All Forum Posts by: Kal Wol

@Paul Welden, Thank you very much. That kind of information was I was looking for. I appreciate it.

 Sorry I should have said 203(k) - https://www.hud.gov/program_offices/housing/sfh/203k/203k--d... probably that might explain a bit. 

Thanks @Christopher Penaflor

Hello awesome BPs.

I just learned about the rehab loan aka 203k today and I was wondering if it is a good idea or not. Recently I have got a house that is sitting on the market and needs a serious work on it. The price is about 120K below the market value for the very reason.

So, I wanted to know more about the 203K regarding if it is a good thing or what kind of things to lookout when going that route. I will be having a discussion tomorrow with the lender who is referred to by my agent and he is supposed to provide me both loans for the mortgage and for the reno.

This is something I am considering in preference to putting my own larger money. The property that i am thinking to proceed is not for flip, I will be living in it and rent out some of the rooms in the house - house-hack.

Thank you all.

 yup, that makes sense @Jack Seiden Actaully that is what I will be end up having. As I mentioned earlier, breaking even is going to be seen as a "good deal" specially in bigger cities like ours. There are still some pockets with some minimized risk.

But you are right on the point, the money you have on the bank seems to be going down fast and stopping the bleeding through asset is one way. Thanks for the great discussion point brother.

 Thanks @Jack Seiden for the input. What kind of strategies do you think are better in our area based on your experience? 

 Thanks a lot Nicholas.

 Thanks @Russell Brazil for your input. I am picking up on the game here, and everyone's input on my journey is very vital. Since you know the area, yours is more valuable and thank you for the great description you provided me.

I am not planning to flip actually. I want to live in the house and rent out a couple of rooms in the house. I was interested in the process of getting my money back once the renovation is done and that is where I was looking the options.

But from the good responses I got, it looks like i shall find other alternative. Probably the turnkey properties. The issue with those is, making breaking even is tricky as due to the high values of the house and most importantly the interest rate.

I can just sit and wait next year incase if the prices and/or interest rates makes sense - what I am afraid is, if the interest rate is down the competition will be through the roof - that I gather from the "gurus" :)

It looks like unless very deep discount is found on the market, it will be tricky to find a good deal. The great thing is, I have got a lot of information to consider whenever the next opportunity reveals. 

 Thanks @Nicholas L. for the great insight. You right, I have got the ARV and rehab amount, it is just I have been only referring/using the ARV's 70% and didn't deduct the rehab amount.

The very good point you brought to my attention is about finding the lender right now before I purchase? So what would be the discussion like? Is that a known procedure, like you go to the lender and tell them I am about to buy this property and will you be cash-refi me. This is great point Nicholas and if you don't mind, please elaborate a bit on this.

The price for the house was marked high and I think that is the reason it has been sitting on the market. And owner seems to be a kind of person who doesn't budge based on the basic discussion my agent has with the owner's

I am also looking on other area, it is just cities near to the major cities solid for rent as they and I think they appreciate quicker than the other parts. 

 @Vlasta Georgievski you have saved a brother here big time :) I can't thank you enough. I will be out of the asking price. All I have done was calculating 70% of the ARV from the nearby comps and went with that. My realtor has discussed with the seller's agent on that amount.

The cost for the house is estimated around 80K. Kitchen, all flooring, paint, all three bathrooms, windows, appliances and who knows what has to be changed. So the estimate is around 80K - I think it might be a bit high estimate but it is better to be on the safe side.

I haven't deducted the rehab and holding costs. The contractor said it will take about 2month but I will say it will take at least 3months.

The area is a good neighborhood, near to the capital DC, great schools and easy access to the major highways. Not sure if speculation works here - but as far the numbers are concerned, I think I am going to leave it.

Have you ever considered BRRRR method based on the appreciation only? Does that make sense to invest based on future growth at all?

Thanks @Vadim F. for super fast response.

The market is in rockville maryland, Montgomery county. I haven't understood the one "rent will cover on 75LTV refi" part.

The first thing I got lost is on how much to offer for the buyer. For flippers I see ARV*0.7 - rehab cost. Is that going to be the same for the BRRR also. As I mentioned the house does need a whole lot of renovation. I am not planning flipping, I am planning to live and rent out part of the rooms.

Right now I am planning to ask 70% of the ARV of the house. And to get my renovation money, that is where I am kinda lost - like how and how long does it take?