All Forum Posts by: Michele Wax

I think what everyone is trying to do is get the best deal for themselves.  Banks with big names are more prone to say no then yes.  You are trying to find the money cheaply, to do this you will have to look harder for the money.  After all nothing comes for free..... there are consultants out there that find you the best deal available but they cost money at closing on top of what the lender wants.  You do win if you can take a point or two for the consultant. 

Here is what I have told others, you can spend 20 hours a week for a month to find the best lender for each deal you make or you can pay someone to do it for you.  I know once you know how to do it you don't need someone to help you...but, then you get big enough that you have ten loans out and you want to do another deal where do you go from there?  20 hours for a month learning what to do for another month or pay someone to do the work for you.  

So, I say learn what you need to know about the property, what the rehab or holding costs are. Just like you don't spend money learning how to install an HVAC system to a house because the one you bought needs a new one, use a financial consultant if you do not have the experience.  I am not trying sell myself or anyone else here just stating my opinion.  

Congrats ! Sounds like your doing great!

Congrats on getting started early. I think you should go for a FHA loan and buy an apartment building with 2-4 doors, not a house with 4 rooms. A bank will look on this easier. If you could find a building with 3-4 bedrooms and your friends then also moved into the one you are in it would make you a ton of cash.

A four bedroom house that is not made into apartments will never make the kind of money an apartment building would.  
Find something that has zero or one vacancies that has been rented out for more than 6 months. Buy that and move in with a FHA loan. You would make your money back faster and give you some clout to start setting up for retirement.

Living with friends is always a bad deal.  Someone always moves out and you are stuck with the bills. But if you own even a duplex and the other side is making payments to you for say 1500 a month and the mortgage is 2000 you will still be doing great if you have a friend that rents a room from you for 600 then you are going to be able to put aside some money for yourself. 

I don't know your area but this is a way better idea. 

My suggestion Portfolio loan. Group some or all together and get a loan. I have a client that loans against 4 of his units all the time....pays them off and gets another loan.  I believe he is getting a Line of Credit off them now it works better for him. 

I think you should make it legally yours before you get a loan for repairs.  I mean have it in writing that you are purchasing the home for x amount of dollars. 

Figure out how much skin in the game you will have so you can tell the bank your down payment.  On 110 k I think you should have around 22 k down. 

I am interested in how you will approach a bank.  

I mean saying my aunt is selling me this house worth 145  k for 60 and then I want 50 more to rehab it sounds a little fishy to me.  I mean it has happened. But your Aunt can't just gift you 85 k of a home. Taxes will come into play.

I would be interested in you taking the money out of the VA loan. TO rehab the other property. You could also rent as is to someone for say 6 months at a reduced rent if they are willing to do some rehab work. Doing this you will need a very long written out what has to be done by when and how much the rent goes up when they are done rehabbing the place. I have heard people say they have moved in and painted and did new carpet and had some minor repairs to do and they received a reduced rent for 12 months for their work.

There are several types of rehab loans and fix and flip loans, there are also angel investors and partnerships.

If it is FHA you have to live there.

Next thing to figure out if it cash flows charge yourself rent that is comparable to what is paid in the area. 

Then figure out if that makes it cash flow positive or negative.  If it is then negative then its a no go.

Whose name is on the property now?   You said you bought with the partner. 

IF you get a DBA you can get a checking account. DBA- Doing Business AS.

IF you get an LLC started you have to make sure that the loans verbiage lets you move it to an LLC. Most do not let you do this.

As for how to get your name on the property it depend s what is on the deed and on the loan.  

This should have been done at time of purchase and right now if your name is  not on it you are on you own, if the partners name is solo he owns it and you own nothing. 

I would also make a quick run to legal zoom and make a partnership agreement.  This should have also been done before the property was purchased. 

BE very careful.

According to what you have said it looks like if you invested any cash you have nothing to prove you own it.  

Carts go behind the horse and right now your cart is a mile in front of the horse. 

Good Luck and let us know how this works out. 

You have to live there for the life of the loan.  I do not think you will be legal if you rent it out.