All Forum Posts by: Steven Goldman

@Steven Nguyen            Your first step is to liquidate some of your Crypto so you have liquid funds to contribute to the deal. Lenders will want to see those funds deposited in a bank or other lending institution on one or two monthly statements. Otherwise, you will have to explain the large deposit and possibly the source of the funds to buy the crypto.

You can expect to need about 20 percent of the overall costs of the purchase and rehab. You will also need about 6 months of reserves deposited in a traditional financial institution rather than a crypto account.

The next step is to find the target property and calculate the acquisition costs and costs of construction along with the after-repair value. 

The after-repair value determines if the property is a good BRRRR or flip. If the permanent financing will allow you to recover most of your initial investment and the fair market rent covers the principal, interest taxes, and insurance with cash left over, you have a BRRRR. If it does not it may still be a good flip. Good luck.

@Stacie Telles You may be able to refinance your property if the repairs or remodeling have caused an appreciation in value. Most lenders require 6-12 months from acquisition seasoning before using the appraised current fair market value to calculate LTV. Most hard money lenders will allow you to borrow up to 75 percent of the current after-repair value after 6 months and most banks 12 months. Good luck!

Caution: Personal credit card financing is a huge risk and good luck finding 0 percent interest today. The problem with using credit card funding is it destroys your DTI and thus lowers your credit score. If you decide you need to hold the property it makes refinancing either impossible or expensive.

If you are going to finance your rehab then use a LLC to purchase and a rehab lender for financing. This eliminates the problem of increasing your debt and damaging your credit score. Many of the horror stories I have heard and witnessed in real estate came from the notion that funding real estate with personal debt or credit cards is a good idea.

The old appraiser problem. This is going to become a bigger problem if the economy slips into a recession. Appraiser's learned a valuable lesson in 2008 when they were accused of being one of the causes of the great recession. We always meet the appraiser at the property with an explanation of the improvements we have completed. I have observed the older appraisers often have a outdated view of values especially in recently appreciating communities. If you research recent sales you can always provide the appraiser a list of those sales.

One of the best ways to insure a higher value is to update the property using materials and fixtures that are popular and common in the area. It makes it easier for the appraiser to make comparisons. Adding a 1/2 bath, new roof, central air or other typical improvements will increase the value of the property. Make sure the property has street appeal. The first impression is always very important. We usually redo the concrete walks or steps if they are old, graying and in need of repair. It makes the property pop from the street. Good luck. 

@Jake Baker  You should think about a rehab loan if you are going to buy and hold. You will incur more lending costs but you will only be in the first loan for 6 months. Some rehab lenders have favorable refinancing programs to convert the rehab loan to permanent 30 year financing. Most rehab loans offer 85 to 90 percent of the purchase price and 100 percent of the renovation costs. It allows you to use a small fraction of your own money. Good luck and keep moving forward!

 Hi, I am an investor and mortgage broker in the Southern suburbs of Philadelphia. I would be glad to share my knowledge with you. It would be a good idea to lookup meetups in the southern suburbs and attend them. You will meet other real estate investors and they are usually willing to share their experience.. 

Hi Nicole, You will be eligible for a DSCR loan. The proper timing and structure of that loan are unclear from the information in your scenario. Malcomb's suggestion that you will be limited to a maximum of 75 percent of the appraised value is correct assuming the the rent will cover that figure. You should consult with a mortgage broker or lender now so you know how to maximize the LTV on the refinance. Good luck.

 Hi Charlene, It all comes down to preparation and effort. If you have a more extensive full gut rehab you need drawings depicting the work to be performed and material specifications. If you do not, you may get bids from contractors that can not be compared to each other because the contractors have a different view of the quality of work or materials you envision. It's Like comparing apples to oranges.

Hi Sharma: I am stunned that anyone would suggest that you start a rehab in Philadelphia without permits. If you do so and get caught you will have a tremendous problem. I know the Director of the construction division of License and Inspection and if you are doing anything other than cosmetic painting and maintenance you will screw yourself if you do not obtain permits.

It is a good suggestion to use contractors properly licensed in Philadelphia. To obtain a permit you will need a scope of work and sketch plan. Permits are all pulled by your contractor through a website called Eclipse. Generally speaking, contractors who are not licensed or, do not want to follow the Boca code, will suggest that you do not need permits. I would avoid those contractors. Good luck.

 Hi peter, I flip in Upper Darby, Drexel Hill and the surrounding communities. We just sold a flip in February in Upper Darby and starting another in Norwood. Feel free to reach out to me I am familiar with the costs of construction on the typical 3 bedroom, 1 or 2 bathroom houses in the area.