All Forum Posts by: Brandon Cao

Bill Gulley
Hi Bill, Thanks for your input! There's a heck of a lot of info you provided! You're right I forgot to mention that this will actually be an investment property. I was curious since I thought you would have to wait to season a cash-out refinance, but I'm glad I asked since I thought it would be "easy" to get a cash-out refinance after the year term when in fact it could be difficult.

I've heard a lot about the rate-and-term refinance from other investors and thought about pursuing this route. It definitely made sense to me that I would have to record this as a lien but was unsure how do that. Thanks to your explanation! The other path forward that I'm considering is Wells Fargos Purchase & renovate conventional loan program. Also, I was reading the post from:

http://www.biggerpockets.com/forums/67/topics/56550-how-does-one-get-loan-for-renovating-a-property-for-flip

Bryan A. mentioned: "i think i posted an answer to one of your questions a week or 2 ago about getting smaller loans for rentals...same answer here...small local banks...they will provide rehab financing as well, but you'll have to put down the 25% for the purchase price and 25% of the renovations"

I definitely have some options! Right now I'm waiting for a response for the offer... Thanks again Bill!

Mike H.

Hi Mike, thanks for your reply as well! I think our circumstances might be slightly different since I have an investment property. Perhaps in a owner occupied investment where the Cash-out refinance is easier, you could go with the parental loan being unofficial and then waiting the year seasoning plus repairs performed. At that point, according to my understanding, I could cash-out refi with a new appraisal (again assuming if I was owner occupied).

--Brandon

Hi Everyone,

I will potentially be purchasing a $50k house that requires a decent amount of repairs maybe about $25k. After repair value would be $110k, plenty for refinance. The initial loan mortgage would be a 20% down conventional residential mortgage (therefore a $40k mortgage). If I borrow the $25k amount from parents and use some sort of paper documentation to document the transaction with an interest rate. Would I be able to refinance the 80% [or $65k whichever is less] of the property value using the after-repair value assuming 1 year has passed using a rate-and-term refinance? In other words can I refinance such that it includes the $65k mortgage and then I can pay back the loan to the parents.

Would it be possible to refinance prior to 12 months?

The reason I am considering this is because I don't want to pay the high interest rate for hard money loan.

Thanks!
Brandon

Hi Matthew,

As someone who just purchased a triplex with FHA 3.5% down, there are certain regulations for FHA. I believe you must move in within either 30 or 60 days of closing (I don't remember exactly which one). In my particular circumstance I closed in Mid February and I moved in on March 1st when one of the tenant's leases was up. That being said, the owner may have the ability to give them 2 months notice if their is about to expire or if they are on month-to-month.

Brandon

Thanks Prashant, their contact information would be great!

Thanks Brandon,

Yes after removing all of the staples and tackstrips, I did attempt to refinish the hardwood floors myself, unfortunately as a rookie, I did not heed the advice of getting the drum sander. I couldn't dig deep enough with a 2-hand orbital floor sander (not the U-sander one). Next time I'll either hire it out or rent the drum sander. But once I ripped off the carpet, I knew that the floors were in great shape.

Yeah not excited about the lead law

Thanks guys for responding. A little update on my property, I did purchase that property back in September, but it turned out to be Single Family residence out in Frankford. I received the rental license by walking down to Center City. Turns out a lot has happened since then and I purchased another property in February 2013, a Triplex out in Germantown, which I currently owner occupy. I'm sure you guys already know, for a triplex you do have to put in $150 check for a Triplex, instead of the owner occupied Duplex. This time I dropped off the application with my Deed and received my rental license 4 weeks later!

Steve Babiak
Unfortunately, I wasn't about the $50 a year until after September so I ended up paying for the $300.

Brandon Eleazer
Looks like they found their new way of making money. Lead inspections every 2 years required for families with children 6 and under. I'll probably start a new thread to discuss this issue...

As for the Single Family house in Frankford, it was owned by a woman who lived there for 30 years. It definitely took a toll, but most of the structure was good bones, I ripped out the carpet and refinished the hardwood floors. Replaced some 2"x2" missing tiles with those small 1"x1" glass tiles from HD. Fixed many plaster crack issues with Alex Plus DAP caulk as well as Spackle and Drywall plaster Washers. Ripped out the wallpaper and repainted the entire house and replaced the stove. All in all a lot of elbow grease a few subcontractors, but eventually got it rented out in 3 days on the market!

Looking forward to future investing!

Hmm, yes that might be tight finding a Conventional Loan. However, what you could do is find a Mortgage Broker that has this kind of experience, see if he can handle Foreclosure auction conventional loan. I would recommend signing up for Angie's list (don't worry I'm not getting paid to say that), and finding a good mortgage broker in your area. Even if you can't find a lender in time, you're still getting a killer deal!

Shaine, that sounds like an excellent deal. If you want to maintain your leverage however, to invest in future housees, you could take out a personal mortgage on the property. Fannie Mae will probably require 30% down for a quadroplex. Then you can do a quit-claim deed to your new LLC. Now the part I'm unsure about, I think it is legal to have a quit-claim go to a Single-member LLC with no worries about the Bank ever asking for the full mortgage amount (see attorney). Anyways, if you go this route, you can save your self money for rehab costs and also for investing in future houses. Rates are very low.

Last Update: I made time to walk down to the municipal building. Took about 10 minutes to receive the rental license! If anyone is on a tight deadline, I would definite suggest going down in person. Make sure to bring either a personal check or a money order for the amount required.

Thanks everyone!

Hmm, two interesting views. I like the try and rent it anyways, but I can't seem to get around the Certificate of Rental Suitability. Don't get me wrong, I rehabbed the place so that it is more than livable! The time it takes to get the license is just too long. Also, thanks Steve, I'm glad some people agree with this required license being too excessive. Also, here's an update:

Spoke to a Property Management Co. based in Northeast Philadelphia:
They said that you will have to wait the 4-6 weeks to get the license and then the Certificate, apparently it does take them that long.

I also spoke to a Philadelphia 3-1-1 line Government representative:
He said alternatively you can walk down to the Philadelphia Municipals building and directly request for Rental License, however, he warned that you need to bring a MONEY ORDER for the dues as well as it taking 4+ hours on a business day.

Sigh, I don't want to take a vacation day just for this but if I don't get a response soon, I'm not sure if I can wait much longer. Any other thoughts out there?