All Forum Posts by: Thomas Fortune

All - sorry for delayed response. @Mark Creason - Yes, Wells has an unsecured line available. For anyone with decent income/credit, this is a great option. The line amount is a function of income/credit, and for most people it won't be a large enough line to serve a single source of funding, but it's something. 

@Ameer Alexander - yes the bank i originally referenced only works in my local area. 

@Eddie T. - No i didn't. After further discussion with the bank, there were limits on the line based on income and net worth. The bank customer that was getting 2.5x their cash was someone with a very high net worth. For an average investor like myself, the line amount was going to be much smaller multiple which made it less appealing. However, I ended up setting up a different credit line with them using one of my rentals as collateral. The line amount isn't as high as i originally was after, but is still a very good source of funding for me on future deals. 

I've window shopped multi's in hampton roads for a while - common price points seem to be with gross rent at about 1% of asking price. In an average norfolk neighborhood, a 6-plex with 4k/month gross rent will be listed around $400,000. Better neighborhoods (like ghent) will be much higher, and rougher neighborhoods will be lower. 

In my opinion, buying at that won't cash flow unless you carry very little debt on the building...so you'd have better luck doing some marketing and trying to acquire off-market deals. One of the biggest property owners near ODU owns 100s of units and has bought very few from on-market listings. 

Lee Smith is right - you can find out what the property sold for after they close. Your realtor should be able to pull this for you - have hem pull the close price for all propertirs you've lost in the last 12 months, and compare that to your bid. You may see a pattern. If you are just barely losing each deal, then you may need to sharpen your pencil. If you are losing by 10k every time, then you might be more inclined to try a different acquisition strategy - direct mail, etc

@Michael Abernathy - ah, rent to value makes sense now that i see the address. that's an "A" area...one of the most affluent parts of VB. Probably great for attracting good tenants, but less cashflow than if you were invested in B/C areas. 

$1,250 rent for a 200k property in VB is pretty low. What neighborhood, beds/baths and sqft is it? 

If I were in your shoes, I'd take a look at what 85k in cash could get you. You may be able to get 3 or more rentals using that cash (20% down on a 100k properties). 

Equity line may also be a good option...but you are typically doing to only get 70% LTV on that. If it appriased for 200k, you could get a line for 40k (70% of 200k is 140k, minus the current 100k debt).

@Tim Johnson- your probably right. my hope was that this could function in a similar way to a new construction loan. Get 1 loan off the bat for the dirt and build, and then refi into something long term once complete. 

@Charlie Fitzgerald- thank you, that's very helpful input. 

Working on a BRRR right now - paying cash for property and rehab, then plan to refi into a 30 yr fixed at 6 months (required seasoning period to do refinance based on new appraisal instead of purchase price). Had an idea the other day about how to shorten the seasoning period, and wanted to see if anyone else has tried to do this...

some back story:

I use a private lender (family member) for cash, and our agreement on interest/repayment is not documented on the HUD - it's an informal agreement just between us. On my HUD, it shows up as cash purchase - no record of financing.

What if we had an attorney draw up a mortgage, or a construction loan note of some type, which would go on the closing statements as formal financing. Loan would be for 100% of the purchase price plus rehab costs. Once rehabbed/rented, I would do a rate/term refi instead of a cash-out refi. At closing, cash would be returned directly to my lender as a payoff instead of showing as cash out to me personally.

Anyone know if this will fly? or tried something similar? I believe the 6 month seasoning is a specific requirement for cash-out...wondering if I can structure this so it's not actually a cash-out. That way I can pay my lender back sooner, and move on to the next property.

@Mike Makkar - Ah ok, that makes more sense. Are you able to share the brokerage with me? would like to look into that a little more.

Re: unsecured signature lines - I haven't had any luck finding a local lender to do that. Everyone I've heard mention those had had them done locally, and unfortunately banks in my town don't seem to offer those (at least to me ;) )

I've looked a lot at oceanview as well. A lot of small multifamily there, and neighborhood is on the rise (thought there's still quite a big gap in income - 500k homes often sit right beside section 8 multifamily). Probably a great play for longterm hold, especially if development continues. 

@Sheen Ford- do you have to pay flood insurance? And are units metered seperately?

@Morgan Nall- That neighborhood is C class in my opinion. There are colleges in Hampton Roads, but Aberdeen isn't a college neighborhood. There are military bases, and you may be able to draw a military tenant there...but there are certainly other neighborhoods closer to bases. 

Why Aberdeen? Do you have a connection to that neighborhood?