All Forum Posts by: Samuel S.

Hey BP folks,

So this has been one of the largest concerns in my mind when it comes to refinancing out of the BRRR strategy.

For instance - say I am only the refinancing portion away from a very successful BRRR, and all the numbers come back great - from the buy, reno, rents, even appraisal.

Even if I have good credit, appraisal comes back great, and the property is rented out, and the income it produces can still cashflow AFTER the loan, will some banks decline loaning on this property if:

1. I do not have a W2 income?  

2. Or if based on my tax returns, some of my currently owned rentals are showing a paper loss (due to the tax advantages etc)?  

3. Or if I do not have 6 months reserves in my bank accts to support all properties?  

4. Or for another reason I am missing?

In a perfect world, if I had good credit, landlord experience, the subject property was rented AND would cashflow well AFTER the refi - how could banks still decline the loan?? (that is if I have have not met the Fannie/Freddie loan max)  

I guess I am just looking for some advice from those who have done this successfully and frequently in the past. I feel like the average Joe wouldn't be able to BRRR their way to financial freedom (even with great success at the buy, reno, rent phases) if they cannot show other income. And in that same breath, for the full time REI who lives off rental income only, and shows paper losses most properties, then the BRRR strategy would never work unless a partner gets involved?

Sorry for the long post.  Just trying to get clarity on this part, and I cant seem to find any info online in regards to this. 

Thanks!!!

Thanks so much for the advice Joe.  That's what my intuition has told me from the start, but it's been hard to look away because of the attractive financing.  

Hey BP folks,

Was hoping I could get some advice from a few seasoned investors in this particular situation I’m in.

I'm a fairly newer investor with several units, all of which I've been able to purchase in relatively good areas. Just recently, I've been able to get a converted duplex under contract for 8k down seller financing, which will cash flow around $500 after PITI. A local investor had purchased it a few years ago for 16k, and since has made some cosmetic renovations such as new siding, windows, flooring etc.

Here are the numbers:

Purchase Price = 63k

Down Payment = 8k over 30 years @ 6.57% w/ no balloon

PITI = 587

Landlord paid gas = $150

Monthly Outlay = 737

Total Income = 1300 (650 per side)

Cash Flow = $563

On paper I feel as though this is a good deal. The only downfall is that the location is not the most ideal. I wouldn't classify it as awful, but a C, C-, with drug use being the main issue. That said, it’s really not in "that bad” of a neighborhood, as it’s right off a main road relatively close to a downtown area with a pretty large tenant pool.  There are definitely much worse parts of town, but there are definitely better parts of town as well.

I am really just trying to get some advice on if I should pursue purchasing this deal.  I probably wouldn't make it a point to continue purchasing in this area in the future, but right now I am just trying to grow my RE portfolio with solid cash flowing deals with a lower amount of cash into the deal. I would be purchasing this property at somewhat of a premium price (50k is avg for duplex in this area), albeit with attractive financing.

Any advice would be greatly appreciated!! 

Hey guys,

So I am very familiar with Oakland/Macomb County, but recently have been looking into Wayne County.  Specifically the downriver areas (Wyandotte, Lincoln Park, Taylor, etc).  Just by looking at what things are currently listed for (single and multi families), there seems to be good cash flow potential....

For those familiar with these areas, would you consider downriver to be a good investment choice?  How is the tenant base?  Does it differ drastically from area like Lincoln Park, to Taylor, to Wayne?  

Any insight would be greatly appreciated!!

Thanks a lot for your response Derek! Very helpful. I suppose it's fairly common sense that if you have over 20% equity, and a qualified buyer, as it stands now many banks would be willing to work with you. Regardless of conforming v non-conforming.

So right now the property is in a zone that no longer allows rentals, but it has been grandfathered in, and the rental certs are both up to date.  I haven't spoken with the city yet, but have to imagine this means they are aware that 2 houses are on 1 tax parcel, and are ok with it.  

I think your idea about re-surveying and splitting is brilliant, I wasn't even aware you could do that.  But I suppose if they were to allow that, it might jeopardize the grandfather status, and I might not be able to rent either property.  But I guess I could still sell them on 30 yr land contracts lol.

Hey BP Folks,

So I am getting ready to sign the PA to get a duplex under contract, which is currently a non conforming property.  It is technically not even a duplex, but rather a 2br house and 1 br house on the same tax parcel.  

I would be purchasing on a land contract, with a 5 year balloon, with the intent to refinance with a traditional lender once 20% equity has been established. 

Was hoping to get some advice on if this would be a risky move, from the perspective of being able to refinance with a traditional lender once I have 20%+ equity.  

As I understand it, this would need to be a portfolio loan, since it would not meet the criteria to be sold to Fannie/Freddie.  If banks were dealing with qualified buyers, would this be fairly easy to refinance?

Any advice would be greatly appreciated!

Hey BP folks,

So I have created an LLC for my rental property, and needing to set up an EIN number for the business bank account.

I am currently using a third party as my registered agent.  

When I go to set up my EIN, one of the question asks for the LLC physical address. Would I be able to use the registered agents physical address for this? Or would I need to use either the rental property address or my personal address?

Any advice would be greatly appreciated!! 

Hey BP Folks,

So I have been looking to invest in trust deeds for some time now, but there are still a few things that I am hoping to get clarity on before making the leap.  The confusion I am getting is in relation to the foreclosure process.  The trust deeds that I am looking into would all be first position liens, where the underlying property had been owned free and clear prior taking out the loan.

1.)  Can all trust deeds be foreclosed on out of court, or just the ones located in non judicial foreclosure states?

2.)  Can I myself foreclose on the property, or do I need an attorney to do so?

3.)  If there is a power of attorney clause in the contract, but it is in a judicial foreclosure state, can the property be foreclosed on relatively quickly and cost effectively through the court system?

4.)  Once the property is taken back over, do I have the option of renting it out instead of selling?  And if renting it out is a viable option, do I have the ability to borrow against the property (being that I now own the property free and clear)?

My understanding is that trust deeds essentially transfer the legal title to a third party (title company etc), while the borrower receives equitable title.  Wouldn't this situation make it that much easier to have the title quickly transferred over to the lender should there be a breach of contract?

Any advice would be greatly appreciated!!

Jeff,

Thanks for your input!! I figured that was the case for both programs.  Unfortunately for the newer investor with limited funds, this means seller financing and/or mortgage assignments are the most practical way to go.

Hey BP folks,

So I am just trying to figure out if there's a legitimate way to buy a non owner occupied, investment property with a low down payment, that will bank financed. 

I recently found out about Fannie Mae's "Home Path" program (where qualified, non owner occupied investment properties could be bought for 10% or less down), but have read that this program had been discontinued a few years back..

The other day I came across a similar program offered thru Freddie Mac called "Home Possible", but I have not been able to find any info regarding the requirements for investment property down payments.  

If anyone has any insight on this program it would be greatly appreciated!!