All Forum Posts by: Sean Youngberg

@Jeff Dulla

That is interesting information, thanks. What are you thoughts on this response from the lender: 

Conventional mortgages are not for investment properties, they are for primary residences. So a 30 year option the property is out, unless it becomes your primary residence. You probably do qualify on your income alone in increasing the debt on the property, but it is not a slam dunk if it is not generating income.

It sounds like they are only willing to continue it as a commercial loan since it is an investment property. I suppose that would be fine, but I'm not sure I want to turn it into a rental yet, so would rather try to qualify based on "conventional" terms (ability to repay, etc).

@Jeff Dulla Since it is a portfolio lender, would they be selling "conventional" mortgages to fannie/freddie?

I do have about 70% equity stake in my primary residence.

They didn't say no-go entirely, but ReFi to a "conventional" mortgage was a no-go since this is an investment property. Here is the quote:

Conventional mortgages are not for investment properties, they are for primary residences. So a 30 year option the property is out, unless it becomes your primary residence. You probably do qualify on your income alone in increasing the debt on the property, but it is not a slam dunk if it is not generating income.

I think that is part of what is confusing me, as I read about people getting up to 4 conventional loans pretty easily just based on Income / DTI. But I suppose since they are a portfolio lender, conventional loan is not the same thing?

I'm worried about being able to qualify now since my DTI and credit score are all out of wack due to the debt (which the loan would fix).

Side Note: Why do I have such a hard time tagging @someone here. Is there a trick to it?

I'm having quite the learning experience on my first "deal". Purchased an old SFH REO for rehab and flip. I used a portfolio lender that provided a "construction" loan with interest-only during the rehab which has now converted to a 3-year note with balloon.

The rehab ended up going way over budget, and over the amount of the construction loan. Most of this overage I'm now carrying on credit cards. I had a lot of the credit card debt on 0% promo rates which are now rolling off.

House is finished now and on the market, but its not getting a lot of traction for the current asking price.  What I want to do at this point is leverage the equity of the investment property to pay off my credit card debt. I've now accepted that I may need to hold this property for several months before finding the right buyer. Also starting to explore the market to rent the property instead. In either case, I need to get some cash out to pay off the cards.

Existing Commercial Note $148K

Estimated Value $260-270K

I would like to Cash out ReFi to around $210K or around 80% LTV. I thought this would be easy enough to convert to a conventional mortgage as my W2 income should be enough to qualify for that. But my portfolio lender is saying no-go on the conventional since it is an investment property. They are willing to work with me if I rent it and start generating some revenue from the property. I'm going to have another chat Monday to see about options, but was hoping the BP community could offer some advice.

The other crummy thing is my credit score is in the dumps due to the card utilization. My DTI with the current CC payments is at 44%. My wife's DTI much less.

Hello flippers! I have begun rehab on my first deal. I'm partnered with a contractor and we are having a hard time with a few major decisions on rehab scope about exactly what should be done. He has the instinct to go in a fix everything in order to make it right. Meanwhile I'm worried about  spending money in areas that aren't going to give us a return. We had an consult from a designer/investor that got us thinking we were trying to do too much to rehab and flip this house.

It was an REO Purchase through hubzu. 3100 SqFt, 2-story, 1920 craftsman. Situated in a nice historical zoned area. Houses on these few blocks are selling much higher/sqft than than the surrounding neighborhoods. Pretty major rehab effort.

The numbers I settled on before the purchase:

• Purchase: 65K
• Rehab Est: 75K
• ARV: 190K

 I'm looking for some opinions on some of these rehab decisions. And maybe some more general advice on how you make these kind of decisions on older houses. Things like major changes to floor plan or expansion, structural issues, dealing with parking, updating major systems (HVAC/elec/plumbing) vs patching them if they are still functional and safe. Do you try to leave most of these things as-is as long as they are up to code and put your money into level of finish instead?

Some specific questions

1. Rebuilding front porch - It was enclosed at some point 40+ years ago to make a huge 22x22 LR. Looks terrible from the street, just like the side of a house. It would cost probably ~15-20K to do what we hoped to do to restore the front wrap-around porch and new front entryway that opens into the hall instead of LR. It would take ~250 sqft out of the LR. Even if we don't do the porch, the huge LR ceiling joists are sagging about 10 inches and will need to add support posts and beams and replace joists and drywall.

2. Wiring - We have already replaced the fuse box but all of the wiring in the house is not grounded. It is safe and working. All existing outlets are 3-prong even though there is no ground. Do we re-wire everything or just replace circuits as needed when we are working with the floor plan?

3. Back of house - There isn't a pleasant situation in the back of the house either. An alley runs behind our house between two streets. There is no covered parking, patio, porch, gable. Just nothing really. A portion of the property has been paved adjacent to alley that neighbors try to park in. No place to even put a mower and lawn stuff. A lot of the comps have detached garages or carports. Should we build one?

How can I calculate the return on these additions? There are really only 40 or so houses that I can use for comps, so it is difficult for me to estimate the value of porch vs no porch, etc.

There have been some more listings in our area that make me think we underestimated our ARV. A similar comp just got listed for 260, more than 70K over our ARV. So I guess I'm trying to figure out if we should go all out with our "wish-list" of renovations and shoot for a better ARV.

Other rehab scope that we are already pretty well decided on:

1. Replace fuse panel with new breaker. Have service moved from back door to side and add service disconnect.
2. Convert two downstairs bedrooms to deluxe master suite w/ walk-in closet and large bath.
3. New flooring throughout downstairs. Still deciding between hardwood or engineered hw.
4. New deluxe eat-in kitchen (already gutted)

Google Street View

Front

Rear

Front Porch Concept

Proposed Floor Plan with porch

@Manny Cirino

Awesome. Thanks for the advice. This seems like an accurate enough method to get a good baseline ARV without spending too much time. I was actually trying to do something similar with a spreadsheet that made adjustments to the comps and then come up with an adjusted $/SqFt for the comps and then take the average of that and apply to the subject property. But where I can find comps that are more similar, your way would be much simpler. Plus I haven't had enough experience to know what kind of value to use for the adjustments.

My main issue with my spreadsheet is how to compare finished basement sq ft. And it would be the same problem with your method. For the listings I'm looking at on Zillow, etc. they seem to include the basement space in the total sq. ft. amount and the sold $/sq. ft. value. Have you ran across this before? Is that something specific to my market? I thought I had read that finished sub-grade living spaces should not be included in the total sq. ft. of the property.

It has been a pain where I'm trying to compare a subject property without basement with others that have 500-800 sq. ft. basement.

 Thanks @Ben McMahon. That sounds like some solid advice to make conservative estimates and keep me in the black. I don't want to settle for breaking even on my first, but I won't be entirely disappointed if that happens.

 Thanks @Paul Timmins! The main REIA group in my area is a $500/year membership. Is this normal? I don't mind to pay, but I don't want to get involved in some kind of hype/marketing scheme. I did find and join a smaller group I found on meetup.com. Thanks for the tip.

Those two J Scott books I believe will be my first purchase. I've been reading his posts and just heard his first BP podcast.

oh thanks Mags. Nice tip!!

Thanks Chris. I have been use Zillow and such to find the recent sold/pending/listed comps. But I was thinking I needed to actually make adjustments with hard numbers. I do have a realtor friend, but I didn't want to waste my goodwill my requesting a ton of estimates as we are starting out.

I suppose I could get a general feel based on comps with just really rough numbers for adjustments to find out if the deal is worthwhile at all. Then pass those with the most potential on to my realtor for estimate.

How do you find the Knoxville market? Are you working with SFHs or multi-units?