All Forum Posts by: Nate Bell

@Ryan Phelps

I think there’s a level of detail that you’re overlooking that would help clarify your thoughts on #2. Private lenders don’t operate like a credit card company where when you reduce the balance owed, they reduce the payment/interest owed. If a private lender gives you $50k, they generally don’t want to take partial payments and they’re going to charge you interest on $50k until all of that $50k is returned.

You should plan on having cash reserves that would allow you to cover any shortfall in the refinance so you can close out the private money loan.

@Jaclyn Manion

Don’t let that $6k burn a hole in your pocket. In this market, it would be very difficult for a newbie to find a deal worth spending everything they have on. I’d recommend continuing to educate yourself, save up, and seek out a side hustle connected to real estate that will boost both your education and finances. Try to find a local investor and see if you can help them with anything while you wait for the market to cool down.

@Jeff Langley

It’s hard to give a definitive answer without the rest of your financial picture, particularly what your reserve/emergency fund looks like, but if the property will still cash flow at the higher rate, and the slight reduction in cash flow isn’t meaningful to your daily life, I’d lean toward hanging on to the cash. If you have hundreds of thousands of liquid assets already, I might lean the other way.

@James Appleton

I’d be very careful about getting into your first major rehab in this construction/materials environment. There’s never been a better time to be a wholesaler with so much money floating around and so many uninformed people trying to get into rental property ownership. If I were you, I’d keep doing wholesaling, build your war chest, and then Brrrr your first property once contractors are hungrier and materials supply/cost has stabilized.

@Jon Greer

Sources cited debunking the popular myth that Wall Street is driving up prices on a large scale.

https://youtu.be/WjN8Fn0qWDc

@Wendy Deters

I wouldn't gamble your retirement on flipping. Not any substantial portion of it anyway. Most use cash, hard money loans, a HELOC, or some other line of credit. But you really need to start with education. "The Book on Flipping Houses" by J Scott is a good resource. And then you need to figure out how you're going to find off market deals so that you can buy houses cheap enough to actually make a profit on. Brandon Turner and others have books on how to find off market deals. Most of your profits are determined when you buy, not by what you do along the way.

@Cali Skier

Wow, this guy has some chutzpah! He doesn’t do the hardest part and charges above the top end of the pay scale?!

No, this is not a good deal, it’s not even general contracting. Coordinating subs is one of the top two or three biggest tasks that comprises the responsibility, and therefore the fee, of a GC. You can bet that if a sub doesn’t show or messes something up, it’s gonna be your problem to resolve. This guy should be paid a 1-time fee as a consultant, at best. I think you should help him go out of business and find a real GC.

@Troy Sanders

Get a hard money loan and get into a project with a total cost (acquisition and repairs) of ~$80k. Go into it thinking you’ll Brrrr it, and be open to the idea of selling it when you’re done after you see how the market is, how easy it is for you to get long term financing, and whether you went over budget or not.

@Robert N.

I think a lot of people on BP downplay or gloss over the struggles with cash out refi. Truth is, your experience so far is more common than not. Yeah, there’s some very successful folks on here that have lenders tripping over themselves to lend to them, but it’s just not the case for the average investor. Until you’ve blown up, the lending component of this business is going to be a challenge, and your ability to overcome that challenge is one of the few things that will separate you from the pack of mediocre, stagnant investors. Just keep calling and networking. When introducing yourself, be direct and quick to move on; don’t let them waste your time. You’ll find one.

@Jason Schatzberg

The “everything would be in his name because I can not” part is a little confusing and troubling. If you do this, you should be the title holder and he should be a lien holder.

What’s your exit strategy? How are you eventually going to pay home back in 3-4 years? Why will it take 3-4 years to exit? This seems like it would work for him to do interest only for 3-4 years with a balloon payment at the end. That’s not really a great deal for you though. You should be paying down some principal during that time, which would be happening with a more conventionally structured loan.