All Forum Posts by: Matt Hurley

I'll echo Brian and Keyonte, Detroit has some the most intense micro-market prices I've ever seen in Real Estate, and it comes with a lot of headaches. But when done right, there's a fantastic amount of opportunity. Good example, close investor friend bought 6 properties downtown in 2019. Each with a purchase price below $40k (avg $30k or less), with $20k or less in rehab, with rents cash flowing in the $400+/mo. range after PITI and variable landlord expenses. I don't know of numbers like that elsewhere.

Numbers look good, but you're going to have a lot harder time finding (good) contractors. Literally every street has a different property value set, and at some point you're going to get your copper and a water heater stolen (I literally don't know an investor w/more than a 2 years in Detroit to whom this has NOT happened). The city's a really shiny ROI opportunity from the out of state perspective, but you need a local crew who knows the area in and out. Or even better, lives there themselves. Do some research, fly into the city and take a look at properties, attend some SE Michigan local meetups, then decide if it's a decision that's worth it to you :)

Credit cards are a fantastic way to build your score, when used appropriately. Your best bet is to spend some time budgeting, find out how much you spend each month and how much you're making. If you're making more than you spend, then put every transaction you can on the credit card then (MOST importantly) pay that entire balance off at the end of every month. By doing this you will not get charged an interest rate and you'll be building your credit score. 

Keep an active and keen eye on your balance, and don't spend more than you make. 

Those types of companies can actually be quite helpful in my opinion. I created a startup (with a partner) that lead to 18 employees on several 0% APR credit cards. The advantages of these services is they only have to run a hard pull on your credit score once, and use that info to apply to multiple credit cards for you. If you do it on your own, you'll be running a hard pull on your credit score for every company you use, decreasing your credit score significantly.

Other things to pay attention to, most of these companies require a personal guarantee. This means that if the business can’t pay the debt back, they can come after your Personal Assets. It’s a risk, but can be worth it in the long run if you’re careful. 

Cash is king, a Cash out Refi could be recycled (in decreasing amounts as you noted) property by property. You could start with the high value 5 borough properties and move out to Jersey/Delaware with the lower 6 fig houses. 

I’m a former rental manager and AirBnb Arbitrage investor in NYC. Do tons and tons (and tons) of research on what you can and can’t do in each building. If you’re shooting for long term rentals, read every single line of your condo associations (or co-op) agreement. Be familiar with NYC’s housing laws. Many have extremely strict rules when it comes to short term and long term rentals. A client of mine got burned big time when an airbnb Renter turned sublettor at one of his apartments decided not to leave. Ended up paying $20k+ in legal fees and back rent because he overcharged him $50/mo. over the rent controlled amount. So, research your butt off!

@Brian Kantor my how the time flies :)

I ended up going with a hard money lender out in California for my first rehab project, and I'm about to refinance out of that into a traditional loan in my name. There are some local hard money lenders (the one I know is Green Block Inc.), but their rates are higher because they're dealing mostly in lower value properties. Otherwise, you're looking at a higher rate more traditional commercial loan with a bank. Big "need to know" is owner occupancy, you can't live in the property if you have a commercial loan. Very very few commercial lenders will fund a "house hack" project.

I'm in the same boat, I received the advance $$ but I'm waiting to spend it until I find out what is forgivable and what isn't. I've seen conflicting reports that says if you use any portion of the advance for COVID related expenditures it converts the entire amount into a grant, not needing to pay back anything. Seen other reports saying that only the amount spent on payroll and mortgage interest is what you don't need to pay back. What I have confirmed is that a normal (non-covid) EIDL grant has deferred payments for up to a year from the Disaster, after which the amount is converted into a 30 year loan which you need to pay back like a mortgage (but with a really low interest rate). That as much will potentially be true if any of your money does not become forgivable. 

Unless you’re a note investor, this deal will not make sense. If you want to rehab and rent, walk away 

So you're looking to get a house for "free" to live in, sounds like a good plan to me! To Joe's point, hard money would be more complicated but definitely not impossible. A common number to keep in mind if you're going to go that road is 75% ARV. This is often the max a HM lender will lend on a property, so your purchase price + rehab has to be less than 75% of the value after it's repaired and re-appraised. Some other things to keep in mind, in order to get a HM loan you need to have an LLC and you cannot live in the property while you are rehabbing it. So if you were thinking you could do a live in flip with a HM loan, that won't work.

What are your long term goals and how long have you been at your current place? Any reason you're not just buying a new rental and staying at your house so you don't have to move? 

Basically, all normal funding approaches (commercial or residential) are an option except seller financing. Since it's a SFH you can always go the FHA route for a low down payment option, VA (if you're military) or USDA if it's rural. Otherwise, you're in the higher down payment range.