchase price back (probably would take 6-9 years) and then she has full ownership.  

I have no idea on how to do this. I was wary of establishing an LLC together just for this small purchase but if that's the best way to do it that's fine. Anybody have recommendations on how to get something like this accomplished simply and better yet, a better way to structure it that makes sense?

Thanks in advance!

@Chris Mason Thanks Chris! My worry is that our DTI was probably around 36ish when we refinanced with our 2 W-2s last year. Without my W-2 , we'd be well over 50 before even looking at another mortgage however tiny it is. That is, unless they look at my realtor and investment income which only started about 5 months ago. I guess the question is how flexible would banks be given my change of employment in 2018. It sounds like it may vary depending on the lender. I've put a few calls in to a couple lenders so will hear back tomorrow. I was just checking here to see what to expect. Thanks again.

@Ned Carey   I can.  I just assumed that for self employed income I would need at least 2 years of tax returns or verification for a conventional lender. 

Hello, I'm looking to obtain financing for various rental properties. Earlier this year, I quit my W-2 job and now work full-time as a real estate agent and investor. My wife still has her W-2 job. My income this year will actually be more than last year but I'm worried that I won't qualify for conventional loans (my preference) based on DTI if we use only her W-2 since that's the only documentable monthly income. Our credit is very good and we have ample cash.

I'm looking at some low cost rental properties (under $90K each) as well as multi-unit properties up to $400K.  I know that I can go through companies like Lending One and Corevest but sometimes their products don't exactly fit (I don't meet the minimum loan amount in some cases) and I'd like to explore other options.

I have tried finding a small bank in the area (I'm in the Raleigh/Durham area) that does portfolio loans but haven't had much luck.  Can anybody advise on how I can obtain conventional or "better" financing than direct lenders like Corevest or LendingOne?   Any and all options would be appreciated!

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $195,000
Cash invested: $235,000
Sale price: $472,500

First flip - downtown Durham - thought it would be a 4 month rehab. Ended up going a year. Great first learning experience though so much so that I bought the house next door with the exact same footprint.

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

Love the downtown Durham area......had 10 1/2 foot ceilings - built in 1920 - loved the history and the fact that it was conducive to the perfect floorplan.

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

MLS - negotiated with investor to include the kitchen cabinets (ended up donating them) they had bought along with appliances

How did you finance this deal?

Hard Money for purchase and 1/2 rehab

How did you add value to the deal?

Analytics - even though we went WAY over budget and help on to the property 3 times as long as planned, we were able to still make money due to precise budgeting.

What was the outcome?

Sold! Made decent money. Got to really know my neighbors and fell in love with them. I feel like we contributed to an amazing street with a mix of new and original residents! On to the house next door!

Lessons learned? Challenges?

Need to plan better. Need to find contractors you trust. Use an architect for bigger jobs!

Originally posted by @Jonathan Carter:

Hey Bock, I recently purchased my first 3 deals using a personal LOC. I'm sure there are plenty of lenders who will refi if purchased through an LLC, but the lender I used said I would not have been able to refi if I purchased through an LLC.

I talked to dozens of lenders before I found newpennfinancial. Many lenders would not let me refi under the delayed financing exemption. They all wanted to base the LTV off the purchase price and not an appraised value like the FannieMae guidelines state you can do, or have me wait 6 months. But with newpenn I'll be getting almost all the LOC cash back so I can keep BRRRRing.

If the numbers work to wait 6 months that will open you up to a lot more lender, some of which should be able to refi a purchase through an LLC, maybe you might need to personally guarantee the loan.

Also keep in mind if you refi before 6-12 months you most likely wont be able to use the rental income to help with DTI.

didn't really answer your question, but I wanted to share some of my experiences. There are many good lenders here on BP, that will give you a better answer.

Thanks for taking the time Jonathan! I assume New Penn refinances if the property is under my LLC? What types of rates do they offer compared to more conventional 6 month seasoned refinances?

Do you have an LLC or do you keep everything under your personal name? You had said, you purchased your first 3 deals using a personal LOC but I was curious as to how you approach things now if you have an LLC. Thanks again!

So, I have a question about financing rentals and flips.  Here is my current situation (I’m in the Raleigh, NC area):

Wife and I have high 700 credit scores and W-2 income

We have an LLC which we have not used to purchase property (just switched the purpose to REI). All the below business lines and credit are entirely unused.

$50,000 business line 8%

$25,000 business credit card 10%

$48,000 business credit card line (0% until 9/18 3% transfer fee)

$27,000 business credit card line (0% until 9/18 3% transfer fee)

Personal credit line $25,000 (9.25%)

Personal home equity line $104,000 (3.4%) using this for current flip rehab

We just bought our first flip project under my name and plan on more. However, I'd like to start investing in rentals using the BRRR strategy but I'm wondering how to finance it?

Do I purchase through the LLC? If so, will I have trouble refinancing afterwards?

Or do I buy the properties under my wife and or my name but then forego access to the business lines?  Could I use my business lines to fund properties under our personal names?  

I imagine this is pretty common for those of you with LLCs so I'd love to hear some advice about the best way to line up financing. I want to start investing in multiple properties and setup a financing structure we can repeat consistently that won't handcuff us in the future (DTI, cash on hand, etc.). Thanks in advance for any help you can provide!

Thanks for everybody for the replies!  It was very helpful.  I did receive a couple pre-approvals and am leaning towards Lending Home right now.  We just got an agreed upon contract and are moving forward.  Hopefully, this will be the first of many to successful transactions to come!

Hello, I’m in the process of negotiating on a property. The sales price would be $200,000, the property rehab would be approximately $80,000-$100,000 and the ARV would be anywhere from $400K-$450K. I’ve secured preapproval for a conventional homesense loan but the closing time on that is 45-60 days. The seller needs to have a fast close so I’m exploring HML or other options. I’m a first time rehabber so I’ve noticed that most HML lenders have really awful terms for first timers. I’m in North Carolina and was hoping somebody could direct me to reputable lenders that will work with me. Our credit scores are over 800 and my wife and I make about $134K a year. Can anybody help?