All Forum Posts by: Scott Hollister

@Account Closed Yes sir! Sorry, I've got a hard money lender and his name is Jeff and his last name resembles Joe's...ha

Here is the link I referenced with @Joe Villeneuve: https://www.biggerpockets.com/forums/311/topics/257763-brrrr-strategy

Hey  @Mark Stone,

1. FHA loan, still owner occupied? (What's your interest rate?)
2. If I were in your position I would refi, $1800 year x 30 years = $54,000 dollars. Even though you have tenants "paying" this fee I think you can justify paying the refi fees, and finding a higher and better use of the PMI fees. (you could also finance them in as well.) Don't forget they will require an appraisal, check to see if its lender paid.
3. Refi sooner than later if this is your choice and it works for your situation. Im getting 3.5% owner occupied in CT. Some call that free money... (As opposed to high teens back in the day)
4. What works for me is the BRRRR strategy. Here @Jeff Villeneuve explains it the best IMO.

Here are the steps with explanations:

1 - Get cash together.
2 - Find a RE Market that will allow you to use your cash ONLY for all costs (buy/rehab/etc...)
3 - Find a lender that will do REFI loans on Rentals...and what their terms are. The usual terms would be 75% of the ARV (after repair value).
4 - Find a property, in the Market you found, that will allow your to -
a) Buy/rehab cost at less than the terms of your lender for refi (75% or less using the lender above) & where that total cost is not more than the available funds you have on hand.
b) Buy/rehab the property
5 - After the "seasoning period" required by your lender, get the property refinanced.
6 - Take the cash from the refinance (this is why you use cash to start with...and not a loan) and repeat Steps #4 - 6...as many times as you want/can.

Note: After a certain point, or even in the beginning, you may need to involve cash partners to get the needed cash together, or a credit partner if you can't get approval for the refi's.

For me I didn't have the cash to put down, so I used a hard money lender. They required "skin" in the game and I didn't have the 20k to put down, so I borrowed that too. I used a Home Equity Line of Credit to put down on the property using no money of my own, just sweat equity. If you're in a better position financially where you can use all your own cash, go for it. If not, let the creative process begin!

@Mark Stone this has been bugging me since I got my first property with PMI 4 years ago...

1. When did you purchase the house? (Sounds like a decent time ago if you have 20% equity?) 
2. Are you sure you can't request it off after 78% LTV?
3. Check with your local lender, mine charges around $2800. If thats the case then you can justify financing it in and "paying yourself" the PMI until that amount is fulfilled.
4. If you refi, do you start the loan over with a new 30 year? Just remember that loans are interest heavy in the beginning. Make sure you account for this as well and not just the monthly savings of getting PMI off.
5. Weight out the options with money today versus money tomorrow. For instance, if your triplex is cash flowing and making you money, do you have a higher and better use for that money? It might be cost effective to purchase another property since: interest rates are low, deals are out there, etc. BUT this is just me throwing out options. Take it all in and form your own decision. (Listen to others as well, pick what works for you)
6. Is there a higher and best use of your equity? HELOC for a BRRRR strategy? (HELOCs in my area go up to 97% LTV)

Best of luck and please let us know! 

@Yer Ly Correct. Right now my goal is to buy properties with as little out of pocket. I "purchase" them with sweat equity. Thats what I'm good at, I also have summers off as a teacher. @Brandon Turner says that everyone has strengths, you just have to find/use yours and leverage it to your advantage. 

Hello @Yer Ly,

I think the only thing that is consistent across the world is Cash on Cash return. Are you happy with making 14.17% on your money? (It's hard to say, you have vacancy, cap ex, p&I, repairs, insurance, and property taxes) It is good that you are budgeting for those but most are market specific so its hard to say if you should increase or decrease them. 

I think you should contact the seller to factor in repairs. That is a HUGE factor when analyzing deals. 

In my opinion, I think there is a higher and better use for that 24k. Are you familiar with the BRRRR strategy? Find a hard money lender that will loan you on a property that needs work, put 10% on purchase and rehab, repair it, rent it out, then do a cash out refi on the property. 6 months to a year later, repeat with your 24k.

Look into the BRRRR strategy and see if its right for you. Best of luck Yer!! Keep analyzing, you will get better and better with each one!

Here is a post from @Joe Villeneuve...

Here are the steps with explanations:

1 - Get cash together.
2 - Find a RE Market that will allow you to use your cash ONLY for all costs (buy/rehab/etc...)
3 - Find a lender that will do REFI loans on Rentals...and what their terms are. The usual terms would be 75% of the ARV (after repair value).
4 - Find a property, in the Market you found, that will allow your to -
a) Buy/rehab cost at less than the terms of your lender for refi (75% or less using the lender above) & where that total cost is not more than the available funds you have on hand.
b) Buy/rehab the property
5 - After the "seasoning period" required by your lender, get the property refinanced.
6 - Take the cash from the refinance (this is why you use cash to start with...and not a loan) and repeat Steps #4 - 6...as many times as you want/can.

Note: After a certain point, or even in the beginning, you may need to involve cash partners to get the needed cash together, or a credit partner if you can't get approval for the refi's.

Hello @Christopher Kolasa,

Thats great that you're looking to get your first multi! House hack duplex is a great way to start. Plus, you have a great rental market in RI if you market to URI students. 

Speaking about your friend. Instead of looking at his debt, look at his personal philosophy. That will tell you the type of man he is. I would vet him strictly as a business parter, not a friend when it comes to investing. If someone just looked at my student debt I would have never gotten started. I have around 60k also, but I have never been late on any of my bills because I respect the value in making my lenders whole. Regardless of the situation.

My questions: 

• Student loans: Has he ever been late? Are they refinanced to help lower his monthly debt to income ratio? (You won't be liable for HIS loans, if you form an LLC together, then you are a team. If it fails, then you both owe the debt of that project and any associated fees. It is important to know what type of person he is before getting into bed with him.

(in this situation, does he pay his bills)

• You must plan for the worse in the sense that this IS a business and should be treated as such. Talk to an attorney to see if an LLC is the right type of legal entity for you in your market. Every state is different.
• How will you split the deal to make it beneficial for both parties? Are you fronting the money and he is going to do the work? 

At the end of the day just make sure you are investing wisely. Take proper precautions, think of multiple exit strategies, and do your due diligence. Best of luck! You are at the best forum for REI!

Hello and welcome,

@Adero R.

It sounds like you already have the success mindset, no time like the present! You are in the right place, listening to the podcasts and watching the webinars. 

Check out these tips: https://www.biggerpockets.com/renewsblog/wp-conten...

Best of luck and keep at it! 

@Eric Armstrong,

I just received a HELOC 2 months ago for my SF investment. I went up to 90% on my primary because I purchased it with an FHA 3 years ago. I pay an introductory rate for the first two years, my current payment on 21k is 71.34 a month. Interest only until I refi out in 6 months.

After intro rate I pay prime plus 1-2%. 

Local Credit Union in CT. 

Hello @Brian Wobbe, 

It's great that you're thinking about investing in real estate. Just make sure you are ready to do so with a business mindset. 

My questions are:

1. It sounds like a D area, with 15k you can put 3.5% on a FHA duplex in a great neighborhood. DO NOT be fooled by cheap houses, in my market they are cheap for a reason. And if you have listened to the podcasts you know Detroit is a tough market.
2. It scares me that 15k wont hurt you financially, losing money always hurts. Whether its a dollar or 15k. 
3. This friend, 
   1. Have you know him for awhile? 
   2. Is he good with finances? (If he needs an extra couple hundred a month?)
   3. Does he bring real estate knowledge that you don't have? (Then a 50/50 split might be worth it)
4. You always should be looking for passive income, appreciation is a cherry on top. But its even better when you can carefully look for it. 
   1. What neighborhoods will improve when a school is renovated? Job growth moving into an area? Etc. 
5. My advice: If you are going to get a 15k house in Detroit and there is no way of talking you out of it...
   1. You have the upper hand with cash, if you say its already renovated then whats stopping you from just buying it and learning as you go? Paying him a property management fee? Why involve a parter (Unless you get an education) when you don't have to? 

Hello @Dave P.,

You're close to me. I have two private money lenders I use in CT that offer a range of terms. Let me know if yours doesn't work out and I will recommend one of them based on your needs.