All Forum Posts by: Noah Wright

Hey Isadore!

Great to see you're looking into Poughkeepsie. I used to work in the area, not personally investing there, but I have helped handfuls of investors secure financing in Dutchess and Ulster counties, I do know it’s seeing some heightened interest from investors due to its proximity to the ever-expanding NYC and relatively lower property prices compared to alternative areas. If you’re focusing on specific property types (single-family, multifamily, or fix and flips), I’d be happy to help analyze the financials of the deals, without any concern about me sniping any good ones you find for myself, haha.

Let me know how I can assist!

Best, Noah

Hey Daniel,

Congrats on taking the plunge into real estate investing! It’s natural to feel both excited and nervous, especially with your first deal. Let’s break it down to see if this property is a good fit for your goals.

A Few Key Points:

1. Purchase Price and Rental Income:
   • Your purchase price is $325,000, and your rental income estimate is $5,250 per month. That’s a pretty solid gross rent-to-price ratio (~1.6%), which is a positive sign for cash flow. Anything around or above 1% is generally considered a good starting point for a potential deal.
2. Repair Costs:
   • You’ve estimated between $145K - $200K for repairs, which is a significant investment relative to the purchase price. To evaluate whether this is worth it, you’ll need to consider the After Repair Value (ARV) and how much the property will appreciate after the renovations. Since it’s a unique property and comps are hard to find, the third-party appraisal will be important in understanding the potential equity growth.
3. Cash Flow During Repairs:
   • Starting to collect rent on the 2/1 ($1,650) within 45 days is a smart move, as it gives you immediate income to offset some of your costs. Once all three units are operational, you’ll have three income streams to support your expenses.

Evaluating if it’s a Good Deal:

• Cash-on-Cash Return: After figuring out your total investment (down payment + repair costs + holding costs), calculate your net annual cash flow (rental income minus expenses like mortgage, repairs, insurance, etc.). Then divide that net cash flow by your total cash invested. A return of 8-12% is generally considered good, but it will depend on your personal goals.
• Risk with Repairs: Major repair costs are always a risk, especially with a wide range like $145K - $200K. It might be worth getting multiple contractor estimates to narrow down that range. Also, have a contingency fund in case costs exceed your expectations.
• Long-Term Hold or Flip?: If you’re planning to hold the property long-term, the repairs may not be as concerning since you’ll gain appreciation over time and benefit from consistent cash flow. However, if you’re unsure about future property values due to the unique nature of the property, this could pose more risk.

What You May Not Be Considering:

• Financing Flexibility: Using a HELOC for repairs is a solid plan, but make sure the loan terms are favorable and the rates are manageable over time, especially with interest rates fluctuating.
• Vacancy and Maintenance Costs: Once all units are rented, factor in potential vacancy periods and ongoing maintenance costs, especially with multiple units.

In conclusion, while the repairs are a big expense, the strong rental income potential suggests it could be a good deal if you manage the rehab costs well. Getting an accurate ARV and running different financing scenarios will help you make a more confident decision.

Let me know if you have any more questions or need to walk through the numbers further!

Hey Tanya,

Sounds like you've got a solid plan for getting into multifamily and using the BRRRR method! Let's break down your questions:

a. Using a HELOC for Down Payment and Rehab Costs:
A HELOC can be a great way to access equity for new investments, but taking out nearly all the equity on your SFH rental could pose some risks. Since you're also planning to take a hard money loan for the rehab, be mindful of the combined monthly payments. While your current rental supports a higher mortgage with positive cash flow, you’ll want to ensure you have enough cushion to cover unexpected expenses or vacancies on either property. It's all fun and games until a reckless driver jumps the curb...

Since your investment goals are $300 monthly cash flow and 30% equity, you’ll need to make sure the numbers work for both properties under these new financing terms. It’s wise to run different stress tests on your budget to see how it handles fluctuating interest rates, higher costs, potentially lower market valuations, or worst-case-scenario acts of God.

b. Offer Price and Rental Income:
With an offer of $525K and a mortgage payment around $2,633, the rental income you’ve estimated ($2,000 for the lower unit and $2,600 for the upper unit) should comfortably cover the mortgage and taxes. However, since you mentioned this is a mid-term rental strategy, make sure to factor in vacancy rates, seasonal demand, and potential furnishing costs, which can be higher than long-term rentals.

What you may also want to consider:

• Exit Strategy: If rates don’t drop within 12-18 months for your refi, what will your backup plan look like? Would you be comfortable holding on to the property longer at current rates? 
• HELOC Flexibility: HELOCs often have variable interest rates, which could increase over time. Are you prepared for rising rates, especially if the refi timeline gets pushed back?
• Contingency Fund: With both a HELOC and a hard money loan, it’s important to have a contingency fund for unexpected rehab costs or delays.

In terms of your numbers, it looks like you’ve accounted for a lot already, but running a few worst-case scenarios might give you peace of mind as you move forward. It sounds like you’re on track, but feel free to dig deeper into any potential risk factors or challenges! Happy to provide some competitive numbers on the financing side of the equation as well -

Good luck with the deal in Denver!

Hey Jasmine,

Yes, there are lenders that will allow a cash-out refinance on a property with no mortgage. Based on what you're looking for—keeping business and personal finances separate—using a DSCR (Debt Service Coverage Ratio) loan might be a great fit for your situation.

Here's why DSCR loans could benefit you:

1. LLC-Friendly: DSCR lenders typically allow the loan to be taken in the name of an LLC, so you can easily transfer the title to your LLC and keep the property separate from your personal finances. Obviously this is a huge concern, as a tenant could sue you as an individual for liability of the property, and in a country like this that could bankrupt you. We obviously don't want that risk on your plate.
   
2. No Personal Income Requirement: These loans don't rely on your personal debt-to-income (DTI) ratio, which is ideal if you want to avoid tying up your personal credit or finances. The loan approval is based on the property's cash flow—so as long as the rental income covers the mortgage, you're in a good position. A conventional loan may come in slightly cheaper, that's true, but the red tape on conventional mortgages is excessive to say the least.
   
3. No Reporting on Personal Credit: DSCR loans are kept off your personal credit profile, which is perfect for keeping your personal and business credit separate. This means it won't affect your credit score or show up when you apply for personal credit in the future.
   
4. Flexible Terms for Investors: Since DSCR loans are designed for investors, they tend to be more flexible in terms of documentation and loan structure, making them a smoother process compared to traditional loans.

This option sounds like it could meet your goals for separating business from personal while unlocking equity in your property. I would recommend getting a couple DSCR quotes, a couple conventional quotes if you want, and go with the numbers that help you sleep best at night. Let me know if you'd like to explore DSCR loans specifically further or would like to execute on this transaction --

Hey Yuval,

Great to see you diving into U.S. real estate! Since you're a U.S. citizen living abroad, non-QM (non-qualified mortgage) programs designed for foreign nationals might be an ideal solution for your situation. Here’s a breakdown to address your questions:

1. 30-Year Fixed-Rate Loan for Non-Residents: While traditional 30-year fixed-rate loans might be harder to qualify for as a non-resident citizen, non-QM lenders offer flexible options. These loans typically don't require the same strict income verification as conventional loans, and they focus more on your assets and property income. Rates will generally be higher than conventional loans—typically in the 7-9% range—depending on your profile and market conditions. Expect a down payment of 25-35%.
2. Loan Eligibility (New Build vs. BRRRR): Non-QM loans are flexible, so whether you're purchasing a new build or going the BRRRR route, they can work for both. However, lenders may have slightly different terms for a new purchase versus refinancing a property after renovations. It's important to make sure the lender offers both options so you can transition smoothly if you go with the BRRRR method.
3. Cash Purchase & Mortgage Later: Yes, non-QM lenders offer a product called "delayed financing," which allows you to buy a property with cash and refinance later. This is common among investors who want to act quickly and unlock liquidity from a property after closing.
4. Cash-Out Refinancing & Seasoning Periods: Non-QM programs typically offer more lenient or even zero seasoning periods, meaning you can refinance or pull out cash shortly after buying or rehabbing the property. This is perfect if you're using the BRRRR strategy and want to access equity sooner rather than later.

Working with a lender that specializes in non-QM loans for foreign nationals can help you get favorable terms and streamline the process. Working with a broker helps you save time shopping, unlocking access to the hundreds of different lenders without all the market research. This allows you to spend more time focusing on your investment. Let me know if you need help executing this transaction ---

Best of luck with your investments!

Hey Peter,

First off, I understand this is a sensitive situation, so kudos for approaching it with care. Here's a few things you might want to consider:

1. Open Family Discussion: Since there are multiple heirs and not all are on great terms, it’s important to have an open conversation with everyone involved. Framing the idea as a way to preserve and improve the family property (rather than focusing on personal gain) might help avoid misunderstandings. A transparent approach will go a long way in making sure no one feels left out or taken advantage of.
2. Purchasing the Property: Since the home is currently in a trust, after the grandfather’s passing, the property will be distributed based on the trust terms. If your wife’s family agrees, you could look into purchasing the home from the trust, possibly before it enters probate, which could save time and legal headaches.
3. Reducing Closing Costs: One way to reduce closing costs is to negotiate a private sale among family members, which might save on agent commissions and some taxes. A family attorney could help structure the sale to minimize legal and closing fees. Alternatively, inheriting the property and doing an internal buyout (where your wife and you buy out the other heirs) might allow you to bypass some typical closing costs.
4. Renovating and Flipping: If the home is in need of significant repairs, getting an accurate estimate of the renovation costs before making an offer is critical. Since Nassau County home prices are high, ensuring there’s enough room for profit after the flip is essential, especially considering the potential family dynamics and the costs involved.

It’s definitely doable, but being upfront with the family and working with an estate attorney are key to making this work for everyone. Let me know if you have more questions more specific to the renovation financing, and good luck navigating this!

Using "All" of the equity is not easily possible, but we can get up to 85% of that, across any number of properties. Get a couple DSCR quotes and go with the best numbers

Hi Mr. Cohen, I can secure the funds for you based on the ARV immediately (0 months), let's get to work on this. Talk soon

Hey man, I'm curious if we can secure you an 85% rate/term refinance. That 10% difference in LTV would cover the full $25k (and I don't charge such high origination fee either.) We will need to know more about your credit profile but I'm happy to spend some time working on this to find a solution in this direction - if any exist. Feel free to reach out.

Hey James,

Welcome to the fix-and-flip world! It sounds like you’ve done some good research already. Let me break down a few key points and strategies to help you out:

1. Fix-and-Flip Loans (90% LTC / 100% Rehab): When a lender says they’ll finance 90% LTC (Loan-to-Cost) and 100% of rehab, they mean they’ll cover 90% of the total project cost, which includes the purchase price and renovation. For example, if the purchase price is $359K and rehab costs are $33K, your total project cost would be $392K. The lender would fund 90% of that, which is $352.8K, and you’d need to cover the rest ($39.2K). I do Fix and Flip loans like this all day long, we're seeing relatively low pricing these days on those loans.
   
   
2. Private Money Lender for Gap Funding: Since you'll need to bring in around 10%, gap funding can be a smart move if you don’t have the liquid cash. A private money lender could provide that last 10%, allowing you to move forward with the project without needing to tie up your own funds. Gap funding is a lot harder to secure, especially without demonstrated experience. I would be prepared to bring the 10% in out-of-pocket for the first deal, or maybe first 3 flips. Once you get multiple under your belt, it becomes a lot easier to do this type of creative financing.

Just keep in mind, private money loans can come with higher interest rates, so you’ll want to ensure the margins on your flip are high enough to cover those costs while still leaving room for profit.

If you’ve got any more questions, feel free to reach out—happy to help where I can!