All Forum Posts by: Scott Hollister

Hello @Derek G.(Cyclical))

Remember two things: 

1. There are no such things as stupid questions:)
2. Be a student. Gather information, keep your goal in mind, make the best decision that will help YOU. 

Hello @Brian Carson,

Its great that you are using your line for an investment. The goal would be to pull out 75%-80% of the AFTER repair value. (ARV)

Here is what I learned from my recent BRRRR process: 

• Start making connections with local banks right now. My BEST advice would be to ask that same bank you have the LOC with. Ask them what their terms are on cash out refinances. Here is my email I send to EVERY local credit union. (They are more lenient on the "seasoning period". Which is the amount of time you have stabilized the property after purchase)
  • Good Morning,
    I was wondering if your credit union offers cash out refinancing? If so, what is the percentage of the appraisal?
    Thank you,
    Scott 
• I use good morning because I was sending these out at 5am. My crunch time:)
• Basically, you want to find out these things: 
  • Terms: rates, fees, points, etc. 
  • Seasoning period. (Most will be a year, you DO NOT want one. Because the faster you can cash out refi, the faster you can acquire properties)
  • Do you cash out refi on the after repair value or the purchase price? You WANT the ARV, because thats the key to pulling out your LOC.
  • There are a few others based off of your investing strategy, but those are good for now. Maybe some other BP members will add in! 

Podcast 197 is a great resource! @Chris Heeren knocked this episode out of the park! 

All my best Brian! 

Hello @Ray Paszkowski Jr. and @Brent Coombs, 

SFH: Single Family Home

$21k HELOC: I was able to pull $21,000 out of mine, see below.

203k: 

• It is my understanding that you won't be able to qualify for this product because you have an FHA loan out. The only way would be to refinance out/or sell your loan. (This is NOT a good financial choice seeing how you just got your loan, you would end up bringing money to the table because of so little equity. The agents commission on the buy/sell side would eat it up. 
• Here is a product I almost used this year. @Kit Crowne help me find a loan that works for my needs. 
  • Here are 3 different options. Click this link to check out The FannieMae HomeStyle. 5% down and rehab costs covered. (IF you are looking for a loan that has low down payment and rehab costs covered)
  • Downfall to this loan option: You can't do the work yourself or GC(General Contractor) the project. What I mean is that you will be paying "list price" for the work that is being done. (Remember you want to force appreciation as much as possible)

Brent, far as I know RCN will not do that. Most lenders want "skin in the game". I know of some HML that will take another property as the down payment collateral. (Weigh out your risk tolerance for this)

Allow me to clarify, I am still working on my forum replies to be on Brent's level one day;)

• RCN is a Hard Money Lender. Short term, interest only loans for non owner occupied investments. I showed Ray one way to get his next property because he said he wanted to do a BRRRR strategy. (Remember Ray, this was the path I took, you might find a better/cheaper way)
  
  • So here are actual numbers based off of a HML:
  • ARV (After repair value) Lets say a lender allows up to 85% of the purchase price. So Ray, you buy a house for 100k, the lender gives you 85k. (Your "skin in the game" is $15,000)
  • You cover all closing costs and fees. Lets say an even $6,000. (Your cost is $6,000)
  • They cover up to 100% of renovation costs, but you will need to stay under 75% of the ARV. (Your cost is $0)
  • Lets say the house you bought will sell for 185k after its rehabbed. Remember Ray, since your a savy real estate investor, you make a great purchase on the buy side (very important). 
  • You factor in holding costs: Taxes, insurance, electricity, gas, sewer, water, snow/lawn, etc. Depending on the amount of days you hold it. Lets say another $5,000. (Your cost $5,000) You can mitigate these costs during a BRRRR if you get your tenants to pay them.
  • If you go Hard Money, there will be a monthly interest only payment. Lets say 12% (Which seems like the industry average) .12x85k= $10,200/12= $850 each month. (Your cost: $850 each month) Your will also be charged interest on the rehab money as well ONCE you draw from it. 
  • That means you will have to and should, stay under $138,750.00. 
  • You stay under this limit and knock this one out of the park. You're into it for $135,000, sell for 180,000 because its winter time and you price it under appraisal. (People love deals)
  • You have just forced $45,000 in equity. And THAT is what I am recommending. Whether you use hard money, bank money, mom's money, and everything thing in between. Ray, the ultimate goal is to make a wise investment!
• There are many lenders out there that have different products. For instance, RealtyShares has an option that goes up to 70% of ARV. (That means the after repair value of the home will be a 100k, they will loan up to 70k for purchase and rehab) Its your job to stay within those limits.

My suggestions: 

1. Im suggesting that Ray keeps this property because he says it is a cash flowing property. Because Ray has learned to be wise from BP and he has factored in all costs like cap ex, maintenance, vacancy, etc.  
2. Ray wants another (He's got Real Estate Fever:) And you have mentioned BRRRR so I showed you the path I took. The goal here is to make wise investments with your money.
3. I showed Ray that if he pays down his mortgage more, one way to get money for a down payment is to use a Home Equity Line of Credit (HELOC). Which is like a giant credit card for your house. Right now, you don't have enough equity to do so. When I took mine out (Above 80%) I had been paying extra towards the principal for 4 years. (It was $209,000 balance and $260,000 appraisal. I was able to pull $21,000 out and partner with a hard money lender. Much like the actual numbers above.
4. Number 3 is not a recommendation, it is an example to learn from. Check out this awesome debate going on right now about putting your cash towards the principle and make your own decision.

Thank you for being patient and please bare with me as I become a better investor/forum guest learning from all the experienced investors on BP! 

Hello @Ray Paszkowski Jr. and Welcome to BP! Its great to see others from CT on the forums! 

Also @Brent Coombs is knowledgable and we are lucky to have him on the forums! 

I started on the exact same path as you. Congrats on entering real estate with one of the best ways possible! I have one question before I lay out my mastermind plan, because like you I felt stuck this year. An FHA house hack with very little equity (Above 80%) Purchased in 2012.

1. Does your house hack cash flow with you living in it? OR Is it cheaper by living there then renting? (Also, is it worth your time maintaining the building?) 

Remember this is just my path, it may not work for you. I hope my plan gets your creative side flowing, because all we need is just one good idea to start:)

• So here was my thinking! I HATE PMI. So my plan was to pay an extra $159 a month towards principle and another 2k around tax season to get the PMI off in year 5 (which is the minimum requirement, 5 years AND 78% LTV) A simple online payoff calculator will do this for you. (Mine is $244 a month!)
  • This won't work for you because your PMI is most likely for the life of your loan. So if you want it off quicker, force some appreciation and refi a few years down the road. Just MAKE sure that this is a wise move, it may not be wise to start your loan over. Run your numbers diligently, check with your goals to see if this will bring you closer to them.
• So I've been on this path until this year when something magical happened. I started listening to the BP podcasts and went to a BP Meet Up! My mentor mentioned you can get a HELOC up to 100% of your house value! Right there it clicked, there was my down payment for my BRRRR house! I partnered with RCN Capital, a BP featured HML.
  • Side Note: Seeing how you're in CT, we have our next meet up on this Tuesday with RCN! Come make connections and line up some financing. Unless you have a BOM (Bank of Mom:) The rest of us use HM. Ha
  • Here is the link to the event!
• So I used the $21k HELOC and RCN gave me around 100k so I could buy a SFH. I bought it for around 100k, put 16k into it and it appraised for 187k. BRRRR its cold in here! I will pull that equity out in 6 months with conventional financing, who will ALSO be at the meeting if you want to connect with him. (There will also be an amazing commercial lender there as well, always think ahead)
• And now I'm onto my first real flip! 

Just remember, you can do anything you put your mind to! And I would strongly advise going to a BP meeting, we have such an amazing group of investors and we always bring in quality speakers. 

So after seeing this, whats the plan Ray?!

Hello @Brianna Bowers it depends on your business. I agree that you either need a laptop/desktop computer, it just makes all the programs I use easier. Storage is better, etc. (Laptop if you like to be mobile, desktop if you can manage on your iPad/iPhone) The Mac also pairs nicely with the iPhone.

So being a college student has taught me many things, one of which is a combination between thrifty and creative! Ever since my educational technologies class I have been using MAC computers. Can you get something cheaper that does the same thing? Absolutely, but what if I could tell say you can get the best of both worlds?! 

Thats right, a iMac at a deal and "lease" it for a few years. So here is what I've been doing since 2011 and I'm on my 3rd 27" iMac. 

Lets lovingly call this section the: Large Upfront but Minimal Lease Cost Computer Program. 

• New iMacs are expensive and as investors we don't like to pay list price for things. So your best bet is to find someone who purchased one about 6 months old AND purchase the additional apple care. (So 3 years total from purchase date) I have found Craigslist to be a great source for these. Just keep up on it, they go fast when they get posted. 
• You can usually get a 27" for around $1450 depending on the model. So now you have a "new" iMac for about 25% off. You ALSO have apple protection in case anything goes wrong. (I had my screen and cd drive go bad in year two, it was fixed at no cost to me:)
• So here is the lease part. You sell you iMac before the apple care expires, so that someone else can have the comfort of buying with confidence. Usually around $1200. 
• So for about two years you "leased" an iMac for $10.42 per month. 

Thank you student loans for making me an investor:) haha

Just make sure this is the right plan for you, right now I have keep my current iMac past the apple care period because this strategy is time consuming and it might leave you without a computer for awhile.

So my long winded advice comes to a close. Pick the one that best suits your lifestyle/business. 

Good luck!

Hello @Nick Portillo,

You're already doing it! 

Asking for guidance and seeking counsel when you need help. So keep up the good work! 

Next check out this awesome post by @Joshua Dorkin: What Decisions do investors need to make their first deal?

There is so much great advice to go along with Podcast 200! 

Knowledge: 

• Read the best books on Real Estate Investing. I have been reading the Millionaire Real Estate Investor and so far its a great read. Its great to think big! (Let me know if you want to start a reading group, accountability partners are part of the success path)

I can only speak on my experience. 

1. Started with a house hack. Two houses on a single deed. I rent one out and live in the other with a roommate. The goal is to live for "free". I believe this is a great way to start because everyone needs shelter right? And whats better then getting paid to live there?:)
2. Next I did an REO BRRRR strategy with $0 out of pocket. Teamed up with RCN Capital and used a HELOC for a down payment. I forced about 60k of appreciation and will be able to get my money back out, including all closing costs. 
3. Started a flip a month ago. I like it for building up cash reserves. I was wanted to get away from asset rich, cash poor. 

My best advice is to find your strengths, do what you're good at, and make a wise investment that will lead you to your ultimate goal in life. Find your purpose and plan backwards to get there! 

@Philip Pape did you find one yet? I have a great guy north of Hartford if that works?

@Keyla Dietrich and @Corey Spruill: 

Time of Event: 12/13/2016 at 06:00PM
Location: 75 Gerber Rd East, South Windsor, CT 06074 

Hope to see you there! 

Hello BP Members,

The Central Connecticut REI December Meet Up is excited to announce that Don Vaccaro of RCN Capital will be hosting our next meeting. RCN Capital is one of BiggerPockets featured hard money lenders. I was able to use RCN for my first BRRRR strategy this summer I can honestly say that they were the smoothest part of the RE transaction. 

 Don is CEO of RCN Capital, a nationwide hard money lender since 2010. 

• Don is responsible for overall strategy and vision, and performs final underwriting on all loan approvals. 
• Personally invests more than $60 million in equity financing for RCN.
• Founding shareholder and Chairman of the Board of Directors of TicketNetwork, a software and online ticketing marketplace.
• Seasoned Entrepreneur with more than 30 years of experience.

RCN Capital: 

• Nationwide direct private lender with short-term loans ranging from 50k to 2.5M+ for the purchase of non-owner occupied residential and commercial properties, financing of renovation projects and bridge funding. 
• RCN helps investors in fast-moving and competitive real estate markets by using a common sense approach to underwriting, all approvals made in-house. (Quick responses and ability to close in as few as 10 business days)

Don has graciously offered us food and drinks for the meet up. 

Pitching: I clicked yes because RCN is hosting and will explain their loan programs. Otherwise, RCN is interested in how they can add value to our real estate investing. 

Parking: There is a visitor lot to your right as soon as you see the TicketNetwork building. Go to the main entrance around the cul-de-sac. Please arrive early to check in at the main desk.  

Meeting Timeline: Typically we have guest speakers talk for the first hour and network for the 2nd hour. 

Don't miss this chance to network! Every meeting we have great local contacts to help grow your business. Residential and commercial lending, contractors, investor friendly agents, buy and hold, fix and flip, wholesalers, and everything in between! 

If you have any questions please ask below.  

-Scott 

@Dolores Waldron buying as-is is ok IF you have done deals before. For instance, in CT we have a huge problem with crumbling foundations. Which can cost upwards of 150k so just be careful. I would bring someone knowledgeable to help you out. (An inspector that does side work?)

If it is bank owned then it should be free and clear of liens. (Don't take my word for it, still new to this and learning as well)

As for not seeing the inside just run your numbers on what it would need to be totally rehabbed. Count on it being destroyed and then try to get on the inside. (If it were me I would walk around looking to move into the neighborhood, I would knock on the door and ask for their opinion about the street. Then I would casually ask how they liked living here, Ohhh how long have you lived here? Are there any good landlords here? Do they take care of things in a timely manner because my last landlord didn't do a great job... (See where I go with this? Just friendly conversation) 

If you are doing your first deal go traditional financing, unless you get a better deal with credit unions that hold loans in house. Most likely your best bet is traditional. (1-4 unit qualifies as traditional, commercial lending is 5 units and up)