All Forum Posts by: Kyle Shepherd

Hey folks,

The title says it all. What's the proper order in which to do the things necessary to rehab a house? I'm in a super rural area, and through pains with general contractors have realized I will more than likely need to learn to handle rehabs myself.

The one house I'm looking at is a 1440-sqft 2br, 1ba. It needs new fascia and gutters; needs plumbing brought up to code, needs bathroom reworked slightly with new vanities, and a new water heater; needs wiring brought up to code as part of it is on fuse box; needs new flooring; needs a complete HVAC system installed; needs a complete new interior paint job; AND has a little bit of mold in one of the front bedrooms (not black mold) due to poor drainage. Crawlspace, no attic to speak of.

What order would I need to tackle these things in if I were to handle the subcontracting myself?

I know there are numerous ways folks handle the cashflow from rental properties - keeping cash in the bank and piling it up for another down payment on another property, etc., etc. But, when you purchase an investment property with the goal of ultimately using the cashflow to supplement your own income, at which point do you stop saving up cash reserves in the bank (vacancy, disaster, capex, repairs, etc.) and start diverting the cashflow to yourself? Something I'm trying to plan accordingly, as I'm working to secure rental properties to diversify my own family's income streams. I want to build the cash reserves appropriately, and I know I need to have at least 3-4 months for vacancies, but also would like to know if I'm looking at 1-2 years before I can start seeing the $200/unit (or however much) start going to my own income, or.....?

@Kerry Baird and @Tim Milazzo - then why did the loan officer tell me that rental houses are commercial? We weren't talking about mixing retail/office and apartments - context was simply rental houses. Is it a state-by-state thing?

Hey folks - was on the phone earlier with a loan officer at my local bank. Getting my feet wet. Asked about 30-year loans on commercial properties (since rentals are classified as commercial properties, I learned). He said there really is no such thing as a 30-year loan on a commercial property. 15 years, but not 30.

So, I'm puzzled - I've heard tons of folks on the BP podcast say they have however many rentals, and they are 30-year loans, and their tenants are paying the monthly loan payment, and so on. I've heard similar things in the BRRRR discussions - they got a hard money loan, rehabbed a property, then refinanced their rental into a 30-year loan.

Am I confusing terms? Or am I missing something? Is refinancing a rental (commercial) property (say one that you purchased and rehabbed with hard money) into a 30-year term totally different from trying to purchase a rental (commercial) property with a 30-year loan?

OK, thanks for your answers on this. Your input, plus talking with loan officer today and another fellow BP member about it, have helped me realize I didn't quite understand the process correctly. Always learning.

Rookie question here.

Is there a way to do a seller-financed arrangement for the purchase part of a property, but do a private/hard money loan for the rehab costs on that same property, and then refinance ONLY the rehab costs into a conventional loan at the end of 12 months WHILE still paying the sellers for the actual house purchase price?

@Clint Shelley then you know what I'm talking about when it comes to small-town Alabama. That's my goal: normal houses, purchase between $30k and $80k, SFRs, older homes (out of necessity) which need fixing up like paint/flooring/hvac/etc., then rent out for $600-850/mo.

Does this include doing a BRRRR, such that by the time refinance comes around I have a credit report? (I am not sure why the lender told me I don't have a credit report. I am watching my credit report/score move around from week to week. Noob issues lol.)

@Evan Polaski - I was told by this one lender in Birmingham that I did not qualify for ANY of their programs, at all - and the house in question was going to be my primary residence. It would have required a 203k though.

This house I'm referring to in my original post above wouldn't be my primary residence (but there's another that COULD be, depending on the numbers working, since wife and I are trying to buy our primary residence also). I do not have a relationship with a local bank, but my wife has an EXTREMELY good relationship with the VP of our local branch, and I'll be switching a couple of my business accounts over to that bank very soon.

Neal, I've read Rich Dad Poor Dad. That was the book that sent me off in this direction. I'm working through Brandon's book on rentals and then his book on buying properties for no/low money down. Want to get to BRRRR book soon. I also know my own tendency to read and read and read and never actually take action, so I want to avoid that too.

I'm open to upping cash flow requirement to $200/unit, but can that be done with older houses in small-town Alabama in the country? The area I will be working in is not affluent. I'm not operating in Tuscaloosa or Birmingham. Many houses are between 40-80 years old and will be fixer-uppers. (I'm not going to purchase any properties unless the numbers work.) Rent rates are routinely between $550-850/mo however. It may be doable.