All Forum Posts by: Matthew Louks

A family member wants to sell me a property he owns free and clear for 20k that needs 25k in rehab. The ARV on the property is approximately 130k. He is also willing to owner finance at 0% interest, and $0 downpayment as long as I pay him the same $550/month as his previous tenant. I estimate 2-3 month before repairs are complete and I flip the property. Im not sure how I should or how set up the financing as I have only used conventional financing previously. I'm not sure how to setup the mortgage or financing legally for a smooth transition when I sell.

Thanks

I would swap it out. Federal Pacific breakers have a more than 30% fail rate on direct shorts. With it being only a small 100 amp service it would be an easy swap, only about 4 hours at the most for any qualified electrician. I've had people do small panel swaps for as low as 400 dollars for side work. You can also resell the old breakers on craigslist. It'll recoup you a few bucks

Well thanks for the reply Brandon. I've been looking into using OPM besides that of a bank since before I started. That has been the main option I've been looking into since I bought my first property. As for flipping, I wouldn't be opposed to it, but it's not my goal to become a flipper. Coming up with the time to handle one is also a problem since I have a 9-5. The market in my area is saturated with plenty of would be flippers, and getting the proper connections to get a non-MLS deal is a needle in a haystack. It seems as most of the good deals I come across are HUD homes, which seem to go to the owner occupied before the investor.

I think I can get financed if I stick with it enough, even though it may not be as soon as I'd like. I guess the real question is, do I take the refinance/ 2nd mortgage, even though I just finalized one, or do I open a line of credit to pull out the equity in my property. I'm great at finding good deals and seeing the potential in properties. I am obviously not as inclined on the details of the financial end to make them work for me though.

I try doing my homework on as much as possible, but it seems as much as I attempt to do my diligence, everything I find is relatively generic in its description. I would like to find the best way to leverage my 40k into as much as possible, while paying the least I can in fees/ interest. Especially because I have limited income and capital to work with beyond the current equity I have.

I'm beginning to think, as I'm writing this, that flipping is going to be my way to build the capital needed to invest in my future endeavors. Especially given the 20% needed for investment properties by conventional lenders.

I am relatively new to real estate investment, but trying to work my way towards financial independence. A little over one year ago, I bought a HUD two-family flat. I worked the system the best I could and renovated the property myself using a 203k and paying a contractor friend a fee to use his companies licence to get through the red tape. This allowed me to get 35k to renovate and roll it into the loan, meanwhile only putting about 5k of my own cash into the deal. It was a laboring process, but nonetheless complete. I still currently live in one of the units and rent out the other. This covers a majority of my mortgage, which I recently refinanced in order to get a lower rate.

During the refinance process is when I ran into my new road block. Although I found out that I made approximately 40k for the rehab via the appraisal, I also found out that a change I made in my 9-5 killed my chances for conventional loans. For 8 months of last year I worked at a job that was about half of my typical pay. I did return to my previous job since then, and am back making my normal pay. Although, when filing my taxes I found that with the rental income I made roughly the same amount as previous years.

I am now getting a bit anxious to make my next move. In my refinance, I was just looking to ease the current situation by lowering my HUD interest rate and PMI, thus lowering my monthly about $130. Now I would like to to get into my next property, but not necessarily wanting to go the HUD/owner occupied route, seeing as I would rather not tie up all of my cash in down payments and closing costs. I do want to do the same type of deal. My niche is to buy slightly distressed potential rental properties (mutli-families preferred) , maybe in the "C" column, in up and coming neighborhoods, and turn them into B or A properties. This is my plan based on my limited income, and small capital. At least for now. I would like to eventually get into larger properties and potentially office/retail and apartment complexes by doing 1031.

So the real question here is.... what to do next? I have 40k that I can pull out for financing/ rehab of another property. I could also flip a few properties to raise capital. I would like to avoid the hard money lenders, unless I found a deal that would fit the criteria. I would just like to use the money to its best potential profit in a deal that I can handle. I look forward to and am open to any ideas, opinions, suggestions etc.