All Forum Posts by: Nikolay Grozev

Quote from @John Underwood:

If you don't have much equity then a refi doesn't make sense, plus you are going to be paying a much higher interest rate.

I would say using an equity line would be better but once again you don't have enough equity.

Thanks, John. Yes, conventional refinancing sounds the least favorable, and the equity line is also not ideal. 

After I asked the question here, I did some research, and it looks like there are lenders specialized in STR-related loans, that are often times based on anticipated returns, etc. Basically, treat it like investing in a business. 
I'll share my progress here, but meanwhile, I'm still open to suggestions and recommendations. 

Hello everyone,

I recently (a year ago), bought a cabin in the mountains near LA. The house has a lot of potential but also needs a lot of work, and we plan to do a full renovation. I do have the capital to fund everything myself, but would rather keep a decent amount of cash reserves, especially considering the questionable outlook of the economy, so getting a loan makes the most sense at this point. The problem is that the house already appreciated a bit, but we do not have that much equity in it yet, and with the current rates it doesn't make sense to refinance (my mortgage is at 3.25%). I might be able to borrow some money by using lenders specialized in refinancing, but it might be just a fraction of what I would need, and I'm hoping the fund at least 50% of the work or more. 

My question is, do you know of any lenders that are specialized or have products specifically for short-term rental investors, where they evaluate the potential of the property based on location and average returns and do not require the equity of the house to be sufficient collateral for the loan. 
I also have my own business and will be able to show consistent revenue, but like many small business owners, my tax returns would not qualify me for the amount that I plan on spending. 
Another option would be to apply with a smaller bank in the Riverside/San Bernardino area, so this type of recommendations are also welcome. 

Thanks in advance. 

Hi Howard,

I live in LA and I will be traveling to Miami this weekend. I will be driving to Jacksonville and can meet for a coffee or lunch on Tuesday or Wednesday (08/08 - 08/09). I am looking to invest outside of California and I would love to learn from a person with first hand experience in your local market. I think there is also potential for some sort of partnership as well. 


 And to anyone else reading this, I was looking for a meet up in the area during my trip, so I can connect with more people at once, but there isn't anything in the next 10 days. If anyone can recommend a wholesaler in the area or if you are investor or realtor, maybe we can try to meet a few people at once and connect. 

Hi @Marvin S , please send CA, IL and SC to [email protected] 

Thank you.

Originally posted by @Manolo D.:

The going rate for real roofing company is around 500-600 per 100 sq ft. Just asphalt shingles, add if you need some wood work. Depending on roof pitch, it could increase 10-25% from floor area. You might need to present only that mandatory repairs for habitable living, then go out of pocket on the rest of the rehab if you want to go more fancy. There are some construction loan that will turn into a permanent 30 year loan, or was it for new development, I can't remember. Good luck. 

Note: Roofing trade CA workers compensation is at 75-100% of whatever the worker pays are, that makes it very expensive in CA.

 Thanks for the info @Manolo D. Your numbers match my budget, too bad, that I think I lost that deal. Eventually, the bank decided to go with a cash offer... I still learned a ton during the process, though, and hopefully I find maybe better opportunity before end of the year. 

Originally posted by @Matthew Nixon:

You won't be able to get a conventional loan on a property that needs $45-60k in repairs.

Cash or hard money is you're best bet @Nikolay Grozev

The house doesn't need $45-60K. The mandatory repairs would cost roughly $12-15K. I do, however, want to spend extra to utilize the full potential of the property. 

Also, your advise gave me the idea to have more than one lender lined up, just in case. Thanks Matthew.

Hello everyone,

First of all, I'm so glad I found this place. One can literally spend years reading everything here. Problem with that is, the more I read the more I feel like I know nothing ( which is very close to the truth). 

Here is my situation. I've been looking for a property around Long Beach. I live in a nicer area of the town and my funds wouldn't allow me to invest here, so I started browsing through the more affordable areas. As you maybe know, California is not the easiest place to find cash flowing opportunity. I did however stumbled upon a single family house in rough shape, that after all the repairs might be a good candidate for keeping as cash flowing rental, or a flip. 

I've been reading and researching and feel like I understand the concept ( flipping or rehabbing and keeping as rental). Many of the details, though, seem quite vague for now. I'll try to summarize in this post most of my questions.

1. My idea is to use conventional loan, with 10-15% down, and for the rehab use the rest of the cash that I have + probably either hard money lender or get some help from my visa and masters cards ( I know that's not a great idea, so might keep it as last resort). The offer I made is for $230K and the projected rehab will cost $45-60K. What other options do I have for getting those $30-40K besides the hard money lenders? BTW, feel free to recommend if you know any that work with this type of loans.  

2. Still not 100% sure how it works with the mortgage. Can I buy it, rehab it in 2-3 months and immediately after that request re-evaluation of the property and try to pull out what I invested in the rehab? From what I've been reading it seems like that, but aren't there any fines for refinancing earlier than a year after the close or something like that? Do I need to initially discuss that with my lender and make sure he does?

3. When it comes to rates, I'm pre approved with 2 of the biger banks - US Bank and Wells Fargo, but I see some smaller lenders offer lower rates. Which ones work better for what I plan on doing if it matters at all?

4. Is it a good idea to pay some extra after a year? Since I'll go with fairly low down payment, if I pay extra 10-15K for the mortgage, this will remove the PMI, right? Plus will drop my monthly payment and therefore improve the cash flow. But can I do this whenever I decide?

5. Now on the more technical stuff. The roof has to be redone. It has 3 layers. Price wise, does it matter if I'm redoing a roof that has 1 layer or 5? My guess is it does, but how significant? And what's a realistic price for redoing a roof like that if the house is roughly 1300 sq ft? 

Thanks in advance for the help, guys.