All Forum Posts by: Michael Webster

Can you move into a unit? You should be able to get a 3.5% down FHA loan if you're willing to occupy the property.

Some people will suggest that you don't have to actually live there...and it's true that the loan is given with the "intent to occupy" the property within 3 months of closing...but that is also technically mortgage fraud and could end up with you having to pay the loan in full, or going to court.  If it's a great deal, move into a unit and take the hit on that unit's rent for a while then move back home. 

Hey everyone. I'm looking at financing to get going on my first flip done exclusively by me. I've been a part of flips before, but mostly on the sideline. I've got great credit, but 1099 income (real estate agent), and all of my cash is currently tied up. I have a bunch of equity in my home and found a place that will do a HE Loan of 125% of the LTV (https://www.sdfcu.org/home-equity-loans), but the rates and terms are less favorable than most traditional HELOC's. I guess my questions are

1) is it foolish to take out $100,000 at a 7% rate over 10 years to do a flip?

2) Will the line make my DTI ratio too high so that I can't BRRR a property? (I make a decent wage but I do have a car payment and my house payment - though both are more than paid for by HouseHacking with AirBnB...but the bank doesn't consider that).

3) Would it be better to go with a 90% HELOC, with no annual fee and no closing costs and just do a significantly cheaper flip?

Any thoughts or tips would be great. I have started contacting family/friends to see if they are interested in getting into REI, but I don't want to rely on that.

Sounds like a solid project Joshua.  Best of luck with it, and have a nice 4th as well!

Hey Aqeel,

If you're still looking I used to run a property management company and they still are around, I can pass along their name.  Also, I'm a broker and would be happy to help out there as well. Let me know!

Mike 

I'm going to go against the grain here and suggest a firm that you know your DB (Designated Broker) at.  The bigger firms do have a lot of "free" training but they also have a lot more ways to take money from their agents (cost benefit side is your call). I would go around town and interview with a bunch of firms, and I would also reach out on Facebook and ask friends who are some agents they have loved working with.  Then...go out with those agents and ask them what the pros/cons are of their agency. None of us can tell you what the best firm is because it completely depends on your market.  It's like any other job, check out some places and find where you would be the best fit, and don't look exclusively at what the highest split is.   Best of luck!

I would recommend judging each tenant separately on this.  Some tenants show a lot of income but are big spenders, others show less but would never consider missing rent payments.  I focus on tenant history, credit score, eviction history, how they correspond via email and phone, and meeting them in person.  Some management companies will also fill vacancies for you for a reasonable fee and do all this screening (message me if you want some names). If you've got nicer properties, collect double security (max you can collect in Maine last I checked) and be very clear that rent is due on the 1st, not the 2nd or 3rd (etc). If their rent is not there on the 2nd, call them up.  

Hey Jon,

With a CPA background and experience in construction you should have no trouble getting into it.  There is another forum post about getting a meeting going in the area, I'll see if I can find it and send you the link.  Let me know if you have any questions!

Mike

I just called and SDFCU will do a 95% LTV HELOC or a 125% HE Loan on the primary residence (5,7 or 10 yr period). Full appraisal for over 50K.

The valuation for HELOC's is done by their own appraisal. At TD, they do a "desk" appraisal meaning they just look at comps in your area. At Gorham they do a "drive by" appraisal so they actually check out the exterior and see how your place compares to the recent solds. I can help you out with valuation if you want to shoot me a message on here.

Wholesaling can be a bit of a gray area, though plenty of people do it.  I would say it seems an awful lot like practicing real estate without a license, but I'm not a lawyer...I'm just a real estate agent. Haha.

Is the property in OOB?  

I would say it doesn't hurt to ask about owner-financing first, but an investor next isn't bad (I would still consider getting a HELOC on your Portland property and either putting that towards this deal or looking for your next flip). If you CAN refinance out of the place, that's the best option because it's a 15 or 30 year term, low rates, and gives you plenty of time to work on other projects.