All Forum Posts by: Steven Goldman

I seriously encourage you to go to a meetup of investors who do rehabs. and learn all you can about the pitfalls and traps before you try to do your first rehab. It all seems simple, but a successful rehab. requires a strong knowledge of the cost of materials and also management of contractors. Too many newbies think you just buy the property, rehab. it and make a profit.  You need a strong understanding of human nature to manage the contractors and other vendors who might try to take advantage of your lack of experience. I recommend you get the bigger pockets book. J Scott on Estimating rehabs and become aware of the costs and methods of dealing with contractors before you attempt a rehab. Good luck!

Hi Jonathan: I see you are a real estate agent in Lowell Mass. My father was the president of Ames textile the then oldest operating textile mill in Massachusetts's. I believe it is now a museum and my father has passed away. For your readers why did you pick Rochester, NH to acquire a multi unit? How did you fund the purchase? How many multi units does your group own? I have a borrower who is very active in your area. Maybe you should connect. Good luck and keep moving forward. 

In order to get a accurate answer to a great question you will need to provide the following information:

Purchase Price:

Rehab Costs

Taxes 

After repair value

Fair market rent

Armed with that information a lender or investor can give you a reasoned opinion as to the best strategy for this deal. It is important to know the refinancing numbers for a fix and hold. It allows you to calculate your total carrying and transaction costs as well as the final P.I.T.I. If you provide me with the information above I would be glad to give you my two cents for what its worth! Good luck and keep moving forward! 

Hi Jake, are you doing a deed consolidation of the three units? This is a unique scenario and you will need to find a local HML private lender. Few national DSCR lenders will entertain a multiple unit purchase and rehab loan. You are in a very unique niche. I suggest reaching out to local investor groups or meetups to see if you can connect with private money for this deal. It will likely be a short term bridge loan. How much is the purchase price and rehab? That will also dictate who will work with you. Good luck and keep moving forward!

Hi Vidya, you should gather the actual numbers for the properties and then analyze and compare them:

1. Purchase price:

2. Taxes:

3. Insurance:

4. Rehab or repairs if any

5. Market rent for the properties.

The numbers will provide the answer to your question. It all comes down to the numbers. Good luck.

In order to successfully navigate out of state investing it is essential you build a team as Greg Schreffler  suggested. Georgia is a growing State and many of our borrowers are working in the greater Atlanta metro area. In order to be successful they formed a team with a agent or wholesaler, broker or lender and a property manager or contractor.  Most of our clients use rehab lenders so that they are not putting all of their money at risk at time of acquisition.

I think the trickiest part of out of state property management is the construction piece. Contractors come and go so you must stay on top of the construction leg of your team to ensure you do not get burned in the rehab. process. A rehab lender requires draws and inspections so it makes it harder for the contractor to act unethically. Bigger pockets has a great book on rehabbing. J Scott on Estimating Rehab costs. We wish you luck, keep moving forward. 

@MollyPaprota  I always suggest that you assemble a team familiar with Cleveland to work with on the purchase, finance and management of the property. Than you can begin your search with the knowledge that you have the people in place you can trust and depend on. If possible you should take a trip to Cleveland look at some neighborhoods and  properties and meet the team members you are going to rely on. I would start small and learn the marketplace and also test the capacity of your network. If the first deal works smoothly than you can tackle a higher value project.  Fortune favors the prepared. Good luck and keep moving forward. 

@David De La Torre Hi David I am curious why you are considering out of state investing. Investing out of state has significantly greater risks and challenges than investing in your local or geographical market. If your home market is too expensive, you might consider partnering with someone in your market and obtaining some hands on experience before you try to manage an out of state property. If you have no other choice due to your home state market conditions, research a market which would fit your financial capabilities and then begin assembling a team including a realtor, lender, property manager and contractor. You can join local off market property sites and find wholesalers which might reduce the cost of your purchase. If at all possible find a mentor to JV with so that you are not a newbie on your first out of state deal. Good luck and keep moving forward!

All of the contributors gave you good advice. Many banks will require 6 months to 1 year seasoning on a BRRRR. Those banks are not debt service coverage lenders. They are usually full document, full underwrite. Debt service coverage is a factor in their approval process or their calculation of rates. The current challenge is the LTV as the tightening guidelines and rising rates shrink the LTV. DSCR lenders are now adding hits to the base rate depending on the debt service coverage ratio. A 1.2 or greater has a more attractive rate then less than 1.2 and 1.0 is worse. You should factor the rate volatility into any project you are contemplating and make sure you are not going to be in a position of being unbale to refinance out of you bridge loan due to insufficient debt service coverage. Good luck and keep pushing forward!

@Eric Hendrix Identify members of your community who have financial success. They are the possible source of JV partners. JV partners will allow you to scale up your business much more quickly. Many people who have capital do not want to do the footwork to get involved in real estate investing but will consider using their capital to participate. The most successful investors I know found either private lending sources allowing them to avoid the time involved in the traditional mortgage process or JV partners for the sources of down payment money. Good luck and keep moving forward.