All Forum Posts by: Patrick Roberts

Yes, wholesaling is now illegal in SC for the most part. 

NC is also trying to pass legislation right now that is even more restrictive. Basically, all buyers would have to use a realtor or be licensed themselves to transact with a homeowner. 

The specifics of this should be detailed in the operating agreement or whatever contract/documents laid out the ownership, authorities, resolutions, etc. 

Taking what you wrote at face value, your parents own 60% of the equity and the debt, not just 60% of FMV of the property. In other words, there is $160k of equity in the property, and they would get 60% of that at liquidation, not 60% of the FMV, unless the documents say otherwise. Their portion of the debt would need to be assumed by you or retired out of their proceeds on the 60% of FMV.

Assuming they are effectively seller-financing their ownership to you in addition to paying off the existing loan, then the new loan would be $190k + their $96k, so $286k total. 

Anyways, I doubt this deal is going to work out, as the additional $96k in leverage at any rate is going to wipe out what little cashflow there was and then some. Also, 30yr treasuries are yielding 4.96% as of this afternoon. There is no reason for them to lend on a moderately risky deal like this when they can get the same yield risk-free. I get that they are your parents, but this deal isnt fair to them. The rate on this should be at least 6%.

Last piece, do not count on refinancing into a lower rate anytime soon. Gurus have been predicating rate cuts for 3 years. All evidence points to the contrary right now. I would not expect a rate below 6% at any point in the near future. 

Grants/subsidies for residential real estate investment are basically non-existent. 

 Angel Oak is a wholesaler lender. I dont think they have a retail channel (I could be wrong about that). You'll need to work with a broker or lender who can originate for them to access their products. 

Helocs on investment properties are hard to find, and even when you do find them, they tend to be more like hybrid Heloc/Closed-End Seconds than true revolvers. As an example, Angel Oak offers a Heloc for investment properties, but they require a significant draw at closing than cant be repaid for a year (I believe it's a year). 

There are a few wholesale lenders like A&D Mortgage and Deephaven that are offering DSCR 2nd position liens right now. These are closed-end seconds, though, meaning that it functions like a cashout - you get the full loan amount at closing and then it amortizes until repaid. These arent terrible products in select use cases.

Some smaller banks will offer commercial lines of credit secured against investment properties. These tend to require resting every year or so, so this may or may not work for what you have in mind. 

Generally speaking, this plan is workable. Get a Heloc on the condo while you still have it as a primary (finding a lender who will offer a Heloc on a condo is another story), and then use this as emergency liquidity. Try to pile up some actual cash as well. You can use DSCR loans for purchases at 80% LTV on tenant ready properties, or potentially use hard money + cash to buy distressed and rehab, then refi with a DSCR. Start networking with lenders in your area now to get into the weeds of what it will take to prequal you for options like these.

I recommend using the Lenders tab. You can filter by state and specifics and look at their bio prior to reaching out.

Very wrong. The LTV absolutely matters. You need an equity partner for this, not a lender. No reason to bring 90% of the capital and bear almost all the risk only to get a limited return.

Lenders who will allow 15% down are out there, but the terms will be horrible to the point that most deals arent profitable. From a lender's perspective: 25% down is the gold standard, 20% down is meh, and 15% gets sketchy. 

Find out whether the quote is actual cash value (ACV) or replacement cost estimate (RCE). A lot of insurers are offering ACV as a way to keep premiums down in high cost areas. The tradeoff is that ACV brings depreciation into the value - so if a roof has to be replaced and costs $30k, but it's ACV was only $5k at the time of loss, then insurance is only paying $5k. Make sure you have coverage for hurricanes/wind and hail. If you have a lender on the purchase, I'd be shocked if they allow you to proceed with insufficient insurance. We dig into the quote to make sure the collateral is sufficiently protected.