Rental Property Investor · Bettendorf, IA · Member since 2017 · 187 posts · 256 votes
My wife and I already have a few SF rental properties, but our real goal is to get into MF. In the meantime, my wife and I are considering flipping a few SF homes just to get some experience (and a little profit). Target market is Eastern Iowa. Not totally closed to BRRRR if the numbers work, but we don't necessarily want to accumulate more SF right now (eye on the MF prize). We have $60k in the bank and another $100k in HELOC lined up and waiting.
What awesome advice would my fellow BP'ers have for us as we contemplate dipping our toes into house flipping?
Investor · New York City, NY · Member since 2013 · 1k+ posts · 269 votes
9y
@Chris Jensen Good lender characteristics - 1. No scam up front fees other then mandatory appraisal. 2. Ability to extend the loan term in case of delay in selling the property. 3. Willing to help investor build a long term relationship and grow amount of capital available for flips. 4. Have an auction program to assist investor in buying foreclosures.
Rental Property Investor · Bettendorf, IA · Member since 2017 · 187 posts · 256 votes
9y
@Account Closed, nice to know you've been to Bettendorf before, though it sounds like you're due for a return visit! I'm betting that little steak house on a hill was Steventons in Le Claire. Quite well known in the area.
Thanks for the comments on financing. Definitely an area that I'm studying more about. It's clear you make most of your money at purchase, and financing is a huge driver. I'll connect via PM.
Rental Property Investor · Bettendorf, IA · Member since 2017 · 187 posts · 256 votes
9y
@Anthony Dadlani, totally agree. I'm in the process of building a list of key contacts, including lenders and contractors. In your opinion, what are the top 2-3 characteristics of a good lender?
Investor · Greenville SC · Member since 2014 · 86 posts · 29 votes
9y
@Chris Jensen there is definitely some money to be made still in the flipping market. If you have a $100k in a HELOC you have what you need to get started. You should explore the BRRRR method for sure as most lenders in this area are VERY familiar and for that. I just helped another couple with a flip that they actually are going to rent now instead but they used a line of credit and paid for the house and all renovations with cash and are now refinancing it out into a term loan. That is very common here and most banks and bankers will support that method if the appraisal gives them plenty of room on an LTV standpoint.
Just curious what type of MF are you looking for? $160k for a downpayment seems like plenty to get you into a pretty nice MF complext to start out with.
Investor · Greenville SC · Member since 2014 · 86 posts · 29 votes
9y
@Account Closed you may have been at Steventon's, it's actually in LeClaire but it's up on the hill overlooking the river. Not sure how long it's been there for as I've only been in the Quad Cities for 8 years or so.
Investor · New York City, NY · Member since 2013 · 1k+ posts · 269 votes
9y
@Chris Jensen Good lender characteristics - 1. No scam up front fees other then mandatory appraisal. 2. Ability to extend the loan term in case of delay in selling the property. 3. Willing to help investor build a long term relationship and grow amount of capital available for flips. 4. Have an auction program to assist investor in buying foreclosures.
Investor · Greenville SC · Member since 2014 · 86 posts · 29 votes
9y
@Anthony Dadlani@Chris Jensen To build on Anthony's #2 - FLEXIBILITY is key for me. We have a lot of small community type banks here and finding a lender who is willing to put a creative deal together is a great asset! I have several here in the area if you are looking for names and companies!
Rental Property Investor · Bettendorf, IA · Member since 2017 · 187 posts · 256 votes
9y
@Michael Pease, we'd really like to do a BRRRR with an apartment complex (not a SF conversion). Thinking through things, we thought we'd cut our rehap teeth with a small SF before tackling a larger MF. Ideally the complex would be anywhere from 5-20 doors, something in the small commercial category but also something we could manage financially (yes, still need to learn about various financing tactics). Still building out our local team (lenders, contractors, PM companies, lawyers, etc), so it's early stages yet. Sounds like I need to connect with you to bounce ideas. I'll send you a PM.
@Michael Pease, we'd really like to do a BRRRR with an apartment complex (not a SF conversion). Thinking through things, we thought we'd cut our rehap teeth with a small SF before tackling a larger MF. Ideally the complex would be anywhere from 5-20 doors, something in the small commercial category but also something we could manage financially (yes, still need to learn about various financing tactics). Still building out our local team (lenders, contractors, PM companies, lawyers, etc), so it's early stages yet. Sounds like I need to connect with you to bounce ideas. I'll send you a PM.
Keep in mind that the financing and a lot of other things are going to be different as soon as you go from 1-4 to 5+ units.
Specialist · CHICAGO · Member since 2015 · 680 posts · 650 votes
9y
Chris, the commercial (MF) properties in the QC pretty much dried up at the beginning of this year. There were a ton last year, I nabbed one myself. I will tell you that finding a contractor that hasn't multiplied their costs in the last year are hard to find. If you want anything done right you are going to pay out the kisser because its that time in the cycle that everyone thinks they are an HGTV super star. Your best bet is to follow along what Michael is saying. Plan and structure it as a BRRRR with the high goal to be a flip. I don't believe that you should improve either of these strategies any differently. Once completed put it up for sale or rent! Wherever you have the bite first...roll with it. Especially being new, you really need more than one exit strategy. I feel like MOST flips are getting incredibly dangerous, even for the experienced investors. I have some flipping pro's I know losing 6 figures right now. The market is (was...) hot and that gets the contractors focused on securing as much work as possible rather than getting it done with a focus. Your timeline will likely be 25% longer than you anticipate and you need to have a good solid tax strategy to keep as much money as possible.
Rental Property Investor · Bettendorf, IA · Member since 2017 · 187 posts · 256 votes
9y
@Jarrod Kohl, definitely a difference going to 5+. Thanks for the reminder.
@Meghan McCallum, thanks for the perspective and advice. Lots of good stuff there. Multiple exit strategies makes a lot of sense, and that's definitely something we're thinking about.