All Forum Posts by: Will Johnston

Hey Nick, I got a 90% LTV interest only line of credit from my credit union with a 3.25% variable interest rate. So that would get you about 70k. I haven't taken advantage of it yet, but they'll also do a "homeowner loan," which is a lien against your house but requires no equity. That one is capped at 50k and has a 7.5% variable interest rate and is amortized over 10 years (if memory serves). That would get you a good chunk of change, but you'd probably still need additional financing to flip in Brooklyn. As a previous poster suggested, you could do a rental. If you can get something cheap , pay cash, and do some repairs, you could then get a mortgage and get a great deal of your initial capital back. If you want to finance, you're looking at hard money or a construction loan, probably from the commercial loan dept.

Hey Nick, I got a 90% LTV interest only line of credit from my credit union with a 3.25% variable interest rate. So that would get you about 70k. I haven't taken advantage of it yet, but they'll also do a "homeowner loan," which is a lien against your house but requires no equity. That one is capped at 50k and has a 7.5% variable interest rate and is amortized over 10 years (if memory serves). That would get you a good chunk of change, but you'd probably still need additional financing to flip in Brooklyn. As a previous poster suggested, you could do a rental. If you can get something cheap , pay cash, and do some repairs, you could then get a mortgage and get a great deal of your initial capital back.

Thanks, Frank.  I think it's pretty standard in DC, at least for regular primary residence buyers, probably not for investors.  I signed one when I bought my own house a few years ago.

Just wondering what standard practice is for investors.

Would some of you be willing to share how you structure your agreements with the Realtor(s) you work with?

I've been working with a friend who is a Realtor, and I've signed the standard buyer agency agreement form, which states that I can't buy any property without paying them a commission, even if it's something off-MLS from a wholesaler or a private seller working without a Realtor.

My friend is pretty new at this (as am I).  I don't want to take advantage of a friend, and she has been doing a good job.  But it also doesn't seem to make a ton of sense to be locked in to paying a commission on properties that I didn't really need or use a Realtor's services to purchase.

Any thoughts?

I'm actually attempting to use this strategy (or a variation thereof) myself.

The idea is to buy a place below market value for cash and do whatever work needs to be done to get the place ready to rent. The goal is to spend no more than 75% of the post-repair ARV total on purchase, closing costs, repairs, and carrying costs.

So, to stick with the $120k example, let's say I buy it for 75k + $2.5k closing costs, spend 10k on repairs, and have $2.5k in carrying costs. I've got $90k in, so now with a 75% LTV mortgage I can get all of my initial capital back, rinse, and repeat. I'm essentially flipping the property to myself.

I haven't actually done this yet, so I'm speaking from theory not experience.  I bought my first investment property this spring.  I'm cash flow positive in a neighborhood that should see fairly rapid appreciation for the next couple of years.  The problem is that I didn't do something like the above, so I've got a ton of cash tied up in the house until I can refinance post-appreciation.  I realized I had to figure out a new strategy or I'd be stuck at 2-3 properties for a long time.

Now, if I'm off on what Ben was thinking and someone has a line on 100% financing, please let me know, because that would be way easier.  I could buy a place a month and keep my day job. :)