All Forum Posts by: Kyle M.

@Nicholas Bohorquez If you plan to occupy the property for at least 12 months, you can finance renovations with a 203k or Fannie Mae Homestyle renovation loan. This could work particularly well with a multi family if you live in one of the units for a period of time. These options are approximately 3% down. 

@Paul M. DeAngelis what is the average net profit margin of your laundromats?

@Paul M. DeAngelis what is the average net profit margin of your laundromats?

@Miles Gastil the only thing I could think of is if the seller looks at your offer and sees you are financing with FHA they may know their property wouldn't pass inspection and see that as a red flag.

If the property is being sold "as is" and needs work you can get a 203k loan or Fannie Mae HomeStyle renovation loan. Both are limited down payment renovation loans you can use to buy properties that need rehab work. The lender will fund the purchase of the property in addition to renovations for a limited down payment. 

@John Macharia the 1 and 2% tests are quick and dirty tests to analyze the potential profitability/cash flow of real estate investments. You calculate by putting the incoming revenue the property generates in the numerator and the property's purchase price in the denominator. 

2% or more - High likelihood of a good deal

1-2% - Could be a good deal 

Less than 1% - High likelihood it is a bad deal and will not produce positive cash flow. 

You need to ensure you are utilizing correct market rents in the calculation as some others have mentioned on this thread. 

@Miles Gastil to my knowledge, a property does not have to be listed on the MLS to use an FHA loan for purchase. The property does need to pass an FHA inspection which is more stringent than a conventional loan inspection (look into FHA inspections specifics). I would look to connect with wholesalers who work in your market and/or start "Driving for Dollars" in your area and sending out direct mail to properties of interest. Those are the main ways you will be able to find off market deals to finance with an FHA.

@Joshua Pagan No. This deal doesn’t even pass the 1% test. I don't see how this would cash flow. 

2,200/275,000 = 0.8%

@Michael Temple you could start spending chunks of time at your local Home Depot and Lowe’s. It is free to walk around the store and look at the prices of all the flooring materials, bath fixtures, kitchen fixtures, windows, appliances etc. It is also free to talk with the folks in there as well. At my local Home Depot there is a guy who also does independent contract work and he is a very good cost estimator for the labor end of things.

This has helped me tremendously and as I have been walking through houses lately with a friend of mine who has a lot of rehab/flip experience I have been able to come within a close range of his estimates.

@Benjamin Hurwitz can you get 100% financing on these asset based loans or 2nd lien position loans that you mentioned? Also is this scenario you mention for commercial 5+ units or residential 1-4 units?

@Jaysen Medhurst Would the scenario be easier to accomplish with commercial properties 5+ units or residential properties 1-4 units? I am interested in this for a multi family property and am not interested in owner occupying it. 

What is the best way to find the type of lenders that "don't care" as you mention?