You just show up, it's the same time and place each week.
The Meet up in Matthews is Tuesday 8-930am @ Jonathans
10630 Independence Pointe Pkwy, Matthews, NC 28105
I'll shoot you a PM with my number. I'm happy to chat with you and help how I can.
Hi Tony,
My husband and I live in fort mill and we are looking for a local meet up, looks like we missed it February. Are you hosting another one in March ?
We'll be there tomorrow morning at 8:30am in the back room
Rock Hill Diner - 2254 Cherry Rd, Rock Hill, SC 29732
Hey Margaret, Yes we plan to meet up each Wednesday of the month.
Consider bringing in a new partner to help with funding, and offer them a guaranteed return or a percent ownership
We just entered into a JV with a new partner, and I believe this is the strategy we are going to utilize that will be the most cost effective and mutually beneficial for all parties.
To clarify you have 3 pieces of collateral with no debt at all? The walls are not caving in you will make it through just lessons learned for the next round
No debt/liens against the property in the LLC. Plenty of personal debt used to acquire/rehab the properties.
Property 1: Cost85K Rehab30k ARV170K
Property 3: Cost147K Rehab70K ARV285K
Property 2: Cost60K Rehab15K ARV130K
I’ve been making all of the payments for our personal obligations on time. Went from an 800 to 500 credit score as I paid off/transferred all of my partners/gfs debt including auto loan over to my name to position her to borrow heavily to gain access to as much cash as possible to get us up and running. Now here we are, and I’m just trying to figure out how to move from stage one to stage two. This will be our first cash out and while I’ve heard about how it all works in theory, I havnt actually done it.
@Tony Pellettieri
You can still guarantee the loan.
I would rather have a guarantee from someone with 500 credit and 3 assets owned than someone with 800 credit and no assets.
We are both co owners of the company that own the properties. Will definitely inquire about that. Any lenders you’d recommend?
YUP unintended consequences of using CC debt . although to fall to 592 I would have to think you have some lates or something.. but anyway.
this is why HML exist in the first place or PML they are both the same. once you get this straightened out you may want to consider using those company for your debt if your going to refi and keep these.
The other thing your going to run into is cash reserves the DSCR lenders require as you grow they are going to want to see 6 figures in cash in a statement of yours.. So plan on that as well.
Thanks for the feedback Jay. Hopefully we’ll be able to pull this off before the walls close in.
Based on the research I've done, I believe we need a Bridge Loan. What do you think? Details below...
We need a FAST cash-out loan product that requires only the personal guarantee of my business partner (60% ownership) to be used for: completing the remaining rehab and getting the 1st house rent ready, paying off revolving credit accounts to get her credit score up, and funding the other projects we have in the works.
To help bring you up to speed on what's transpired over the 11 weeks we've been in business...
We started our business on Dec 1, 2023, leveraged our "then" good credit/high w2 incomes to bootstrap the startup, assembled a rehab team, and are now about 2 weeks out from the completion of our 1st rehabbed property.
We've closed on 3 properties, all owned free/clear, and have paid for renovations with personal funds/credit.
My credit score was 810, but is now 592, due to excessive debt but 100% on-time payments, therefore can't personally guarantee a loan.
My business partner's score is currently in the 700s, but likely wont be for long, due to her revolving credit % continuously increasing, as we push towards the completion of the first rehab utilizing her remaining credit on her CCs.
Recently, I started researching the underwriting timeline for DSCR loans. Having just found out when credit is pulled and the appraisal is done in the loan process, I now think we may not be in an ideal position, and potentially not in a position at all, to take out a 30 Year Loan in the coming weeks.
I believe adjusting course, at least temporarily, may be the only way to continue moving forward. I foresee us being stopped dead in our tracks due to mutual insufficient credit scores in the near-future and the inability to perform a cash out.
Any input would be much appreciated. Thank you
i think i posted in your other thread, but did you rule out house hacking, or a live in flip? i can't remember.
a big flip is just a very risky way to get started... a house hack or a live in flip are lower risk (not no risk, but lower risk.)
miscellaneous reactions
-you don't buy a flip with a DSCR loan - if you converted it to a BRRRR, you would refi into a DSCR loan. you'd use the DSCR loan to pay off the hard money loan.
-"if you find the deal the money will find you" - once you're an experienced operator, not on your first. so yep, don't trust that.
-no one is going to save you if you buy a bad deal. you'll have to pay back whatever loan you take out. say you think you can sell for 300K or whatever the case is, but comps are at 250K when you're done. that hard money loan is still due. period. they couldn't care less that you misread the comps - you'll have to cover whatever the difference is with your own cash.
-the best flips generally are not on market. so if you're looking at on-market deals with an agent... you're probably wasting your time. once a while something will come along and go on the MLS but in general distressed properties are sold off market.
-it's not just about losing money, it's about time and effort. say you budget for a 3 month rehab and it takes 7 and you break even after you sell. great, you haven't lost money... but you wasted 7 months.
hope this helps
I know a year may seem like a long time, but remember real estate investing is a long game. When I got my first duplex using a 203k, especially it being a fixer upper, the renovation alone took almost 8 months to complete. I wasn't in the property very long until I had the ability to refinance and continue on my journey.
Dollar for dollar its the best way to start and your money will go a lot longer in the long term.
As far as finding properties off market, I wouldn't focus too much on wholesalsers if you're looking to do a 203k or homestyle reno loan. I'd focus on agent outreach. Go to zillow and sort by lowest prices in your market. Call every single listing agent (include pending sales) and let them know your criteria. Keep them on a list and follow up with them. If there are agents that are receptive, invite them to coffee or a lunch and build those relationships.
My flipping business was entirely built on agent relationships. At the end of the day they're the ones that get the lowest hanging fruit.
Other off-market strategies work, but you have to be willing to put the time, money, and effort into sticking with it long enough to see results.
Hey Matthew, Thanks for your response! I am quickly learning how much of a "long game" REI really is. I have been gaining momentum for three years and I often think if I had just pulled the trigger years ago I would be in a much better position. BUT looking forward. I am glad your 203K investment worked out - gives me hope for mine!
I am currently working with 2 agents and I am looking to reach out to more once my funding is locked in. Thanks for the advise on how to go about that. Relationships have gotten me more movement than any mentorship I've been in so I agree!
No idea where you're getting $10-15K in "fees" on a 203k. The HUD consultant would be a maximum of about $1500 or so, and that includes the draws and an inspection on the property, and a full creation of a scope of work. A lender is going to charge anywhere between 2-3% in origination points, and that's no different than any other mortgage. Not to mention, all of these fees are wrapable into the loan.
Also, recommending a HML for someone that's new, saying that it's somehow easier than working with an FHA 203k doesn't make much sense. HML's require their borrowers to have experience in construction or flipping, where a 203k does not. The reason for the few extra pieces of paperwork is to help people with no experience have a more controlled process. I worked in large construction in NYC for over 10 years. Everything required on a 203k is how every construction project should be handled. Having a clear scope of work, a vetted, licensed and insured contractor, and someone to objectively inspect the work is not a "pain", its how every project should be handled.
But the biggest most glaring difference, is you only need 3.5% down on an FHA 203k. On a HML with someone with little experience, you're looking at 25-30% down.
The vetting of a contractor and having a 203k consultant involved is a small price to pay for getting 110% ARV LTV potential for someone with little experience.
I can certainly understand your point of view and advocation for 203(k) loans, however...
In my opinion, and feel free to correct me again, a 203(k) loan is not ideal when utilizing the BRRRR method for the following reasons...
- It's against FHA rules to use a 203K loan for an investment property, unless it's a 2-4 unit multi family and you will live on site.
- 203(k) Loans are for Owner-Occupants
- You can't use a 203(k) loan, legally, if you're planning to rehab/rent(not live in) the property.
- The Cash Out Refi Seasoning Period is 12 Months. The goal of BRRRR is to Cash Out your Cash In the deal ASAP/less than 12mo
- A 203(k) loan is not a scalable loan product. Last time I checked, you can only have 1 at a time.
Personally, I'm not a huge fan of HMLs, but they are a viable loan product for the BRRRR method
Hard Money Lender's don't "Require" anything. They make their own rules and can/do make exceptions.
They are Private Lenders and don't have to abide by the same "Rules" as Traditional Lenders offering Federally Insured Loans.
Just curious, do you charge Beginner Investors you find on BP for your consulting services (The 203k Way)?
I’m responding to the original posters question who mentioned that they’re open to using
it as a funding option and wanted more information on it.
when I see information that’s posted out there about it that’s inaccurate, I chime in.
you can check my account and my previous posts and see that I myself struggled to find the right information about it when I first started into investing.
the 203k is great for house hacking, which in and of itself is an investment strategy.
you can use the BRRRR strategy with it as well because you can build equity into the property and use that equity to go buy additional real estate.
yes, the caveat is owner occupancy for a year. And if you follow the guidelines, as I mentioned above, you can go and refinance and move and do it again.
Fannie Mae has also changed their guidelines with buying multifamily homes with only 5% down if you occupy the property. And you can have up to 11 of those loans under your name.
so the process is repeatable as long as you follow the guidelines.
im not saying its the best option, but im saying its a viable option, and what annoys me most is when I see so much misinformation posted about it anywhere.
the reason I created my YouTube, Facebook, and Instagram communities around the topics was because I saw how many times people were posting here asking questions about the 203k and were getting the wrong answers or mislead constantly by people with no deep & hands on experience with the program.
I’ve made thousands of hours of videos and posts on the subject, all on YouTube Instagram and FB
My only goal is to stop the misinformation and make people aware that it exists and it’s indeed a viable and quite honestly only option that worked for me after years of trying to break into real estate investing in a HCOL in NY.
I've seen Fannie Mae rolled out the 5% down Multi Famly loan. Since FHA lends against the borrowers DTI, and is not an asset based loan product, how does a borrower, and beginner investor that has 50-100k w2 income, get a 300k-1.2M loan for a 2-4 unit multi family property?
i think i posted in your other thread, but did you rule out house hacking, or a live in flip? i can't remember.
a big flip is just a very risky way to get started... a house hack or a live in flip are lower risk (not no risk, but lower risk.)
miscellaneous reactions
-you don't buy a flip with a DSCR loan - if you converted it to a BRRRR, you would refi into a DSCR loan. you'd use the DSCR loan to pay off the hard money loan.
-"if you find the deal the money will find you" - once you're an experienced operator, not on your first. so yep, don't trust that.
-no one is going to save you if you buy a bad deal. you'll have to pay back whatever loan you take out. say you think you can sell for 300K or whatever the case is, but comps are at 250K when you're done. that hard money loan is still due. period. they couldn't care less that you misread the comps - you'll have to cover whatever the difference is with your own cash.
-the best flips generally are not on market. so if you're looking at on-market deals with an agent... you're probably wasting your time. once a while something will come along and go on the MLS but in general distressed properties are sold off market.
-it's not just about losing money, it's about time and effort. say you budget for a 3 month rehab and it takes 7 and you break even after you sell. great, you haven't lost money... but you wasted 7 months.
hope this helps
I know a year may seem like a long time, but remember real estate investing is a long game. When I got my first duplex using a 203k, especially it being a fixer upper, the renovation alone took almost 8 months to complete. I wasn't in the property very long until I had the ability to refinance and continue on my journey.
Dollar for dollar its the best way to start and your money will go a lot longer in the long term.
As far as finding properties off market, I wouldn't focus too much on wholesalsers if you're looking to do a 203k or homestyle reno loan. I'd focus on agent outreach. Go to zillow and sort by lowest prices in your market. Call every single listing agent (include pending sales) and let them know your criteria. Keep them on a list and follow up with them. If there are agents that are receptive, invite them to coffee or a lunch and build those relationships.
My flipping business was entirely built on agent relationships. At the end of the day they're the ones that get the lowest hanging fruit.
Other off-market strategies work, but you have to be willing to put the time, money, and effort into sticking with it long enough to see results.
Hey Matthew, Thanks for your response! I am quickly learning how much of a "long game" REI really is. I have been gaining momentum for three years and I often think if I had just pulled the trigger years ago I would be in a much better position. BUT looking forward. I am glad your 203K investment worked out - gives me hope for mine!
I am currently working with 2 agents and I am looking to reach out to more once my funding is locked in. Thanks for the advise on how to go about that. Relationships have gotten me more movement than any mentorship I've been in so I agree!
No idea where you're getting $10-15K in "fees" on a 203k. The HUD consultant would be a maximum of about $1500 or so, and that includes the draws and an inspection on the property, and a full creation of a scope of work. A lender is going to charge anywhere between 2-3% in origination points, and that's no different than any other mortgage. Not to mention, all of these fees are wrapable into the loan.
Also, recommending a HML for someone that's new, saying that it's somehow easier than working with an FHA 203k doesn't make much sense. HML's require their borrowers to have experience in construction or flipping, where a 203k does not. The reason for the few extra pieces of paperwork is to help people with no experience have a more controlled process. I worked in large construction in NYC for over 10 years. Everything required on a 203k is how every construction project should be handled. Having a clear scope of work, a vetted, licensed and insured contractor, and someone to objectively inspect the work is not a "pain", its how every project should be handled.
But the biggest most glaring difference, is you only need 3.5% down on an FHA 203k. On a HML with someone with little experience, you're looking at 25-30% down.
The vetting of a contractor and having a 203k consultant involved is a small price to pay for getting 110% ARV LTV potential for someone with little experience.
I can certainly understand your point of view and advocation for 203(k) loans, however...
In my opinion, and feel free to correct me again, a 203(k) loan is not ideal when utilizing the BRRRR method for the following reasons...
- It's against FHA rules to use a 203K loan for an investment property, unless it's a 2-4 unit multi family and you will live on site.
- 203(k) Loans are for Owner-Occupants
- You can't use a 203(k) loan, legally, if you're planning to rehab/rent(not live in) the property.
- The Cash Out Refi Seasoning Period is 12 Months. The goal of BRRRR is to Cash Out your Cash In the deal ASAP/less than 12mo
- A 203(k) loan is not a scalable loan product. Last time I checked, you can only have 1 at a time.
Personally, I'm not a huge fan of HMLs, but they are a viable loan product for the BRRRR method
Hard Money Lender's don't "Require" anything. They make their own rules and can/do make exceptions.
They are Private Lenders and don't have to abide by the same "Rules" as Traditional Lenders offering Federally Insured Loans.
Just curious, do you charge Beginner Investors you find on BP for your consulting services (The 203k Way)?