All Forum Posts by: Drago Stanimirovic

Hey Charlice, 

welcome to the world of fix-and-flip! Here are some challenges that first-timers often encounter:

1. Time Creep: Renovations often take longer than expected. Issues like contractor delays, supply shortages, or unforeseen repairs can extend your timeline, which adds to your holding costs (mortgage, utilities, etc.).
   • Tip: Factor in extra time for delays and have a backup plan to stay on track.
2. Over-Renovating: Many new investors fall into the trap of over-improving a property, especially when they try to bring in their own taste. It’s tempting, but not always profitable.
   • Tip: Stick to improvements that will boost value based on the neighborhood, and avoid unnecessary upgrades.
3. Buyer Preferences: Sometimes, the design or finishes you chose don't match what buyers in that market are looking for. It’s easy to misjudge what sells.
   • Tip: Research the local market and talk to real estate agents about what buyers in that area really want.
4. Financing Hiccups: Securing funding for a fix-and-flip can be tricky. Some investors find that their financing falls through mid-project, or they didn’t budget for unexpected costs.
   • Tip: Always have your financing lined up and know the loan terms inside and out. Hard money loans, for instance, might be an option, but make sure to factor in interest rates and timelines.
5. Exit Strategy Uncertainty: You might not be able to sell as quickly as you planned, or for the price you had in mind.
   • Tip: Have a backup exit strategy, such as renting the property short-term until the market improves.

If you’re looking for advice on financing your next project, I’d be happy to help with that or answer any other questions you might have!

Best regards,

Drago

Hi Masyn,

You've made a great breakdown of the key strategies to make small multifamily properties (2-4 units) work in today's market. I agree with all your points, and I'll add some additional thoughts that might help.

5. Value-Add Opportunities

If you're able to buy a property that needs some renovation or cosmetic upgrades, you can increase rents after making improvements. This "forced appreciation" helps boost the property's value, leading to better cash flow or equity you can leverage down the line. It may also make your property more attractive for refinancing at a lower rate or selling at a profit.

6. Partnerships or Syndications

Partnering with other investors could help with the down payment and lower your financial risk. In return, you split the profits. You may find a partner who is more willing to put in a larger capital injection if they get a better CoC return or equity stake. This can help you get into a property that otherwise would be too capital-intensive for a single investor.

7. Government Programs and Subsidies

You might qualify for programs that offer incentives, especially if you're investing in areas targeted for development or revitalization. For example, FHA loans allow you to buy a multifamily property with as little as 3.5% down if you're living in one of the units. Some areas may also offer tax incentives or grants for certain kinds of development, lowering your overall costs.

8. Rent-by-the-Room (Long-Term)

If local regulations allow it, renting out units by the room might generate more income than traditional long-term leases. This can be particularly appealing in areas with a strong demand for affordable housing or student populations.

9. Creative Financing Structures

There’s also the possibility of lease-option or lease-purchase agreements, which allow you to control a property now and buy later, often with part of the rent going toward the down payment. While not as common, these deals are possible in unique situations, especially with motivated sellers.

In this high-interest, low-inventory market, it's all about getting creative while managing your risk and time commitment. If you're planning to expand into this space, we at CTF Funding can help explore financing options tailored to your needs. Let me know if you'd like to discuss your strategy further!

Hey Shai,

When it comes to the fix-and-flip strategy, schools might not seem like a top priority, but they can actually play a bigger role than you’d think! Here's why:

1. Resale Value Boost: Even if your buyers don’t have kids, properties near good schools tend to attract more buyers overall. People see those areas as stable and family-friendly, which can push up the value.
2. Wider Buyer Pool: If you're targeting families, schools are huge. Families will often pay a premium for homes in a good school district, meaning a higher resale price for your flip. Plus, houses near good schools tend to move faster on the market because demand is higher.
3. Neighborhood Appeal: Good schools usually mean better neighborhoods, less crime, and more community involvement, all of which help raise the perceived value of the area. Even non-family buyers consider this when they think about long-term property value.
4. Long-Term Marketability: Even if your target buyer for the flip isn’t directly interested in schools, future buyers might be. Good school districts make for better long-term investments, so it’s something to keep in mind when choosing a property.

So while schools might not be your number one factor when flipping, they can definitely help increase the speed of sale and final profit. It’s worth checking out!

Best,
Drago

Hey Jennifer,

Sounds like you're uncovering some juicy details in your property hunt! Tenant issues can be a headache, but here are some creative ways to handle them:

1. Evicting the Smoky Late-Payer

This tenant sounds like they’re giving you more ash than cash. Since they’re on a month-to-month, you’ve got options:

• The Polite Kick-Out: Send them a polite “non-renewal” notice—basically saying, “Thanks, but no thanks!” Check your local laws, but 30-60 days' notice should do the trick.
• Cash for Keys: Offer them some cash to move out faster (I know, paying them to leave seems backward, but it works). Sometimes a little incentive can make them leave peacefully.
• Raise the Roof (Rent, that is): If local laws allow, crank up the rent to make them consider greener pastures. Smokers tend not to stick around when things get too expensive!

Just make sure to stay within the law so you don’t get stuck in a sticky situation.

2. Bringing the $750 Tenant to the Real World

As for your tenant enjoying their $750-a-month sweet deal, it's time for a gentle reality check. You could go with:

• Step-by-Step Increase: Let them know the rent will be going up gradually, maybe $100 every 6 months, until they’re paying fair market value. This way, it’s not a shock, and they’re more likely to stick around.
• Market Update: Let them know the neighborhood is changing, and so is the rent (to $1,100). Give them proper notice, keep it friendly, and explain it’s all about fairness to match market rates.

A little empathy goes a long way—help them understand the rising costs, and they might just thank you for it (okay, maybe not thank you, but they’ll get it!).

Best of luck, and here’s hoping you turn that property into a smooth-running investment!

Cheers,
Drago

Hey Jerry,

Congrats on taking the steps toward purchasing a rental property! With excellent credit (800+), you're already in a great position, but I understand the struggle with DTI when you're self-employed.

Here are a few options that might help:

1. Asset-Based Lenders: You're on the right track with DSCR loans, but you may find some private lenders or portfolio lenders willing to go into the high 6's. Sometimes, local credit unions or smaller regional banks can offer more competitive rates, especially for strong profiles like yours. They may focus more on the property's income and your assets rather than your personal DTI.
2. Negotiate with Existing Lenders: It’s always worth a shot to negotiate with the lenders who pre-approved you. With your excellent credit and a solid down payment, they may be open to adjusting their rate, especially if they know you’re shopping around.
3. Explore Non-Traditional Lenders: Some private or hard money lenders could offer lower rates for DSCR loans, particularly if the property cash flows well. A good DSCR ratio often gives you leverage.
4. Interest-Only Loan Options: Some lenders offer interest-only loans for investors, which can keep your payments lower in the short term. While not always ideal long-term, this can help secure a lower rate while you focus on cash flow.

If you need any lender recommendations or want to explore further options, feel free to reach out. Best of luck in securing that rental property!

Best,
Drago

Hi Lamar,

Congrats on taking the first step into wholesaling properties! It’s great that you’re committed to putting in the work, and you’re already ahead with tools like PropStream.

Here are a few tips to maximize efficiency:

1. Targeted Lists: Try using PropStream to create highly targeted lists of motivated sellers (e.g., pre-foreclosures, vacant properties, or owners with high equity). This helps ensure you’re focusing on leads that are more likely to convert.
2. Outreach Automation: Automate your outreach with tools like batch texting or email marketing platforms. Consistent follow-ups can make a huge difference. If you’re not already, consider using a CRM to keep track of your leads and communications.
3. Network with Buyers First: Building a buyers list before you find properties can make your deals close faster. That way, you’re not scrambling to find buyers after getting a house under contract.
4. Delegate Low-Impact Tasks: Anything that doesn’t directly contribute to getting deals closed (like research or lead scrubbing) can be outsourced, freeing you up for high-value activities like negotiations.
5. Is it Worth the Time? Absolutely! If you build your funnel and systems right, wholesaling can be a scalable, repeatable process. The key is consistency and optimizing each step.

Hope this helps, and best of luck on your wholesaling journey! If you need any more advice, or financing support feel free to reach out.

Best,
Drago