All Forum Posts by: Lumi Ispas

@Angela Yan, You are correct. I love renovation loan for the owner-occupant buyers and for investors the best buy and hold property if they can find a deal is to buy, fix it up themself and add in the property what's required in the area to be able to give more amenities to the tenants: washer/dryer, extra baths, central air, open concept kitchens with islands, etc which automatically raises rent values and ultimately property values.

@Shaun Robinson, Absolutely you can keep the properties you have. I took into consideration that you did not want to self-manage these particular properties and thought you'll need cash to buy other properties. If you can't get your cash out through refinancing from the existing properties and don't have extra cash for new ones, then you'll have to wait until you save for another downpayment or to buy another less expensive home.

If you do have the cash, or find a way to refinance the above properties then you clearly can keep them and either self-manage or hire a property manager.

@Shaun Robinson, You can build a portfolio and hire a property management company if you don't want to self-manage properties. Depending on how many you have, in time you can just hire someone on salary. For now, as the two properties are too small to refi, I will sell them and buy larger properties with financing using the same methodology as you did on your first two. It's called BRRRR - Buy, Rehab, Rent, Refinance, Repeat.

The plan will be as following:

1. Buy a property that needs work and you can increase the value by 25% more than purchase + rehab cost combined. 

2. Rent the property out for a top dollar.

3.Go back to the bank and refinance in such a way that you leave only the 25% newly built equity in and get out your original downpayment and remodeling money.

4. Hire a property management to manage it. You can hire the company at step 2 and have them rent the property for you too if you prefer not to be engaged in renting it out. Keep in mind you'll have to just pay the rental fees in that case.

5. Repeat the process. Go and buy another property with the same requirements as step 1 above.

Hope that makes sense.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $500,000
Cash invested: $17,500

Property was bought with a 203K FHA renovation loan for $435,000 + $65,000 renovation loan for a total of $500,000.
The renovation consisted of redoing the exterior, some structural work, installing a few new windows, some electrical work and small FHA requirements repairs.
The property was fully rented with an income of $5,000 a month.
As the property was purchased with an FHA, I gave notice to one tenant and occupied the smaller unit, effectively living for free for a year.

What made you interested in investing in this type of deal?

The unbelievable cash flow. I got over 100% return on my cash within one year
The possibility of using the FHA 203K renovation loan with only 3.5% down
The property has 7 parking spots
The property is located 5 blocks from the train station.
The property was fully rented at market rents with long-term tenants.

How did you find this deal and how did you negotiate it?

Found in the MLS, offered over asking price, AS-IS purchase contract to entice the seller to accept my offer & not do any further showings.

How did you finance this deal?

FHA 203K renovation loan

How did you add value to the deal?

Through the renovation loan, I've completed the envelope: the exterior, some new windows, roof repairs, and some interior repairs.

What was the outcome?

I used $17,500 as downpayment and within one year I got $18,000 back

Lessons learned? Challenges?

1. When using a 203K consultant you don't need to pay for a home inspector too. I wasted $1,000 on a double job.
2. Have any agreements with the tenants in writing. A tenant asked if I can give him a rent reduction & I said "yes" if he can be the janitor.I signed a new lease with a $150 price reduction without mentioning that he'll be the janitor. When I called him he acted as the conversation didn't happen & pointed out that's not in the lease. $1800 lost in one year.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Absolutely.
I was my own Real Estate broker, and I am an expert in finding these type of deals and I have a spectacular team of people put together for my clients, which I am happy to refer out!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $500,000
Cash invested: $17,500

Property was bought with a 203K FHA renovation loan for $435,000 + $65,000 renovation loan for a total of $500,000.
The renovation consisted of redoing the exterior, some structural work, installing a few new windows, some electrical work and small FHA requirements repairs.
The property was fully rented with an income of $5,000 a month.
As the property was purchased with an FHA, I gave notice to one tenant and occupied the smaller unit, effectively living for free for a year.

What made you interested in investing in this type of deal?

The unbelievable cash flow. I got over 100% return on my cash within one year
The possibility of using the FHA 203K renovation loan with only 3.5% down
The property has 7 parking spots
The property is located 5 blocks from the train station.
The property was fully rented at market rents with long-term tenants.

How did you find this deal and how did you negotiate it?

Found in the MLS, offered over asking price, AS-IS purchase contract to entice the seller to accept my offer & not do any further showings.

How did you finance this deal?

FHA 203K renovation loan

How did you add value to the deal?

Through the renovation loan, I've completed the envelope: the exterior, some new windows, roof repairs, and some interior repairs.

What was the outcome?

I used $17,500 as downpayment and within one year I got $18,000 back

Lessons learned? Challenges?

1. When using a 203K consultant you don't need to pay for a home inspector too. I wasted $1,000 on a double job.
2. Have any agreements with the tenants in writing. A tenant asked if I can give him a rent reduction & I said "yes" if he can be the janitor.I signed a new lease with a $150 price reduction without mentioning that he'll be the janitor. When I called him he acted as the conversation didn't happen & pointed out that's not in the lease. $1800 lost in one year & I didn't renew his lease

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Absolutely.
I was my own Real Estate broker, and I am an expert in finding these type of deals and I have a spectacular team of people put together for my clients, which I am happy to refer out!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $500,000
Cash invested: $17,500

Property was bought with a 203K FHA renovation loan for $435,000 + $65,000 renovation loan for a total of $500,000.
The renovation consisted of redoing the exterior, some structural work, installing a few new windows, some electrical work and small FHA requirements repairs.
The property was fully rented with an income of $5,000 a month.
As the property was purchased with an FHA, I gave notice to one tenant and occupied the smaller unit, effectively living for free for a year.

What made you interested in investing in this type of deal?

The unbelievable cash flow. I got over 100% return on my cash within one year
The possibility of using the FHA 203K renovation loan with only 3.5% down
The property has 7 parking spots
The property is located 5 blocks from the train station.
The property was fully rented at market rents with long-term tenants.

How did you find this deal and how did you negotiate it?

Found in the MLS, offered over asking price, AS-IS purchase contract to entice the seller to accept my offer & not do any further showings.

How did you finance this deal?

FHA 203K renovation loan

How did you add value to the deal?

Through the renovation loan, I've completed the envelope: the exterior, some new windows, roof repairs, and some interior repairs.

What was the outcome?

I used $17,500 as downpayment and within one year I got $18,000 back

Lessons learned? Challenges?

1. When using a 203K consultant you don't need to pay for a home inspector too. I wasted $1,000 on a double job.
2. Put in writing any agreements with the tenants. A tenant asked if I can give him a rent reduction & I said "yes" if he can be the janitor. I signed a new lease with a $150 price reduction without mentioning that he'll be the janitor. When I called him he acted as the conversation didn't happen & pointed out that's not in the lease. $1800 lost in one year & I didn't renew his lease

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Absolutely.
I was my own Real Estate broker, and I am an expert in finding these type of deals and I have a spectacular team of people put together for my clients, which I am happy to refer out!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $500,000
Cash invested: $17,500

Property was bought with a 203K FHA renovation loan for $435,000 + $65,000 renovation loan for a total of $500,000.
The renovation consisted of redoing the exterior, some structural work, installing a few new windows, some electrical work and small FHA requirements repairs.
The property was fully rented with an income of $5,000 a month.
As the property was purchased with an FHA, I gave notice to one tenant and occupied the smaller unit, effectively living for free for a year, the required period by the bank to live in the property.

What made you interested in investing in this type of deal?

The unbelievable cash flow. I got over 100% return on my cash within one year
The possibility of using the FHA 203K renovation loan with only 3.5% down
The property has 7 parking spots
The property is located 5 blocks from the train station.
The property was fully rented at market rents with long-term tenants.

How did you find this deal and how did you negotiate it?

Found in the MLS, offered over asking price, AS-IS purchase contract to entice the seller to accept my offer & not do any further showings.

How did you finance this deal?

FHA 203K renovation loan

How did you add value to the deal?

Through the renovation loan, I've completed the envelope: the exterior, some new windows, roof repairs, and some interior repairs.

What was the outcome?

I used $17,500 as downpayment and within one year I got $18,000 back

Lessons learned? Challenges?

1. When using a 203K consultant you don't need to pay for a home inspector too. I wasted $1,000 on a double job.
2. Put in writing any agreements with the tenants. A tenant asked if I can give him a rent reduction & I said "yes" if he can be the janitor. I signed a new lease with a $150 price reduction without mentioning that he'll be the janitor. When I called him he acted as the conversation didn't happen & pointed out that's not in the lease. $1800 lost in one year & I didn't renew his lease

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Absolutely.
I was my own Real Estate broker, and I am an expert in finding these type of deals and I have a spectacular team of people put together for my clients, which I am happy to refer out!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $500,000
Cash invested: $17,500

Property was bought with a 203K FHA renovation loan for $435,000 + $65,000 renovation loan for a total of $500,000.
The renovation consisted of redoing the exterior, some structural work, installing a few new windows, some electrical work and small FHA requirements repairs.
The property was fully rented with an income of $5,000 a month.
As the property was purchased with an FHA, I gave notice to one tenant and occupied the smaller unit, effectively living for free for a year, the required period by the bank to live in the property.

What made you interested in investing in this type of deal?

The unbelievable cash flow. I got over 100% return on my cash within one year
The possibility of using the FHA 203K renovation loan with only 3.5% down
The property has 7 parking spots
The property is located 5 blocks from the train station.
The property was fully rented at market rents with long-term tenants.

How did you find this deal and how did you negotiate it?

Found in the MLS, offered over asking price, AS-IS purchase contract to entice the seller to accept my offer & not do any further showings.

How did you finance this deal?

FHA 203K renovation loan

How did you add value to the deal?

Through the renovation loan, I've completed the envelope: the exterior, some new windows, roof repairs, and some interior repairs.

What was the outcome?

I used $17,500 as downpayment and within one year I got $18,000 back

Lessons learned? Challenges?

1. When using a 203K consultant you don't need to pay for a home inspector too. I wasted $1,000 on a double job.
2. Put in writing any agreements with the tenants. A tenant asked if I can give him a rent reduction & I said "yes" if he can be the janitor. I signed a new lease with a $150 price reduction without mentioning that he'll be the janitor. When I called him he acted as the conversation didn't happen & pointed out that's not in the lease. $1800 lost in one year & I didn't renew his lease

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Absolutely.
I was my own Real Estate broker, and I am an expert in finding these type of deals and I have a spectacular team of people put together for my clients, which I am happy to refer out!

@Shaun Robinson, if you want to build a portfolio, why are you asking for the best existing strategy? What is your true goal? Are you trying to get into a different neighborhood, you want more cash flow, what is your real goal?

Btw, tt seems to me you did quite well with your first two properties.

@Michael Martens, besides the two solutions @Dan Weber had offered, there is a third. You'll have to buy homes with owner financing or private money, meaning money at a higher interest rate ( if the deal makes sense), fix up your credit and you can refinance them in loans with lower interest rates when your credit had improved.

Another idea is to hire a credit repair company and fix up your credit asap which also saving money for your next downpayment. Good credit companies can help in as short as 3 months!

Good luck to you!