All Forum Posts by: Kyle Beauchamp

Thank you all for the replies.

@Russell Brazil,

I was certainly under the impression that not having a realtor would help negotiate a lower price. I figure if I offer 100k with a 3% commission and another investor offers 98K without a commission, the bank will look at the bottom line and take the 98k provided all other variables are equal.

@Joel Owens,

I requested rent comps so that I can make sure I will be able to pull 1% of ARV in rents. I requested the CMA to get an idea of what the ARV will be for the refinance. I don't have all cash to close on it since I have a current project going on with about 50k cash tied up. Once that property is done and rented, I will be able to pull out about 60k cash on refinance after loans are paid. I need a loan up front to acquire the property. I will pay back the loan with the refinance after it is repaired and rented.

@Ryan Tyree,

That flat fee for time seems like a logical solution. I will bring that up to the realtor to see if we can work out something like that. Thank you.

@James Wise,

I hadn't really thought of that. Now that I think of it, my property manager in Texas and in Oklahoma also buy/sell. At this point, I am going to involve the realtor with the entire transaction for the full commission. If I miss out on the deal, there are more to be had. In the future, I will see if we can't work out a flat fee like Ryan suggested.

Again, thank you all for the responses, I am still very new to this.

Respectfully,

Kyle Beauchamp

Hey all,

Sorry I'm a bit long winded, I like to try and include all applicable information up front so I don't need to explain much more.

I am Active Duty Army. Me and my family moved to Kansas in August. We had three rental properties (2 in OK, 1 in TX) when we moved here. We use the BRRRR strategy for investing.

We bought our first property in this area last month. It was a HUD property, so we had to use a HUD registered realtor. That same realtor will also be managing the property when renovations are complete (just paint and refinishing hardwood floors left).

We found an REO property that we would like to get next. I reached out to the listing agent and went by the property and checked it out. The listing agent said that they were only considering cash offers.

After that, I contacted the Realtor/Property Manager to request a comparative market analysis and a rent range we can expect so I can run numbers (I'm not fully familiar with this area). I also mentioned that the listing agent said cash only and inquired if that meant that we literally have to have cash or of they would entertain financed offers without a "finance contingency" meaning we would forfeit earnest money if financing fell through. The Realtor provided the requested information the next day.

The dilemna we now have is that I think the Realtor/property manager is expecting a commission built into the contract, but there isn't really room for it. 

Also, I feel like since we found the property and contacted the listing agent to view it and we are preparing the contract that we shouldn't include commission. 

On the other hand, I don't want to mess up the relationship with the property manager. It just seems like a conflict of interest for this individual to serve in both roles.

Does anyone have advice going forward?

V/r

Kyle

I may have missed it, but what type of rents is he getting on those 30-40k houses?

If I buy a 30k house, it is likely seeing some low level tenants.

My understanding is that the operating agreement for a SMLLC is what actually provides the liability protection and needs to be followed so that the LLC is actually operated like a company and treated as separate from the individual. Please let me know if I am thinking too hard on this.

I recently registered a single member LLC in Kansas. I got an EIN from the IRS. I opened a business checking account. I have the first property under contract.

The title company is asking for an operating agreement. I downloaded an example from the bigger pockets fireplace and changed it around a bit to fit my needs. Before I get it notarized, I would like to have someone look it over to make sure it looks good and makes sense. I am trying to avoid paying $500 or more to go to an attorney.

Please let me know of anyone has experience with this or can recommend someone that can review it for me.

@Tom Gimer

This is great. Is there any chance of you providing an example of exhibits B through E as well?

It's funny that you say that. I was talking to a friend just yesterday that self manages. One of his properties is rented to an older couple, they are beyond 70 though. My friend receives all types of calls at late hours for things like changing out light bulbs that the couple is just physically unable to do. My friends wife suggested to have the tenants wife do it, to which my friend replied, "sure, have the 75 year old woman standing on a chair to change it." He has to do everything like that. Air filters, forget about it. He charges them an extra $10 per month to stop by once a month and change the filters.

It is just a different type of tenant I think. That being said, everyone has their niche and that may be worth looking into. 

@Shawn Q. (I figured out how to tag people)

The bank wouldn't let me speak with anyone from underwriting. I did speak with the manager of the loan processor. He agreed that the loan should not be cancelled since I meet the seasoning requirement. It has been escalated to "tier 2 underwriting" for a final determination and they said they will let me know within 24-48 hours. 

There seems to be so much red-tape with this stuff. It's crazy the bank is this hesitant when there is a 25% equity stake, the property already cash flows, I have great credit with a good DTI, and above average W2 income with two other performing properties.

Thank you all for the input. In the future, I think I will stay away from big banks, unless this is the case with smaller banks as well. I only wanted to use this bank since I have one of my other mortgages with them and I thought it would be easier to track everything with one login.

v/r

Kyle

Mike,

Someone told me about delayed financing. I tried to use that to get into a fourth property faster to keep the ball rolling and start acquiring properties faster. I didn't realize that banks wouldn't loan on appraised value without seasoning, so it wasn't going to work out.

I am no longer doing delayed financing, I waited the seasoning period and am doing a conventional loan.

There isn't an official promissory note on the private loan. Just an amortization schedule and a written agreement that essential just covers the fact that if I pay it off early, I still have to pay the full interest of the 24 month loan. The rest of the money, I had saved up.

I could likely get more money from the private lender for another deal, but I don't want to ask for it and lose credibility with the lender. I had talked to him the day before the bank called and said that the refinance would be done in a couple weeks. 

Maybe the bank is considering the property as unseasoned because I started the loan process about a week before hitting 6 months seasoning. I was told by the processor that the seasoning just had to be met by closing. Maybe if I talk to the bank, I can see if they can look at it again. I wish I could talk directly to these mysterious underwriters that the loan processor keeps blaming for hold ups in the process.

V/r

Kyle 

Kyle M,

I would like to add that the property I am trying to refinance is in Oklahoma, I moved to Kansas after I bought it. 

I spoke with some local lenders in Oklahoma, but it is a little late to refinance with them because I need to close within two weeks to fund this deal in Kansas. 

I started this refinance in November, almost two months in and they are just now saying they can't source the funds.

V/r

Kyle Beauchamp