All Forum Posts by: Kurt Kleespies

@Noah Chappell

Thanks for the advice. Kind of what I figured. I was hoping that someone had a miracle fix but that seems like the best scenario which is fine. I have a good relationship with my current bank which is smaller and I do like banking there so I am going to talk with them this week. I will have to make some calls and check around for others that may lend in this scenario.

@Marc Rice

Good info! Thank you

Hello BP! 

I am pretty new to rental investing but I was able to recently get a nice duplex under contract and it closes on the 17th.  I made a cash offer and quick close to get the deal locked up.  What I want is to cash out refi the property quickly so that I can continue to grow my rental property business.  I am looking for input and creative ideas on finding a lender that will hopefully do 80% cash out refi based on appraisal value of the property.

Background info:

* The property is being purchased at $97,500 and will likely appraise around $117k-122k.  Doesn't really need any renovations....units are clean and new carpet, everything functioning, good roof, vinyl siding, etc.  All modern.  Built in 1980.  I would like do a few things like some security cameras outside, a little landscaping, etc because I'm a little picky and want my properties to stand out.  Currently rented through May 31, 2021 to 4 college students.  Each unit is 2 bed/1 bath.  Laundry in the building.  Only 2-3 blocks walking distance to local state college.  Smaller midwest community.  Good neighborhood and safe.  Cashflows about $200 per unit currently but I should easily be able to bring that up to $250-275/unit in the spring.  Previous seller was managing at a distance and wanted out and quickly made sure it was rented so they could sell easier.

My personal info on the deal:

* 804-809 credit score depending on reporting agency

* I own my home outright - Approx $600k value between home and business building that I own personally on the same property

* I own that other business solely and it has a $200+k business loc tied to the home - interest only.  Low usage currently but can range from $0-$150k usage very quickly up and down depending on purchasing.  Liquid tangible assets for sale around $240k+.

* No other loans.  CC's are strictly utilized for instant purchasing power and rewards and are paid off each month.  No other debt.  Conservative frugal mature adult.

* Problem #1:  I am self employed and have been for over 13 years with 2 different businesses (one I sold).  Banks hate self employment.

* Problem #2: Like any good business owner, I take advantage of being a business owner and keep my income low (legally).  Banks also do not like my income on paper when looking at borrowing power based on debt to income even though my debt is low.

* Bottom line, lots of equity in my personal property, very low debt, lots of tangible assets in my business, equity in my business but I still need that loc to make vehicle purchases (larger ticket purchases) to sell.

* Need: I need creative ways to finance rental property deals that I want to buy and hold for 20+ years for retirement.  I see lots of partial options but it comes down to working with the right lender that won't stick it to me on rates and will understand that I want to grown my rental portfolio conservatively but dramatically over the next 5-10 years with them on deals in communities with one or more colleges.

Recommendations on banks/CU, private lenders, where to look, how to structure, etc.  If you have been in the same situation or even have ideas for one part of the situation, I would really appreciate any help that you can provide!  The self employed part is usually the hardest part to get past.  W2 income makes it much easier for most people in the loan underwriting process but I love what I do and I want to be able to grow my RE investments at the same time.

Thank you in advance!


 

Embarrassed to be a Minnesotan nearly daily with situations like this from her ☹️.   Thanks for the info

I would think that potential extra income from in-unit wash/dryer along with ease of renting both units as stated previously would be best.  Being a Minnesotan myself, I would turn down a unit if there were any other options available if I had to walk outside to get to the laundry.  Likewise, I would not be happy if I was in the bottom unit and people were going in/out of my space at all hours.  Pretty big invasion of privacy in my opinion.

I would think that the cost will be well worth it in the long run for rents and/or for a potential sale of the building down the road.  Just think about it as an investment for the long run and the benefit that will come to so many people over the years.

@Eric Anderson and @Aaron Chittum  Hey guys!  Eric - It looks like I caught you about a year after you posted this but I am in Alexandria and just starting my investing.  Really surprised to find others on BP in this small market but maybe I shouldn't be?  Just wondering if you ever established any type of meetup in the area?  It would be great to sit down with you guys and anyone else that you have found in the area and get your perspective, ideas or advice since you have been doing this for a while now.  Let me know your thoughts!  I am interested in purchasing rentals/multi as well as rehab properties.  I own another business in the area as well and I am usually around. Thanks!

@Fabian Marrufo

If you feel your rehab costs are accurate, that is pretty close to a 2% rule.

I would do the following:

1) Review with the agent if it seems to be a done deal i.e cash purchase, etc or are there risks with the buyer getting the money?

2) Think about your risk tolerance considering all that is going on with covid-19 and potential worsening of the real estate market. Would not taking the offer and the rental market souring cause you serious financial hardship if you were not about to rent it immediately?

3) Do you fully trust the accuracy of your bidders/bids? Are there a lot of unknowns with the rehab costs? Would the deal be devasting if the costs ended up 10-15% higher?

If you're comfortable with the long term play, have some long term hold experience and are confident/comfortable in these questions, I would continue with your plan to hold and rent. Do the math over 10 years. A bird in the hand is nice if your trying to build capital to do bigger and/or more projects but I would imagine the long term play will net you a lot more in the end unless you have deals at every corner which is unlikely.