All Forum Posts by: Timothy Howdeshell

 Hey Matt, 

Easiest way is to look for other fix and flippers that are doing marketing. Just Google "sell my house fast [city]" and then call the top 10 companies. Ask to speak to their owner or manager as you have some properties under contract for your fix and flip business, but can't handle all of them at one time. That should get you there. 

Some of these companies are stictly wholesalers so you'll need to call a few, but the others are legit buyers who would be happy to pick up more inventory. 

You can also post your deal on the local real estate investing facebook group. That usually has a lot of activity around good deals. But you may overwhelm yourself with tirekickers using that strategy so be prepared for a lot of calls with that many deals. 

Lastly, if you have this many U/C at one time and are running out of time just JV with a large local wholesaler. They'll do the dispositions in exchange for a cut of the assignment. What I've done also done is sold the wholesaler (using large national companies like NewWestern) the deal contingent on them finding an end buyer. They then found a higher priced buyer, took over my contract, and double closed with the seller and end buyer. It is essentially daisy chaining, but the difference is that all buying parties were aware of this; AND I had the means to close with the seller in case I couldn't find a buyer. I never want to leave someone worse off than I found them.

Funny story, the end buyer on the last house I did this with called me out of the blue to let me know that my #s were spot on as far as ARV and rehab and profit and encouraged me to take the next one down myself :-)

Best of luck! Great problems to have! If I may ask, what marketing strategy are you using now that is having so much success? 

 Hey Nay, 

Well you've obviously come to the right place! We're all here on BP because we have a passion for, interest in, and belief in the life changing potential of real estate. 

I want to chime in as someone that is still rather new as an investor, but has managed to get over the initial stages. If you're an analytical person and like to have everything planned out thoroughly realize that that can be an amazing strength, but also a huge weakness. Every strength is a weakness and vice versa depending on context and perspective. So you'll need to find a way to make up for those natural inclinations and shortcomings. Even if you're not highly analytical (I find that real estate attacts many of those types) my advice is still the same. 

Take action. I'm not saying go max out your credit cards, throw all caution to the wind and just go buy the cheapest house you can afford. But don't get stuck in learning mode. Every strategy works (flipping, wholesaling, AirBnb, etc.), but they don't all work for everyone. Pick the one strategy that sounds like the best fit and buy the best book on that specific subject. Personal recommendation is @Scott Trench 's set for life book on personal finance and Brandon Turner's The Book on Real Estate Investing. Read that book until you find something you don't understand and then research that topic. Once you've read the book move on to the next step. 

Networking. Real estate is a people business. You say in your post that every property in your market doesn't work. But likely there are local investors doing quite well, even today. Spend some time and a little money if you have to to go to meetups, network with other investors, and ask for specific advice on the specific question you have (ex. How do I find an investment friendly realtor to start looking for good 2-4 unit multifamily in my local market to house hack?; and not How do I find a good deal?)

Then just rinse and repeat that strategy. Investing is 90% action up front and 10% learning. Find trusted advisors and move forward one step at a time. 

Lastly, I'm an out of state investor, but I didn't start that way. You certainly can, but realize that it is highly risky! You will have a much easier time figuring out how to do your first deal locally rather than learn a brand new business, with people you've never met, with product you can't see, in a market you don't know. 

House hacking a small multi (2-4 units) is a great start, requires a small downpayment (5% is available now), and can give you the experience and capital to make your next moves if done correctly. When house hacking, you don't need to make cash-flow, you just need to subsidize your housing cost. Any housing cost househacking that is less than comparable rents is a win. Keep working and save the difference to invest. Then let time do its thing. Real estate is a get rich slow, but get rich for sure game. 

Best of luck! 

 I think what you did is perfectly fine. Many real estate people are grow, grow, grow using debt and that strategy does work. One of the mean wealth builders from owning long-term rentals is the loan pay down. For one your tenants are paying off the debt not you and for two inflation makes the cost of paying that debt back cheaper over time.

That being said, there's a lot of Peace of mind to having a paid off rental. And it sounds like you're able to get amazing interest rate on that refinance effectively moving the debt to a 2.75% interest. 

I wouldn't recommend taking on a HELOC on your primary unless you're going to do a fix and flip, BRRRR, or think you can get your money back very quickly on a short-term rental.

heloc is good for a short term use, but not a good option for long-term debt.

You can always just put a mortgage back on the house that you paid down to get the money to keep moving forward. 

Best of luck!

 Hey Max, I'm glad you found your way over to the dark side!

I've always been surprised that so many real estate agents don't really own their own home or invest in real estate. It seems like a real missed opportunity.

The income from being an agent can be very inconsistent at first and house hacking will greatly reduce your monthly overhead, so I think that that's a great way to go.

as an investor who lives out of state, but invests in KCMO you're also in a great area to start your investing training.

Best of luck!

@James Grant Hey James, great questions. It is going to be highly dependent on your local area. I recommend that you reach out to several flippers in your area and just ask them what a general $/sq. ft. they use when underwriting deals. 

In my local market of Kansas City I use $45/sq. ft. This doesn't scale well with <1k sq. ft. or more than $2k but I find that it gets pretty close. 

Next, once you have a property under contract, send 2-3 GCs to give you a bid during your inspection period. You should underwrite the deal conservatively, but prioritize taking action rather than trying to calculate the exact repair costs yourself. Once you get the numbers from the GC you can double check your original #s. If the rehab budget came in under, you're good to go. 

I would add a 10% additional buffer to the GCs number as well when double checking your numbers as most projects come in over rather than under budget. 

Lastly, you can use a rehab estimating sheet to get more accurate numbers. DM me and I'm happy to provide underwriting sheets/templates for you. 

Good luck! You can do 2 doors this year. 

@Caroline Gerardo yes, all of that is correct. No one here ever said someone could get a 95% LTV on a DSCR or HML. I'm going to quit responding as this is distracting from the original poster's question.

 @Caroline Gerardo I think we're getting our wires crossed. I don't advocate lying to lenders, my whole point was to talk to them to understand your options from the beginning. Correct, that you cannot refi from HML to conventional owner occupied, unless you are actually going to occupy, but that's super rare. HML only lend for business purpose, not personal residence on the front end.

And correct, HML don't do owner occupied loans. Yes, HML want a business plan, but putting a renter in and refi via DSCR is a fine business plan. My lenders have never bat an eye at that.

I'm familiar with all of this having done several BRRRRs/yr.

I don't think we're really disagreeing on anything, but I think you're misunderstanding what I wrote above. I never advocated that the OP purchase conventional and try to refi as DSCR while still occupying. He was confusing terms which is why I brought both things up together.

I stand by my original advice. Talk to a loan broker/lender. 

 I couldn't have said it's better. I want to reiterate, never give money directly to an off market seller! 

Always give them money directly to a title company. They will only release funds to the owner of record which is another layer of protection. Ensure that you get title insurance as the buyer also.

Best of luck!

 Hey Trent, 

Welcome to REI and BP! First off, don't feel bad about your financial situation. Admitting it (to yourself really) is the first step and so many people choose the ostrich method instead of sticking their head in the sand and waiting for things to improve around them. As you know, they never do. So I think that you should be proud of yourself!

The good news is that bad credit is not a character defect or unfixable. I would work with a credit repair company to speed up this process. Having good credit will make your investing journey so much easier! Yes, there are methods to buy and deal in real estate without stellar credit, but as a beginner I would start there. Real estate can be punishing for people without a solid financial house in order first. Many times in my journey I've hit a "cash crunch" where, despite a high savings rate and income, I've run out of money to finish a project. I've then needed to rely on additional debt to get me through to stabilizing the property on the back end, pulling out the money via refinance, and paying everything off. This would've been much harder or impossible without good credit. 

Most of the "no credit" methods are more like full time jobs as well. 

While you're working on your personal credit, I would keep underwriting deals so that you know what success looks like when you get the money together. Also, depending on your risk tolerance, you may want to get a mortgage on your ranch and use that cash to put 50% down on a couple of rentals.

To get to 20 houses you're going to have to learn more advanced strategies, but to get started just get 1 rental to see if you even like it. 

Best of luck! 

 Hi Faiz, 

Great question. The short answer is yes, you can refinance a HML to a DSCR product. I've done it several times. The best advice I can give you is to look for your end lender from the beginning of the project. Let them know what you're trying to do and have them tell you what the options are. Also, speak to at least 3 lenders. There are so many products out there and no one knows everything.

A couple of clarifications: if you're only putting 5% down on the property to purchase it is likely an owner occupied loan. You can refinance at any time, but you should intend to live there at least 12 months after the initial purchase to avoid mortgage fraud. Next, if you refinance with a conventional mortgage there is a 6 month (might be 12 mow) seasoning period from original purchase. 

DSCR loans aren't subject to these conforming regulations (including seasoning) so you can do a rate and term, or a cash out refinance as soon as the project is complete. However they have higher rates. Also, you will still need to meet loan-to-value metrics (75% is common). Your example is saying that you'll only have 5% equity after the rehab. I think what you mean is that you'll put 5% down on the initial purchase, do the rehab, and then have a higher property value and something like 30% equity. As long as the loan you're getting is less than 75% of the value, you can refinance. Otherwise you need to bring the remaining money as cash to close + closing costs.

What you're trying to do is get into the property, get your money back out ASAP, and then hold it as a long term rental. Right?

Best advice is to purchase this property with cash (private money if you don't have it), do the rehab out of pocket, and then get a mortgage for the home.

If you need to use HML, get 100% financing for rehab and purchase, then make sure they record a mortgage for this 100% amount. Next, you can refi via rate and term refinance DSCR loan. This is called delayed financing.

What you're trying to do can be done, but there are lots to navigate. A loan broker would be your best option here to speak with. 

Best of luck!