All Forum Posts by: Mike Cook

 Thanks, but this is what threw me: "@Mindy Jensen has done about 15 of these and created millions in wealth."

I don't understand how you get access to " low down-payment, low-interest government insured financing" If say, this was your 5th time doing a live in flip. 

Hopefully that makes sense. I thought those intro rates/DP was just that, you could do it on the first but that's it? 

 New guys here too but how do you get away with the low down payment after your first home? I thought that was for first time buyers only? 

Thanks

I let the deal go. It seems too much too quick. I don't understand the financing and I really haven't done the homework needed. I feel I'm looking at this thing through rose colored glasses. Maybe it's just fear of the unknown. I dont know. I'm not happy about it but I think it was the right move.

 Nice! It's scary (to me) to invest in property literally across the US. Can I ask how you went about finding the property? Just looking online, running the numbers and deciding? How scary was it, etc etc?

Congrats again!

Yep, first property/deal/etc. I'm leaning towards just letting this one go. I don't think the lender is at fault here. I called him on a Friday before a major holiday and he sent over the basics (I'm guessing) and I probably didn't understand properly. 

It may be too much, too soon. It's just that it's literally 2 blocks away so I'm bias to the property. The area we're in is highly sought after and 2/1s are renting for ~1500. So I think it's a good deal if I could get it at the right price but the rehab will be major (splitting a 4/2 into 2 2/1s)

Here's the response. Probably makes more sense to you all than me rambling ;)

"We would do one loan with an interest only period and then it would flow right in to the amortizing period. You would bring 15% of the purchase price plus closing costs to the closing. We would determine the balance of the loan (not to exceed 15% of the renovation budget) based on your budget and our consultation with the appraiser.

No penalties or fees/points, if not done in 6 months. You would have to request a 2-4 month extension, for interest only payments, and it would have to be approved by our board.

No additional fees when it transitions to the amortizing portion of the loan.

The rate would be fixed for the first 5 years of the loan term."

Ah, thanks Erik. I'll reach back out. That makes sense. I kinda had tunnel vision on the 6 months thing. I honestly don't think that's enough time, for me anyways. I have some contacts etc. but not dedicated crews at this time. I'll post what he comes back with just for clarity and maybe that'll help someone else. 

Hey all. So I'm going to bid on a property and spoke to a friend's lender and here are the banks terms. To me, it seems like 2 separate loans that I'd have to bring to closing. Am I way off base here???

Here's the deets.

Bank owned, list is 165k. They're accepting bids and will make the call next week.

We figured it'd be ~80k to get this place rentable. 

Finance guy said this: 

"For a purchase/renovation loan we can loan up to 85% of the purchase price and 85% of the renovation costs. We underwrite each loan on its individual merits so based on underwriting those percentages may change (never going over 85%). When it comes time to order an appraisal, we would need a copy of the renovation budget. The appraisal cost is $400. The appraisal would give an “as is” value and an “as complete” value. Normal attorney fees would apply plus a $749 bank fee. 
Typically, we would set the loan up as interest only during the renovation portion of the loan (not to exceed) six months. The loan would then amortize over 25 years. The term of the loan would be 15 years. Right at this moment, the rate would probably be 8.5%."

So would I need to bring 15% for the price of the house AND another 15% for the rehab? If they're financing 2 loans. I then have 6 month to renovate before the loan 'flips' somehow? To a conventional 15yr fixed @ 8.5?

As I said, I'm new to the REI and financing. Am I understanding this correctly? Am I way off in left field here? Do I need to bring 40k to the table? Can someone explain it like I'm 5?

Thanks for reading.

Hopefully this is the right forum as I haven't gotten the property (yet). If it'd be better somewhere else, please let me know. Thanks in advance.

Investment Info:

4/2 w detacted 1 car garage. Foreclosure/eviction in my neighborhood (literally 3 blocks away). Been vacant for 2+ months. Pics online show water damage on 2 external walls. Kitchen is gutted/destroyed. It's pretty rough. BUT an RE investor buddy walked the property with me and pointed out it may not be as bad as it seems. We noticed it appears to be gutters causing the damage and not the roof. Some downspouts (on the walls w damage) are off and not draining water where it should go. The rest is mostly cosmetic. There's a couple big things it'll need. Electric panel is outdated and needs replaced, the kitchen and a few others. But the HVAC, Water are <10yrs old. Roof and siding/flashing all look good. 

List price: 165,000

Sale price: TBD

Remodel price: 80,000 (Guestimate)

So, talking to the realtor the bank is taking offers on the house and will make a decision on 9/5. I'd have to finance and my buddy said I'd be up against cash buyers. So, being brand new, I'm not sure on a few things, or if this is even a deal or not. I'm fully aware my bias as it's in my neighborhood. BUT it's a great area, close to a great school.

Questions:

How can I beat the cash buyers? Since it needs a lot of work, I'm guessing they will bid low and hope the bank jumps? What can I do to make my bid more attractive? I'm guessing a (what I think) is a higher bid since I have some contingencies (I need financing) may make the bank consider it? 

How would you go about financing this deal? Let's say 265k for the house + remodel. I have friends in the trades plus I'm handy and close, I figure it'll take 6-8 months to rehab. I'm guessing I'll need at least 10% down then I'll have to pay the note until I get renters. Is there any creative financing I'm not seeing?

I all goes as plan (hehe), would it be smart to start an LLC for this? I'd rather not be a landlord since I'm a pushover. Do property mgmt companies even do single place like this or am I on my own until I have say 5 doors or something?

What made me interested:

Location is in my immediate neighborhood.

How will I add value:

Obvious stuff. It's sitting vacant now and an eyesore. Externally house is solid. Plan to reinforce existing deck, privacy fence, landscaping outside. Fix interior walls, remodel kitchen, pull out old carpet, etc. etc.

Plan:

Buy, rehab and hold. It's possible to split it up into two 2/1s. Just need to add external access to the upper floor and split utilities but I don't want to put the cart in front of the horse yet. 

Hopefully that makes sense. I'm brand new to RE investing and these forums. Listened to the podcast for a while now and decided to jump in. Thanks for reading!

Awesome, Memphis is my home town. I've been looking around the outskirts myself. Congrats!

 HATE I sold my house in Smoketown. That's what I get for listening to my 'buddy' the realtor. Oh well...