All Forum Posts by: Paul Shannon

Corevest, Lima One, Visio, Temple View....all do 30 year fixed rates with LLC holding title. Higher rates, but if this is what you seek, they can deliver.

That's a high risk maneuver.  It may work out, but what happens if the stock market goes down and there's a margin call?  What happens if your rental has an A/C unit that needs replaced?  What happens if your business doesn't get off the ground as quickly?   

I'd rent for the short-term.  Keep the money as reserves.  You don't want to get crushed.  

As @Alex McIvor mentioned, Visio is a good option. Similar appetite would be Corevest, Lima One, or Temple View. You won't get 80% LTV in this environment and rates will be higher. They are portfolio lenders who will do 30 year notes on a property in an LLC.

I've read this thread and agree that there is a strong possibility of a significant problem/correction, based on the data already presented.  

But, what the point should be is that you need diversification because NOBODY knows what's going to happen.  The economy is too complex for economists to predict it correctly consistently.  Diversification in stocks, bonds, precious metals, different assets within real estate, other alternatives.  

If you only have your money in flipping houses and inventory picks up and prices go down while you're borrowing on bridge-loans, you are going to get hammered and wiped out.  

Its prudent to raise cash reserves, diversify, etc.  Its not prudent to sit frozen and think you know what is going to happen.  You'll look back in 5 years and have missed who knows how many opportunities.  

Take proper precaution so when there is a downturn, you're ready to handle it and capitalize on it.  That downturn may not happen for quite some time though.  Just don't be over leveraged when it happens.  

Its sounds like the GC has the opportunity to drive up labor costs on the front end prior to the sale.  They could also walk off the job with your materials and you'd have no recourse.  I'd give a bigger % profit to them, but have them put some skin in the game.  

Ex: You pay for the purchase of the property.  GC pays for materials.  At the sale, you both get your up front investment back prior to splitting the profits. 

Here's a map to help with some of the aforementioned neighborhoods:

Agree with @Whitney Hutten and would add specifically with pursuit of BRRRR to have an idea of who your lender will be and what their terms will look like so you know how to get your money out. Understand your comps in your market, ideally the one you live in.

If you do all these things and still miss, it likely won't be by much.  If its isn't the deal you thought it would be, you may not make the return you thought you would.  But...if you rent if for a few years, you'll get your money back.  It just may take a little longer.  

You're money is not going to evaporate.  You'll have a hard asset that produces income.  When I understood that, my fear of failure was diminished.  The bigger mistake would not be taking a chance on yourself.  

Had FU money in the bank after grinding without passion for years.  BRRRRd my first property and pulled out ~$23K more than I had put in.  I've never ran so fast the day I ran from that corporate gig.  

@Simon Obas  @Joe S.

It comes down to deal flow, capital available, contractor crews etc. Being careful taking on too much is particularly prudent right now b/c lenders could get spooked pretty easily if and change the guidelines or stop lending on a dime, like they did back in March. If renters stop paying and there's a lot of evictions, for example, seasoning requirements could become even stricter. I love BRRRR, but it only works when banks want to play.

If I'm understanding correctly you could get a commercial loan for, say, 5 properties. They would be on one mortgage. The loan-to-value ratio the bank would agree to would give you an idea of how far your 100K downpayment would go. Let's say 70% LTV, so you're 100K downpayment would allow for ~$340k purchase price. You'd be on a 5/1 product likely, around 4% interest, and would have to refinance in 5 years when the balloon payment would be due.