All Forum Posts by: Jim Blackburn

@Adam Ulery  nice job Adam! 

@Jim Rohman

Read my response on this thread. I think it will provide value to your question.

https://www.biggerpockets.com/forums/311/topics/491821-help-with-purchasing-first-multi-family-home

@Jerry Wolf

Find out what the reason is that the seller only wants cash offers… Why?

Is it because repairs are needed on the property and it will not pass a conventional or FHA inspection?

What specific repairs are they?

What will it cost to remedy those?

“I’m really interested in your property, if I were to pay for those repairs out of my pocket, to make sure that this property passes the inspection for the loan, would you then be willing to sell this property to me with the loan?”

I’m in love with your property…If I would offer you $5000 more than your asking price, would you be going to work with me on this property?

@Kevin G.

It’s normal… It’s a simple condition… The underwriter wants to know that you don’t have a private loan out there for these properties because if you did then she will ask to count the payment in your debt to income ratio.

The underwriter needs to do her due diligence as required by her license, and simply get a written statement from you whether or not you have an outstanding loan out there with another payment that is related to these properties that you are buying.

So you just write a short letter sign and date and turn in to the underwriter and then you close…

After closing, if you then go and get a loan with a payment, you don’t have to backtrack and go back to redo the refinance because you’re already closed and funded…

If you want to close the cash out refinance, you better write the letter.

@Ashley Pohlman

I work with over 100 banks and none of them offer a HLOC on investment property.

If anybody has a good source, would you provide it to me?

I do know of a bank that offers 90% CLTV on primary residence and Lot of investors tap into their primary home equity like that to reinvest in other properties.

@Mark Leclair

That depends if you’ll be buying the property as your as your primary residence or as an investment… If you buy it as a primary, then you only need as little as 1% down… If you buy it as investment, typically you need at least 15% down.

If the property is not in move-in condition and has safety hazards like hanging wires, ripped up floorboards, ripped up drywall, leaks in the roof, anything that could cause a health concern to the person living in the house… Then you will be able to close it with the standard FHA or conventional loan… in that case you would need to look at your renovation loan options

Possibilities include :

FHA 203K for primary residence with as little as 3.5% down of the total need (acquisition + rehab costs)

Fannie Mae homestyle renovation loan (5% down)

100% fix n flip loan - that gives you the money for the acquisition In all the money for the renovation both labor and materials (The only caveat to this one, is that the maximum LTV is 65% of the ARV for first time investor, 70% for an experienced investor)

ARV = after repair value

If looking at buying a multi family property, like a four unit, if it's the primary residence, go with an FHA 3.5% of total purchase… unless you have 20% then Go conventional.

@Alyssa Nagasako

If you invest your 20,000 instead of paying off your student loans, and you lose the 20,000, how are you going to feel when you still have the student loan?

Another words, how long have you been saving this $20,000? And how difficult would it be for you to save the 20,000 again?

For some people $20,000 is a lot of money… It might take them five years to save up that money, maybe 10 years… For those people, it might feel good, to get those didn’t land paid off, and never have to worry about that debt again...

And then from there, start aggressively saving again as much as you can… I want you have a nice lump some amount that you can start investing with, then start! But at least if you lose it, you know that your debts are paid off...

That’s the conservative approach....

There of course is also the aggressive approach... Which is what the first gentleman mentioned who replied to this post… In general, if you think you can net the return on assets, that’s greater than your cost of capital, then you net the spread. That’s hedge fund management 101!

So then you have to ask yourself, what kind of investment opportunities do you have in front of you right now? What are the chances of success? Do you have business partners Who may be willing to split up the risk with you so that you’re not taking on all of the rest by yourself? By splitting up the risk, you enjoy the benefits of the lesson, the education, the experience, along the way whether your investment makes or loses money…. This is the best way to go with a beginner...

So from there,… You decide are you a conservative investor or are you an aggressive investor… Then you can make the decision to pay off your student loan, or to invest the money right now before paying off the student loan..

Also keep in mind before you go out and buy real estate, you’ll need to get preapproved by a lender to determine your max purchase power, either for a standard purchase, or a renovation loan.

Good luck!

@Chauncy Gray

There is no secret or stealing. This is how finance works my man… Check out the game Rich dad poor dad 2. I bet that 20 years from now, after you’ve built your real estate empire, using all of the knowledge that you learned on BiggerPockets, and Rich dad Poor dad, that you too will be lending people money, and charging interest over a 30 year amortization.

Why? Because thats what people with capital do. It’s called “capitalism.” Those who have the capital, can lend to others, to help them buy houses and build businesses.

Here’s the thing that you must realize… This isn’t free money…The lender takes on a certain degree of risk in exchange for the possibility of a return on their investment..

Pretend you’re the lender… You lend a young man $200,000 cash to buy ahouse… In exchange, he has to pay you $1000 a month… (not a bad deal for the young man, considering the fact that without this loan he wouldn’t have the money to buy the house… For just $1000 a month, the seller handover the keys to a house… that’s A huge opportunity… That many countries in the world don’t get to enjoy this luxury of finance!)

So what’s the risk? Six months into the loan, the young man stops paying you your thousand dollars a month… (remember you are the lender). In some states, it can take two or three years before the lender/landlord can finally kick the person out of the house with the sheriff sale. At 36 missed payments and $1000 each… That means the bank lost $36,000 on taking a chance with that young buyer.. and that’s just the loan payments. I imagine the buyer was not paying the property taxes either. Property taxes are probably $15,000 for three years.. On top of that, since the buyer hit rough times, lost his job, and was short for cash… He decided to rip out all the cabinetry and appliances and toilet and sink and sell them on craigslist for a few thousand dollars.. let’s say approximately $20,000 of labor and materials to get the property in livable condition. I’m top of that let’s add another $5000 for court costs to serve into effect into foreclose.

Altogether the lender lost $76,000, by taking a risk, to offer this young Buyer $200,000 loan...

So the point is, there needs to be some element of reward in exchange for risk…

And again, the beauty of capitalism, which is the beauty of America, is that you can play both sides…. It’s just that when you’re young, and without money and education, it takes a few years of experience under your belt before you accumulated knowledge experience and capital..

Invest time on this website every day, invest time in your social networks, and invest time and bettering your skills every single day.... and you too will be in the position one day to be the lender.

@Tycee Tyler

A year is a long time, I'd hate to see those carrying costs!  A good way to set up payments to contractor is at the completion of weekly phase on Fridays, this way they are always motivated to work then next 5 days to get to the carrot on Friday.

Unless of course, another relationship is paying him more to work on their stuff first, then you need to increase your budget or find a different contractor. 

@Ephryn Thompson

Are you working with Realtors already?  I would hoop up with a couple good ones and also check out the fsbo sites.

Also, as a first time buyer, multi family with just 3.5% down is best way to go.  Read my post on this thread.

https://www.biggerpockets.com/forums/311/topics/491821-help-with-purchasing-first-multi-family-home