All Forum Posts by: Steve Mikrut

I have talked with a lender. I contacted about 6 actually before I found one that said he can do it. I have a call with him today but here's the programs he's got...

Conventional Loan Option:

• I can help you refinance up to 85% LTV based on the appraised value (not purchase price).
  • Translation: It's possible to get ALL of your initial investment back. Because the LTV (Loan to Value) is defined by the appraised value, as opposed to purchase price, it's possible to get your purchase price + rehab costs back… The appraisal must support.
  • Depending the timing of your initial acquisition and the completion of the renovations, I can treat your transaction as Delayed (aka Deferred) financing. Translation: Conventional guidelines do not consider it a “cash-out.” Thus, the loan pricing is optimized in your favor.
• This would utilize a 30-yr. fixed rate.
  • Actually, you can have any loan type you want. The 30-yr. fixed simply has the best pricing and longest amortization right now.
    • A 10, 15, 20, or even 25 yr. fixed have shorter amortizations and therefore higher payments despite lower interest rates. (Most Bigger Pockets investors seek to maximize their monthly cash flow.)
• Depending on your loan size, credit score and other factors the rate would range from as low as 3.875% to 5.5% in the current market.
  • Forgive me, the wide range in rates is not me being vague. Rather, the rate will also depend on whether you want closing costs or not. (As the rate rises, closing costs drop.)
    • I am finding that no two Bigger Pockets / BRRRR investors have the same strategy when it comes to balancing the short-term goal of minimum-closing-costs against the long-term goal of minimum payments.

Nonconforming Loan Options

• It's possible to get as high as a 95% LTV on a non-owner-occupied single-family residence.
• Rates are higher for nonconforming loans
  • While rates are higher, there is no PMI if/when the LTV is over 80%.
  • Rates are likely to be 6.5% to 8.5% on a 30-yr. amortization.
• Again, you can get all of your sunken costs back. It just depends on the appraisal.

Given the analysis you attached, if/when the value is 89,000 and you stay on budget, you should be able to leverage all of your sunken costs. I.E. you should be able to get all your liquidity back out.

One more thing, the broker/PM said when the rehab was complete that it should rent for $1200/mo. I calculated as only getting $1100. The rental comps show it's possible to reach $1200

Lucas,

Thank you so much for looking at my analysis. I didn't know what to put for the rate on the refinance which is why I had 9%. I agree that's not what it's going to be. I changed that to 6% and bumped Cap EX and Repairs to 7%. Now the cash flow is $131/mo, Cash on Cash ROI is 19.4% and I would possibly leave around $8k in the deal which is ok with me.

I'm not sure how to attach the new analysis to this thread. Lets see if this works...

https://www.dropbox.com/s/sge3... 

Looks like I accidentally made the monthly payment P and I during the acquisition phase when it's supposed to be interest only. I fixed it on the calculator but not sure how to upload the new analysis without starting a new thread.

By the way, It's a SFR 2/1 that we will be changes to a 3/1. Property is located in Beloit WI.

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I am borrowing 100% of the money from my parents HELOC to do the deal so i won't have any of my own $ in the deal unless I have to leave some in due to a low appraisal or something at the end.

All opinions are welcome.

Thank you,

Steve Mikrut

I live in Las Vegas, but I am looking to begin my investing career in Central to Southern Wisconsin. All of my family lives out there so it will make long distance investing much cheaper. The property values are also much lower in many areas there than they are in Las Vegas. I am looking to connect with people in that area. Agents, Contractors, Property Managers, etc. I would love to talk with anyone doing deals in that area. 

Hi Nakia. I live in Las Vegas and am new to BP as well. I went to a Meetup last week which was good to meet some other people interested in investing. I look forward to meeting more people/investors and getting some deals under my belt as an investor instead of as an agent. 

Alan, excellent feedback. I hadn’t considered agreeing on the final sales price up front but I see how that could be a point of contention at the end. Thank you. 

@Steve Mikrut

I forgot to mention this would be a Fox and flip. Maybe even a seller finance