All Forum Posts by: Michael Tully

@Brad Bellstedt Great post! Thank you for asking this as I also would love to learn this information!

Hello!

I think it mostly depends on what type of properties you're looking for. Turnkey might be harder if you're just looking for a straight conventional loan, and flips may be easier if you're willing to use HML. I am new to this myself, but just throwing some ideas out there:

1) One option would be to partner with someone. If your partner has the financing and you have the down payment, together you can invest!

2) Try out the BRRRR strategy? Find a private or hard money lender to aquire, then refinance out of that loan once you have a renter in the place and can prove cash flow to a lender (the cash flow can be used to boost your income and therefore reduce your DTI)

3) If you have equity in your personal home mortgage, get a HELOC and that, combined with your $65k savings, may be enough to do cash purchases in the market you're looking to invest in.

4) Try speaking to a local community bank. They may be willing to work with your DTI depending on what type of investments you're trying to make.

Just some of my thoughts. I am a newbie, despite having been a lurker here for 3 years!

Michael Tully

@Account Closed Welcome to BP! I am also a newbie, but I wanted to bring up a point that hasn't been mentioned yet: exit strategy. As others have said, HML are short term use, and it seems like this multi you are looking for is something you'd want to hold as a rental. The problem in that case is that you won't be able to refinance out of the deal once the rehab is done in order to pay back the HML. When you refinance you'll usually be able to get about 60-70% of the ARV, which won't be all that much higher than your PP because you won't be doing a large amount of rehab. You'd have to find a very good deal in order to be able to refi out enough to pay back the HML.

Just for example, I've been running models that use that mode of financing, however (at least in Vegas), I have not found deals with enough meat on the bone to use HML to BRRRR the property. The only viable deal I have found in which HML would be a good route is in a property where the rehab costs will be about 3% of the ARV, and the property is selling for about 70% of the ARV. The general rule I've read is that you should pay no more than 70% ARV minus rehab costs. In this case it's close. But even then, I know I would not be able to refi out enough to get a HML repaid, so I would have to flip the property and the final profit out is 12k, minus the points + interest paid to HML and the cost to sell. This isn't a huge margin, and if something comes up then it could cost me to flip. The other option is to use a conventional loan but hard money/private money for the down payment. This may be a better option for you as well. You'd just need to find a way to qualify, like getting a great cosigner (pay them to sign with you), or by getting help from a parent or family member(money or HELOC on their home?), maybe even finding a partner.

As others have stated using an FHA with a 3.5% down loan sounds like the best option because of the fact that it is a multi and you could live in one unit for a year and rent the rest. The 203k actually allows for a rehab budget. It's just a matter of whether you still cash flow with the PMI. Even if you don't cash flow, it may be worth it to pay a small "rent" for a year just to be able to refinance out of the FHA (if you have enough equity at that point) to where you start to cash flow.

What type of renters are you looking for? If you are focusing on vacation rentals Airbnb could be a good option. Trying to get on hotels.com or another common site would be good also. I know you can list on Zillow and other sites like that which are commonly used to find rentals. But the sites would depend on whether you’d like short or longer term tenants.

@Steve C. Thanks! And yes, very important! I've been definitely keeping that going for the last year. It's something most in our industry don't realize until its too late. And that's a great tip. Luckily I've become a bit of a homebody which makes it easy to not blow everything after a shift! Glad to see another industry local on here!

@Alexander Felice Good ole downtown Vegas for me! I was on the strip for a while but am currently at Therapy in the Fremont East District. Get a lot more locals coming through now.

@Aziz Raji @Tom Ott Thanks guys!

@Jon Lee Thanks! I've seen your name around the site and on meetups. I've been looking at going to one, just a matter of scheduling! And thank you, I've been wondering if it's just me because I haven't seen anything that would BRRR here in town. I would prefer to get more than one door but things are priced too high to have a good enough margin to refi. I appreciate the offer! I'll be in touch.

@Account Closed Yeah the challenge I am facing is almost every property I have found is either way overpriced to be profitable, priced reasonably but in a high HOA area that eats the profits, or cheap but not in an area that can draw the rent (or tenant type) I am looking for. There are a couple that I have found that work but it seems that when I run the numbers the cash flow is between 200-400 IF you can get it at a reasonable price. The better ones are where the seller is willing to carry. But still, these are still only at about 4-5% Cap and somewhere around 5-7 CCR. If you can get them at a reasonable price you can bump that up to an 8-10% CCR. But with the way prices are rising I do not think they would sell at that price. My next step is to start making offers because I won't know until I offer right?

And you're right about the plexxes in vegas. My mom lives in a nice one but you will never see one on the market as a whole because they are built more like townhomes that share a wall or two (think a square divided into quarters that remain square) and are usually sold as individual townhomes. The ones you tend to find are in older areas in town and are usually around 40 years old. They tend to rent around 550 and are almost all 1+1 or 2+1s. I have found only one that will cash flow and even then it's not stellar. 

@Account Closed Vegas native here, AirBnb is a touchy subject here in town. The problem is that it's only legal in the city of Las Vegas as the city is permitted, but most of our valley is actually in unincorporated Clark County. You've got to apply for a permit and be registered and there is a rule that there can't be any other short term rental units within 660 feet of a short term rental unit. So if you live in a condo tower (*cough* Ogden *cough*) you have to apply for special variances which have so far all been denied (to my knowledge). The city commissioners seem to be against AirBnb citing issues as noise and trashy guests. But for the ones who have permits and keep things quiet seem to make money! But as far as I know it's only legal to have AirBnb properties in the city of Las Vegas, Henderson, and North Las Vegas. But, again, most of our homes are in unincorporated Clark County and the hotels and casinos do not want the competition.

Hello all! My name is Michael Tully and I am from Las Vegas, Nevada! I was born and raised here in the valley and am familiar with most neighborhoods around town (moved a lot growing up). I am a math/accounting student and a bartender downtown. I have been educating myself on all things real estate and am excited to start making real moves! 

I, like most of us, found BP through web searches and having originally dismissed the site am back to it after almost a year. I am interested in long term rental properties, BRRR strategies, and possibly mild to moderate flips. I have not yet decided on which as I am interested in all of it and have yet to decide between SFH and MFH as Las Vegas is a bit tricky at the moment. As a newbie, I would like to invest in a city I know but I understand there are easier markets to work in, especially with the trend our city is in. I have been spending my time analyzing every promising property I can find on the various MLS window sites (Realtor, Zillow, etc) as well as Craigslist and local ads. I am not 100% sure but I feel the next move is to get in contact with an Agent and start sending in offers, as Brandon Turner has suggested in many episodes of the podcast. In the mean time I plan to keep analyzing properties but if anyone is interested in the Las Vegas area I am more than willing to be boots on the ground and help in any way I can.