All Forum Posts by: Paul Beets

I listened to this podcast. What I'm still not sure of is how you included the rehab funds on the HUD. Neither banks nor title companies have any idea what I'm talking about when I bring this idea up.

@Alexander Felice: Any chance you could elaborate on this or correct my misunderstanding? I'd be thrilled with even 100% of HUD if the rehab funds were included.

I've had some success finding banks in my market to do cash-outs at 75% or 80% LTV of market low to zero seasoning. The 6 months seasoning has been the constraint for me. But I'm interested if there is a way to do it even faster with this delayed financing exception.

@Maria Luna:     I also live here in Metro Detroit.    I don't know the area as well as some of the other folks but I'm afraid I'd have to agree with them.     All of my properties I own are in Indianapolis.   Great market, low taxes, and very landlord and real estate investment friendly city.      I would STRONGLY encourage  you to move there rather than Detroit.   

Michigan is a great place to live and Detroit is on the up-swing.     As others have mentioned - investing in Detroit will probably be the biggest challenge of your life.    There is nothing that will be easy or glamorous.    

Here is my advice to you to try and be "positive" about this move since you are "all-in."    

Network, network, network. Attend every single REI meetup, local mastermind, and renegade you can. Give what knowledge you do have out for free. Help others as much as you can. Build a strong network of like-minded individuals whom you trust and rely on.

I'd like to be one of the first people on that list.    I have a small network of my own I'd be happy to share.   Just send me a PM.      August is a great time to arrive in Detroit.     If there is anything I can do please call!

Paul

So far so good!     David Greene has a really great book on out of state investing.    

I got started and only invest out of state.   

Much success,

Paul

If you are wanting to successfully do a BRRRR - this is the formula you need to run "back of the napkin" for every property you look at:

Cap Rate

(Anticipated Rental Income * 12) * .6 - this will give you "Net Operating Income" for the year with a 40% hedge for expenses.

Divide that by the purchase price gives you a cap rate.      I don't do any deals that aren't 12%+ cap rate cash flowing $200 per month after all expenses.

75% of After Repair Value

You want to be "all-in" purchase + rehab at 75% of after repair value. Be conservative on your comps for ARV.

If these two line up - then it is a good BRRRR deal. Unlikely you are going to find those on the MLS but not impossible.

Paul

A portfolio loan is a loan against 2 or more properties (which you have).     You might be able to qualify for this by leveraging all your existing assets.

Like the commenter mentioned above - DTI is a funny thing and every bank may have a different method of calculating and threshold requirements. The bank you spoke to and got denied - what was their threshold and what did your DTI come back as? Did they include rental income or no?

I was recently denied a HELOC on my primary residence (wanting to do what you are doing) because when they calculated my DTI they didn't include my rental income on my 4 properties. So my DTI was really high even though I had a 720 credit score. But I went to another bank and they approved me.

Paul

@Alejandro Arciniega

My first though just glancing at the numbers is the 1% rule. The property should rent close to 1% of the purchase price. It does but it is pretty close.

Second thought is with rehab you are a very low proforma cap rate around 6%. Your ROI is going to be better with leverage but you are already starting very low.

If that ARV is off at all this whole deal is going to go south.

Your goal should be to pull as much out of the deal with the refi as you can. You are leaving $20K+ in the deal! That really isn’t good.

My two cents. Happy to discuss more for you. Your goal needs to be a very comfortable ROI after leverage. Say 20% or more. I do deals now that are 40% and well beyond.

Please send me a message and we can exchange contact numbers.

Paul

@Andrew 

@Andrew Monaghan What you have described is definitely the process you'll need to follow.   I'm not sure that all of the travel is required.   But has @Kaylee Walterbach mentioned - the author has also published a really great book about long distance investing.    You couple these two books together and you have a very practical guide how to build that team and develop the relationships necessary to be successful.

I am currently investing out of state although I don't know if I would call it long distance ( around 5 hours distance ).    I drive down there maybe once a month to check in on progress in person.   However - I have built my team and I communicate with them via phone and e-mail multiple times daily.

I'd be happy to have a chat with you and answer any questions you have.    The hardest part of real estate investing is taking that first step!

Good luck!

Paul

@Vinh Huynh. Can you share some background why you purchase this property to begin with?