All Forum Posts by: Andrew Martel

Hello everyone, 

I'm looking for a solid general contractor in newport news to do some minor rehabing (~10K) in the Newport News area.  Any recommendations are appreciated.  Thanks!  

So over the past 4 months I have been working on my first 3 low-income rental deals.  Here's how it's going so far. 

Deal 1-

33K 3Bed 1Bath 1300SqFt

I found this property through my realtor.  It had just popped up on the market and compared to the homes around it, it was a beauty.  There are a few problems with it... mainly that it is outdated - The home was built in 1930 and has no AC, windows are cracked and old, the light fixtures were barely there and the floors (hardwood and linoleum) were a mess.

Now it's essential that I mention that this is an out of state purchase. I live in Texas and the home is in Virginia. All my previous homes have been purchased in the state that I was living... So this I know will be a challenge.

Through a bit of shopping I found a contractor and got an estimate. I was looking at around 25K to rehab the home. This is money I did not have. So I went searching for a loan. Come to find out, most HML's don't want to do anything under 60K, so I went to the bank. There is only one loan that I could find that would suit my situation- the Fannie/Fred Homestyle Loan. This is very similar to the 203K loan, but it is for investors and has a lot less restrictions. I managed to find a bank that could get me the loan so long as it came to 46K total money lended. Perfect! I managed to get the seller to agree to 33K sell price, with 25K in rehab that puts me around 58K... I'm golden.

Closing took over 70 days. The underwriter we worked with was atrocious. I have never provided so much paperwork to a bank... ever. Ridiculous stuff too, like a letter from my squadron commander stating that I would be receiving my Basic Allowance for Housing for the next 3 years.... huh? We closed none the less. Now we're on to the rehab portion.

Rehab started last Friday and I must say, for rolling the dice on this contractor, he's impressed me so far. For me a big factor influencing my decision on who does my contract work is how well they communicate. This dude OVERcommunicates, and I love it! I've been informed of every item and he replies within an hour tops.  So far so good, we'll see how it goes as we progress further.

I have a lot more to write about this and the other properties but I'm being pulled away. I will continue later on!

I'm supposed to close on a deal tonight where I am getting a 53K loan on a property.  The broker is saying that because the loan is so small that I will have to be responsible for paying the broker's commission. Total closing is coming to a little over 5K. Does this sound right for this size loan? Am i being raked over the coals on this one? 

So here's the current situation. I'm in the process of picking up 5 properties right now. 4 of them I am using homestyle loans and the 5th i'm paying cash.  Each property has appraised for at least double what I'm paying for them, but I will have 4 different loans.  Now my goal was to get them under one loan 6 months from now.  How do I go about doing this and can I refi for more than what I paid since they appraised so much higher? With the rents I expect to receive, I will be able to still cash flow after a higher refi, and I would love to have a little more cash in my account in order to pick up more properties.  Your advice is greatly appreciated!

I am no attorney and I always recommend you consult one before making a decision but here here is my opinion (I plan on blogging it in detail later). I opened an LLC to get started in real estate and it was a DISASTER. I spent more time trying to find someone who would lend to the company than I should have.

What you can do is go in under your personal name and quit claim the deed over to the LLC. Be careful though, if you do this, there is a potential that you will kick in the "Due on Sale Clause" with your lender.

Chris welcome!! This site is awesome.  Ask some Q's and read. You're starting it right!

Traditional financing will require a decent credit score.  Do you anything currently that is reported to one of the 3 credit agencies here in the states?

@Max L. Horton

I started off with 50K and utilized homestyle loans to finance the remaining. I do low income however and was able to pick up 3 properties right off the bat with that much money (2 financed one cash).

@Justin Fernandez 

Could you dive a bit more into that? My understanding was the SBA's required 50% of the property purchased to be utilize for business purposes only? I could definitely be wrong and would love to see how SBA would work for this!

We pulled out of the situation. Thank you everyone for your advice!  Just had to go with my gut like Crystal said.  On to the next!

Joe, 

Give me a call. We can meet for coffee. I'm looking to do the same.