All Forum Posts by: Eric Northrup

We have a property that we renovated completely with the hope of BRRR. However, we are having more and more opportunities to buy properties that are a little better in our buy box.

We are wrestling with do we sell or add it to our portfolio.We will make money either way but we would be taking 15-20k hit loss in our overall profit if we sell.

If we rent, we would be cash flowing little 200+ but now strapped for cash to buy more properties.

There's more details I could give but this is the initial quandary.

Thoughts?

https://www.zillow.com/homedet...

Is this the property that you are thinking of selling or renting? Why can you not do a HELOC or refiance? Why not try to bring a partner in so you can do the other deals you are thinking of?

I've thought of all of those options. Navigating through the numbers as we speak. Thank you

0 Votes

Cincinnati, Ohio

Quote from @David M.:

@Eric Northrup

I think it depends on your investment goals and strategy, as limited by your resources. "Sounds like" you are stuck between choosing "quick, short term" profits (albeit as a high tax rate since it would be flip) or longer term buy and hold. Perhaps think about it this way, which approach makes you more money in your mind? Can you make more, hopefully significantly, than $200/mo (after taxes include SE tax, etc) flipping properties since you have the deal flow? I'd like to think so. Maybe leverage your cash with some hard money / private equity and you can really generate some profit. You could be doing 2-3 deals at a time instead of one at a time.

Does that help? I'd be happy to chat if you like. Just let me know.

Yes that is exactly where I am at. Thank you for your input. Both decisions make money, its literally what is going to be best. All in all, its probably up to me and my level of risk. Thank you

0 Votes

Cincinnati, Ohio

It all started with this property we call, WEAVER. Weaver was a house that was neglected for 7 years in one of the most family-friendly streets in Cold Springs, KY. I was presented with an opportunity to finance and partner on this deal. While we could have put “lipstick on a pig,” which means do the bare minimum and make a large profit while hiding problems. This is what can give “flippers” a bad reputation.

After developing a friendship with the previous owner, both Brandon (my partner) and I, decided we wanted to redeem this property as our first project, from a major eye sore to a tremendous blessing to the next owner or renter. We made a promise to send the previous owner pictures after the renovation was complete to show her the before and after. We invested a large amount of money (very large) and did a complete renovation, updating and fixing everything about the house. We learned a lot about ourselves, the importance of systems and processes, and the value of reliable and qualified contractors to do the work. The project took a total of 7 months (longer than we initially thought) as we outsourced everything and worked full-time jobs. Here was the biggest surprise…The appreciation and gratitude that came from everyone on this family-friendly street. I couldn’t believe how many people asked to go inside and marvel at the transformation of the house. Thanking us over and over. This was by far, worth more than any amount of profit we could receive. A sense of purpose, accomplishment, and pride in what we were able to do with the house birthed that day and how Northern Lights Properties came to exist.

I absolutely LOVED the previous job I had (Pastor) and was able to bless people in so many ways. I had great pay, unbelievable work/life balance, however, I couldn't justify staying in a job and still pursue real estate. As I transitioned from the job, a lot of transition has happened in the last month. We are excited (and very nervous) of all the change but are reminded that this is what it means to walk by faith. It's a struggle, it's hard, many times I wonder why in the world did I leave a job that I absolutely love. It’s the moments where you see redemption play out in front of your eyes that spurs you to press forward. Thanks Weaver.

https://www.zillow.com/homedet...

0 Votes

Soo...Need Wisdom.

We have a property that we renovated completely with the hope of BRRR. However, we are having more and more opportunities to buy properties that are a little better in our buy box.

We are wrestling with do we sell or add it to our portfolio.We will make money either way but we would be taking 15-20k hit loss in our overall profit if we sell.

If we rent, we would be cash flowing little 200+ but now strapped for cash to buy more properties.

There's more details I could give but this is the initial quandary.

Thoughts?

https://www.zillow.com/homedet...

0 Votes

Cincinnati, Ohio

Quote from @David M.:

Quote from @Eric Northrup:

Quote from @Nick Belsky:

@Eric Northrup

You are experiencing what many many BRRRR investors run into. The seasoning requirements can put your plans to a screeching halt. Working with a mortgage broker who is familiar with BRRRR, the fix and flip financing, as well as the perm financing knows how to make this process seamless and maximize the amount of cash you get out of your strategy.

There are several lenders who can do what you are looking for. Sounds to me like you need to find the right mortgage broker.

Cheers!

I have been told that Seasoning requirements are FEDERAL REGULATIONS from my bank...As I have read the document and sought counsel, I can't find this to be true. Am I missing something.

@Eric Northrup

Yes, the Title seasoning requirement is 6mo as part of the Fannie Mae requirements. I don't have the regs handy, but its there... So, as mentioned if you stay away from conforming loans you can move much faster. You just "give up" what comes with standard consumer loans.

Also, if you have a conforming loan, the loan needs/should be kept open for 6 payments. Otherwise, the lender, not you, gets hits with fees and they as well as the loan officer loses money (actually the loan officer has to pay back the commission). So, between the two conditions the 6 months are "baked in" regardless.

You can use a local bank, but then they have to be willing to hold the Note and selloff the Note to the secondary market. Apparently, whomever you are working with at that bank isn't that savy or doesn't think you are a good bet. I don't know...

Good luck.

I am purchasing these homes with cash...The bank is telling me I can't refinance after renovations because of seasoning requirements. Any way around this?

0 Votes

Cincinnati, Ohio

Quote from @Andrew Postell:

@Eric Northrup thanks for posting. This is a far too common frustration from many of us as investors. Early in my career lenders would tell me that the BRRRR method was illegal! And they only said that because they couldn't lend on a property like that. It's like a foreign language sometimes. As @Kerry Baird (thanks for the mention) stated I have tried to create several posts on this topic to try to help with people's understanding on loans. I'm still trying! But here's some resources for you to use (hint: always work with a lender...or any other vendor...that comes from another real estate investor):

1. How to find good real estate investor friendly lenders: Here

2. How to properly structure your cash purchases: Here

3. How to avoid seasoning: Here

Feel free to ask anything else if you want. Thanks!

Thanks man! This was very helpful

1 Vote

Cincinnati, Ohio

Quote from @Nick Belsky:

@Eric Northrup

There are several lenders who can do what you are looking for. Sounds to me like you need to find the right mortgage broker.

Cheers!

I have been told that Seasoning requirements are FEDERAL REGULATIONS from my bank...As I have read the document and sought counsel, I can't find this to be true. Am I missing something.

0 Votes

Cincinnati, Ohio

Quote from @Orkeem Davis:

Nope! Keep it KISS -- "Keep It Simple Stupid" Too many moving parts. Don't get me wrong, I love the interactive world of real estate, but you should have a pulse on your business goals and objectives. You should be guiding the boat or you should connect with a mentor who can get you to the shallow and deep water until you ae able to swim on your own. Best Success!

Thanks man! I appreciate the response.

0 Votes

Cincinnati, Ohio

I am doing both. Basically, acquiring/renovating houses are the main gig but we are getting requests for outside work as people are made aware of what we are doing. I would be interested in your templates and checklists. Thank you

Quote from @Kelly Creamer:

Hi Eric:

Are you looking to streamline the remodel/construction process? If, so, are you flipping the properties or brrr?

I have templates and checklists I’m happy to share. If you want to give me some specifics with anything on the rehab side (managing subs, schedules, job costing estimating etc) , feel free to ask!

0 Votes

Cincinnati, Ohio

Thank you Chris! I appreciate your wisdom. I have been told any business that is making over 30k a year should go to a "S Crop"

Do you have thoughts on that?

Quote from @Chris Seveney:

@Eric Northrup

LLC is a pass through entity unless your filing taxes as an s corp so the statement from for taxes it's a liability thing is BS.

Using an unlicensed company to do the work that is your own will give you zero asset protection because who is the owner of the LLC that was doing the work - you, so guess who is also sued - you personally. Sounds like your tax specialist is also trying to play lawyer (and maybe they are one), but based on what was written this seems like a huge waste of time and money and puts you at greater risk.

0 Votes

Cincinnati, Ohio

All Forum Posts by: Eric Northrup

Eric Northrup has started 4 posts and replied 14 times.

Post: Need Wisdom with starting out

Post: Need Wisdom with starting out

Post: It all started with Weaver - Feel Good Story

Post: Need Wisdom with starting out

Post: Refinancing vs Portfolio Loans

Post: Refinancing vs Portfolio Loans

Post: Refinancing vs Portfolio Loans

Post: Help! I need somebody...Contractor conundrum

Post: Help! I need somebody...Contractor conundrum

Post: Help! I need somebody...Contractor conundrum