All Forum Posts by: Tanner Lewis

Hey Tanner, the first step when building your team is to contact two people: a realtor and a lender. For your realtor, you want someone active in your market who deals primarily with investors. The realtor should be able to provide you with good referrals for property managers and contractors in your area. For your lender, you want to find someone who fits your investing strategy well and work with them to narrow down your buy box so that you can get a deal that is pretty simple to finance (this will reduce A LOT of headaches later on). I also usually refer borrowers to my preferred insurance agent and any realtors I have worked with in their market. BiggerPockets has a "Build your team" tab where you can find a lot of these investor-friendly team members.

Like Charles mentioned, most private and conventional lenders will not do second position liens, but you may be able to find a private lender who will entertain the idea. 

In my opinion, this deal would make more sense with a hard money loan, have you considered taking it that route?

From the lending side, I am seeing a lot of cash flowing short-term rental deals in Colorado, but not many LTR deals. If you are looking for cash flow in your market, I suggest looking around on AirDNA and seeing if any of those deals make sense.

It depends if your loan has a prepayment penalty. Most DSCR loans will carry a 5-year penalty, so I suggest waiting until that is over before paying more than your minimum payment , or you will incur additional fees.

When looking for a DSCR lender for your short-term rental, ask how they can underwrite short-term rental income. Most DSCR lenders use LTR rents or TTMs, some use STR 1007, but the most aggressive ones can use AirDNA. It all boils down to finding a lender with a product that matches your investing strategy

Also, something to consider... if you currently have your home with an FHA loan and your girlfriend is not on the mortgage... you can have her take out her FHA loan on a new house hack. Once married you only get one FHA per couple, so (not that I am encouraging it) but it is a great way to lever up to $2m of debt/assets with only 2.5% down

I think Jaron is referring to the homestead exemption, which gives you a tax break if it is an owner-occupied property. You would still get it on the next property you live in, but not whatever one you keep as a rental. If you are curious, you can pull the tax bill off the tax accessor's website and see what your homestead exemption is. When running the cash flow on a deal, I suggest using the DSCR ratio at a bare minimum, but realistically you want to account for cap ex, repairs, vacancy, etc.

Bart, it just depends on what your investing strategy and your priorities are. As a first-time investor, I suggest looking for turnkey rentals in high cash-flowing states (mainly the Midwest). This is because many new investors get way over their heads with rehab, and I think it's best to fully understand one aspect of real estate investing (ex., rentals) before branching out and learning another aspect (rehabs/BRS). You likely will not be looking to make an appreciation play as you need a solid cash flow foundation to support those kinds of investments. 

Once you narrow down what markets fit your strategy, I suggest working with an investor-friendly realtor in the market to narrow down on the submarkets you want to purchase in. Analyze enough deals to determine when a deal is abnormally good for the area, and you'll be able to recognize opportunities as they come. 

Hey Jordan, since conventional financing sounds out of the picture, the alternative would be hard money and DSCR lending. Even with those, you would have to bring a minimum of $20k-$30k to the table to pay for the down payment and closing costs. Hard money also would require that you have reserves, ~15% down, and enough cash to fund the rehab and be reimbursed. Looking at private money and seller financing, you will still have to bring cash as a down payment. I would first try to increase your income/liquidity or bring on other investors who can provide the capital.

I would talk with an asset protection lawyer on this, but from a lending side, I see a lot of Wyoming LLCs as parent companies. I also see a lot of trusts, but they often are pretty difficult to lend to (even as a parent company). I don't see a lot of LP's, but they come into play more when an investor wants to not have as much liability as they are just contributing money to a partnership.