All Forum Posts by: Zack Thiesen

@Clayton Casey Yes, absolutely, that is their job to guide you through that process and tells you what you must review and sign. If you are indeed set on foreclosures, any agent will be able to make an offer on it for you. Try asking local RE group or on Facebook classifieds locally if anyone or the community has recommendations for agents that have a great track record. It does help if they have experience with the foreclosure paperwork, and some agents are not able to offer on HUD properties.

 People who choose not to use agents typically have a thorough understanding already or have a real estate lawyer draft or review the contracts. The agent will often have relationships with inspectors and lenders that they like to work with, or you can find your own and they will help you with that too. I would advise not to get totally comfortable with the "one-stop-shop" feeling at that point and be open to shopping around for better terms or rates with other lenders if you can get them. You won't hurt their feelings.  

Agents can answer the questions you have about contracts and what things mean as you read them. They are basically there to escort you through the process as easily as possible. I bought my home in a buyer's market so I paid nothing for the services of the agent, the buyer did. Although in today's market sometimes the seller stipulates that the buyer pays closing costs. Sometimes it comes down to what is customarily agreed upon where you live. 

Thank you @Kerry Baird for the info on debt service coverage ratio and commerical lending, I will do some more digging, especially on how the loans are typically structured. Are they usually 5-15 yr balloon? I have heard it can be higher rates but much smoother sailing in some ways. I just read @Jesse Fragale's primer on commercial lending and it was illuminating. It sounds like I would fall in the regional debt category. I have also read that many of these loans are structured as 5-15 yr balloon, but they will do longer, more traditional terms without balloon payments. For the sake of not getting in over my head, I wanted to start out purchasing SFR's. But his article did not list them as elligible, although it didn't say explicitly they weren't, and I have read many threads where people say they purchase SFR's with commercial loans routinely.

Thank you for your patience as I try to de-mystify all of this! I really appreciate it.

I'm at the end of only my first live-in flip so take my info with a grain of salt I guess. Maybe the most - or only - valuable thing I have to say is that a live-in flip has been an excellent intro for me, and I definitely learned a great deal that has only encouraged me to move forward. 

Getting a conventional loan on a house that needs a fair amount of work can be hard. It was for mine. Some lenders are very strict, even down to if there is peeling exterior paint. I almost did not get a loan on mine because an un-capped well was discovered and found to be a liability (in case like a kid fell in it, I guess?) The rehab loans are a good option in that case. I didn't get one, but they can be a good option I've heard. 

There are definitely lenders and agents that deal more specifically in foreclosures, because there are unique aspects to buying encumbered property. Like when you buy a property at a tax sale and the former owner no longer owns it and refuses to leave, but he is also no one's tenant technically so he cannot be evicted, you have to file for ejection, which is a whole 'nother ball of wax, etc...

Owner financed can be a great way to get a fixer while bypassing the headaches of conventional loans. If I could have found any that fit my criteria at the time I bought I think I might have preferred it. Although )(speaking of encumbered property) make sure you don't skip the title search part no matter how nice they may seem. The final thing I might add in your search for whatever you get is to not get discouraged in your search for lenders or agents. Be sure of what you need and there will be someone out there that can fulfill it. I had to call every lender in my town and ultimately went with the numbers I got from a loan officer 6 hours from where I live. Best of luck to you!

I am a little skiddish about posting what might be a stupid question.. I am currently closing on my first rental that I bought here in California three years ago and if all goes well I should be up $120k sooner than later. I will be leaving for another state after that to pursue investing more seriously and hopefully, full time.

My question is about income documentation for the cash out refi's that I will encounter, because I sure as heck won't do all this only to arrive there and discover that I was dreaming. I am a carpenter by trade and enjoyed living essentially free in one of the units of the building I own. As such, there were several months and periods of time that I did not have income, just money saved, and went to help out my family down south. 

Long story short... (And this would be in a region/market with an avg home price of $75k and avg per capita income of about $17k) If I purchase a property in good condition outright for around $50k, and then finance another with money down and use the house I bought as collateral, is that a viable plan in any reality? I will be moving there to work on the homes myself and with others I hire and won't be employed in another way. I will perhaps be there for 6 months or so for the entire process from property search to employing a PM company. Then I will head back to California to work for a while and come back the next year to cash-out refi and do it again.

I apologize if it sounds like a foolish scenario.. I just imagine banks won't like breaks in employment and irregularities like that. I have read about things like no-doc loans, using assets as collateral for loans etc. and am just curious how that would work in a BRRRR'ing strategy or if you would hit a wall somewhere.

No-doc seems a little unbelievable, hard to imagine they still exist.. do they? My experience the first time around in real estate was that I really had to ask around... A LOT. And I learned a lot. I will never forget the first lender I went to they said no way. Many, many phone calls, meetings and inquiries later I went through the process without a hitch with a loan officer at a Wells Fargo branch that is 6 hours from where I live. So I figured I would ask around for advice in this next step in my investing journey too.

Thanks

, Zack

@Christian Manhard Good tip! I will be BRRRR'ing in another state than where I live now and where my client-base is, but certainly a lot of good opportunities have arisen in the past from making small talk with them. There are even good deals here occasionally, especially for CA, but I am looking for even more favorable numbers. And congratulations on your recent closing!

@David Kazarian Thanks for the reply. Can I do business with them on SFR's if not incorporated? I understand that financing and insurance rates are not as good with commercial but again, that is the recourse for the un-stellar credit. My credit really is not that bad, either, I was just curious how strict the lending climate is these days. I do appreciate the comments about how to fix credit, but I am well aware of that process. I have a feeling if I do the leg work in finding even conventional residential lenders it wouldn't be an impossible feat to find one. It wasn't the first time I did it.

I've yet to do my complete due diligence on this separate issue of LLC's, but it is certainly something I will look into more completely. Thanks again David!

Thank you @Chris K. for the detailed response! I think that "there's no upper limit to litigation" seals it for me, and I would certainly not rely on the county's disclosure of occupancy either. It's a shame they make it such an unrealistic process. My suspicion was that the only people buying these were probably r.e. lawyers themselves, that might be the only way I can think of that it would make any sense to make this type of purchase. 

But again, thanks for the great reply!

@Kase Knochenhauer Thank you for all the suggestions! For commercial lending, do the purchases need to be multi-family with a min # of units or can you buy SFR's?

And seller financing is something that appeals to me, definitely something to watch for. 

I have a property in California I've owned for 3 years currently in the sale process and looking to net around 120k after closing costs. I am younger and a carpenter by trade looking to get into BRRRR'ing out of state. I anticipate hitting issues with the refinancing aspect as my credit leaves something to be desired. I guess a better question might be (without getting too personal about my credit score), what is a minimum or appropriate score to have for refinance in order to not get laughed out of the office of your local community bank lol

If I purchase a property completely for say $60k, then another for $20k and put the rest of the money into it in rehab, could I refinance with the property I own outright as collateral? What are better strategies to begin? Buy a collateral property, then buy a fixer that is owner financed with $2k down and go from there?

Thanks

I have scoured the internet for examples of stories from people buying occupied property at a tax sale and having to file for ejectment. I am eyeing properties in Pennsylvania and looking at past years sales records and almost none of the properties sell, even at the low prices. I know it can take up to or even over a year sometimes, but beyond that I had trouble finding the range of associated costs. And then also the matter of clearing the title etc etc. As far as I can tell it is anywhere from $400 - $2500, or up to $10k? Who knows..but it is important info to ballpark into my math before going into an auction. Does anyone have examples or formulas for this that they use? I'm aware that every case can be wildly different.. but even if you had like a worst-case scenario number, I would use that metric and be grateful to know it. 

I suppose I should also ask, is it common to disclose if the properties are occupied or not? Do they make it known? I downloaded the bidder one-sheet from the county I'm interested in and of course there is a line that says the county makes no claims or warranties regarding occupancy yadda yadda but it appears to be boiler plate. Do they let you know?
 

I read about how in Philadelphia - for example - the sheriff will "often require the owner to provide four movers, a twenty-four foot moving truck, and storage for the squatter"!! WTF... so ya, any stories would be appreciated!

Seems like someone should have a set amount of days and then the sheriff comes, end of it. Why does this have to be some complicated?

Thanks.