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Kyle Moreau
  • New to Real Estate
  • Florida
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Newish to real estate

Kyle Moreau
  • New to Real Estate
  • Florida
Posted Nov 7 2023, 16:45

Good evening, 

so happy to be here, and look forward to getting involved in the world of real estate investing. I've been thinking about getting involved for some time now, just can't seam to pull the trigger. I've purchased homes before. Just not for investment purposes. I would like some advice on lenders on what my options there are and what is the best route to go. To one day not be dependent on a job. Would be my end goal. But for now just starting would be great. 

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Stashoo Dorn
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Stashoo Dorn
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Replied Nov 7 2023, 17:04

@Kyle Moreau

Welcome!

You might have better luck posting this question in the "Starting Out" forum rather than "Real Estate News & Current Events".

With that being said, what helped me get started was reading a couple of books here on BP:

How to Invest in Real Estate

Investing in Real Estate with No (and Low) Money Down

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Kyle Moreau
  • New to Real Estate
  • Florida
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Kyle Moreau
  • New to Real Estate
  • Florida
Replied Nov 7 2023, 17:13

Stashoo dorn. 

thanks for the advice. I will try and move the post. I'm not very tech savvy. 

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John Karg
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  • Lender
  • West Palm Beach, FL
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John Karg
Pro Member
  • Lender
  • West Palm Beach, FL
Replied Nov 7 2023, 17:40

Hi Kyle, 

Welcome to the site! If you've owned your own property before, then you are already well ahead of most beginners, as you already know what it takes to maintain a property. Now all you need is to study your local market with some basic principles in mind, and you'll be collecting rent checks in no time! 

As far as lending options, it all depends on the amount of cash you have available for the down payment and the property type. Personally, I think house hacking is a great strategy and it's how I bought my first property (buying a 2-4 unit property and living in one unit while you rent the others). This allows you to get the lower interest rate associated with an owner occupied loan, while also being able to use the other units' rental income to qualify for the loan. Starting later this month, it will even be possible to buy a 2-4 unit property with only 5% down on a conventional loan. 

However this isn't the only option, as I know there aren't too many 2-4 unit properties up in Destin. You can also always buy any 1-4 unit property as an investment property without having to live in it, with down payment requirements starting at 15% for a single family.  

There's a lot of different options, and no right answer--it just depends on your personal situation and goals. It can be overwhelming, so you are totally free to call or message me anytime to talk through any ideas or different options! 

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Kyle Moreau
  • New to Real Estate
  • Florida
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Kyle Moreau
  • New to Real Estate
  • Florida
Replied Nov 7 2023, 17:55

@John Karg

Thank you for the insite, house hacking is most definitely a way to go about investing just don't think its the way I can go. Due to having a family. This is a new world for me that I'm trying to learn about. and learn what type of financial means there are to start. I was thinking about doing a heloc on my current home. That has a lot of equity built up. But not sure if that's a smart move or not. To get my first investment, it would be great if it was a multifamily. Because I cant seem to make a single family home work with the numbers and interest rates the way they are to make a return on the investment. But I am just starting out. 

thank you again for the help

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John Karg
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  • Lender
  • West Palm Beach, FL
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John Karg
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  • Lender
  • West Palm Beach, FL
Replied Nov 7 2023, 18:08
Quote from @Kyle Moreau:

@John Karg

Thank you for the insite, house hacking is most definitely a way to go about investing just don't think its the way I can go. Due to having a family. This is a new world for me that I'm trying to learn about. and learn what type of financial means there are to start. I was thinking about doing a heloc on my current home. That has a lot of equity built up. But not sure if that's a smart move or not. To get my first investment, it would be great if it was a multifamily. Because I cant seem to make a single family home work with the numbers and interest rates the way they are to make a return on the investment. But I am just starting out. 

thank you again for the help


 That totally makes sense--with a family house hacking usually isn't practical. 

Getting a HELOC on your current primary home is very easy--the fees are low to open one, and there are different options for length with the most common being a 3 year draw period, and 20 or 30 year amortization. The rate is always variable of course, with rates usually around 1 - 1.5% higher than the current 30 year fixed rate. It depends on credit score and the size of the line of credit however, so if you'd like I can get you an exact number.

There is also the option to get a fixed-rate home equity loan (2nd mortgage), however if rates go down you would have to refinance to take advantage of the lower rates, as with the HELOC it will float down automatically.

I'm always here if you have any questions! 

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Kyle Moreau
  • New to Real Estate
  • Florida
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Kyle Moreau
  • New to Real Estate
  • Florida
Replied Nov 7 2023, 18:17

@John Karg

how do I get in touch with you? To discuss this further? 

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Taz Zettergren
  • Real Estate Agent
  • Memphis, TN
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Taz Zettergren
  • Real Estate Agent
  • Memphis, TN
Replied Nov 8 2023, 04:40

@Kyle Moreau welcome to the forums and congrats on the first post! Getting started is the hardest part but once you get going it's much easier, like a flywheel. Are you wanting to do this yourself actively or are you open to partnering with someone to do it passively? Also are you locked in to one market or are you open? 

We are still seeing single family homes pencil even in this current rate environment, in some cases we are having to get creative in order for them to do so but we are still achieving that goal. I've helped hundreds of clients like yourself get started and build a buy/hold portfolio passively here in the southern/middle part of the country. 

Feel free to reach out if I can be of any assistance. Best of luck investing!

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Joseph Beilke
  • Real Estate Agent
  • Palm Coast, FL
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Joseph Beilke
  • Real Estate Agent
  • Palm Coast, FL
Replied Nov 8 2023, 05:07

@Kyle Moreau

Welcome to BP and world of all things Real Estate.  As a few have said here put your nose in books, go to meet ups, research the forms and ask questions.  There is a 1000's PHD's worth of Knowledge here in this community.  Not everyone here is an expert but there personal experiences do add much substance to many topics.  I've been wrong on things and learned from them and have corrected wrong statements too.  Be open to many different view points and make sure not to be jaded by to much bias.  You will find fools and trolls, among this forums, it will take a while to figure them out, but you will learn which one are here to help and which one are here to hinder.  

The market is tuff right now, but don't get down if you don't come across a deal right away, also do not get analysis paralysis. They more you analyze the fast and better you will be when a winner does become available.   

Lastly, good lucky out there and feel free to reach out anytime.

  • Real Estate Agent Florida (#SL3346780)

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Kyle Moreau
  • New to Real Estate
  • Florida
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Kyle Moreau
  • New to Real Estate
  • Florida
Replied Nov 8 2023, 05:37

@Joseph Beilke

Thank you for insite it's much appreciated,do you recommend any good books to read? I'm all for learning all that I can. But I'm also the kind of person that is hands on as well. And the best way to learn is to do it. And learn from your own mistakes. 

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Kyle Moreau
  • New to Real Estate
  • Florida
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Kyle Moreau
  • New to Real Estate
  • Florida
Replied Nov 8 2023, 05:43

@Taz Zettergren Thank you for reaching out. And I have to agree starting I think will be the hardest part, a lot of fear of the unknown, but hopefully after the first deal it will progress into something great. I'm open to any avenues to advance. But I think it's best if I start near home at first. 

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Taz Zettergren
  • Real Estate Agent
  • Memphis, TN
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Taz Zettergren
  • Real Estate Agent
  • Memphis, TN
Replied Nov 8 2023, 07:36
Quote from @Kyle Moreau:

@Taz Zettergren Thank you for reaching out. And I have to agree starting I think will be the hardest part, a lot of fear of the unknown, but hopefully after the first deal it will progress into something great. I'm open to any avenues to advance. But I think it's best if I start near home at first. 

Completely understand, personally I'm hands on myself but there are several avenues out there than can help you do it passively while being kept in the loop. Of course it comes down to the team you're working with but when that's setup and executed properly you're essentially just managing the manager.
I do a lot in Memphis, Little Rock and DFW. Other markets as well just not as much volume so if you do decide to come west some don't hesitate to reach out. I'd be happy to assist. 

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Ricardo Hidalgo
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Ricardo Hidalgo
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  • Real Estate Agent
Replied Nov 8 2023, 11:41
Quote from @Kyle Moreau:

Good evening, 

so happy to be here, and look forward to getting involved in the world of real estate investing. I've been thinking about getting involved for some time now, just can't seam to pull the trigger. I've purchased homes before. Just not for investment purposes. I would like some advice on lenders on what my options there are and what is the best route to go. To one day not be dependent on a job. Would be my end goal. But for now just starting would be great. 


 You could always buy new construction homes and have all cost covered for little to no downpayment. Leave the home after a year to rent it out and do it again. Typically new construction will have warranties and less maintenance cost. Plus it saves you more money buying new for insurance purposes. 

or

You could do value which means renovating older properties to have the force appreciation. It just depends how much time or passive you want this to be!

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Mike Klarman
  • Specialist
  • New Jersey
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Mike Klarman
  • Specialist
  • New Jersey
Replied Nov 20 2023, 10:06

Hi Kyle, welcome into the world of REI!!!!!

So to be a good candidate for a loan as a new investor:

1) Have good credit and clean bg and make sure your Debt utilization isn't bananas.

2) Have some start up cash, things in this world cost money.  Appraisals, closing costs, down payments, holding costs, etc.

I have opened up some networks in the right areas where I know I can get new clients 85%/100% on the purchase/rehab.  I have gotten about 10 BP community members started in like the last three months in an out of state network I set up.  

You have to start cheap, well you don't have to, but for most people starting cheap, starting small.  Build profit and experience by staying busy for a full year and get at least 3 projects done, some of my clients get 5+ done in a year.

Now at the end of year 1, you have experience, you've made a little money.  Maybe you profited 20k on each of three projects so now if you started with 40k, you now have 100k.

Put yourself into a situation where you can win.  Crawl, walk run.  When you do it that way, there's success waiting for you at the end of the rainbow.

When you rush, are hasty and do not manage your working capital well at the end of the rainbow is a big giant abyss you fall into never to be seen from again.  Your first deal can be a gateway to heaven or hell.  I can't tell you how many people have come to me and said they had 75k and brought me a deal where every penny of that 75k would be needed to just close the purchase.  Then what?  How do you get the rehab started?  Who is paying the 1500 loan payment every month?  How will you turn on the electricity and water for the crew at the house working?

If you come to me and you have one bullet to fire, you have like 25k and it's all you got, then shoot your shot.  No pain, no gain.  No risk, no reward.  But if you have multiple bullets, you have a whole magazine of beautiful shiny bullets and you tell me you want to empty the clip in project 1??????  I always try and stop people and ask them to really think about it.

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Kyle Moreau
  • New to Real Estate
  • Florida
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Kyle Moreau
  • New to Real Estate
  • Florida
Replied Nov 20 2023, 19:46

@Mike Klarman

thank you for the sound advice, if or when I embark on this journey I will remember what you have said. I appreciate the response coming from the heart. It's hard to find now days. 

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Mike Klarman
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  • New Jersey
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Mike Klarman
  • Specialist
  • New Jersey
Replied Nov 21 2023, 07:23

GL, and if you get priced out of Florida feel free to reach out.

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Dustin Sanders
  • Realtor
  • Pensacola, FL
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Dustin Sanders
  • Realtor
  • Pensacola, FL
Replied Dec 17 2023, 05:38

@Kyle Moreau Amen brother! Congrats and looking to take a leap. It’s scary though in just a few short years, it’ll open so many opportunities.

Not all lenders are created equal. Some can only do your traditional financing (conventional, FHA, VA, USDA, etc.) Some lenders can do DSCR loans (Debt Service Coverage Ratio). Some are even brokers that can shop the best investment loan options! I recommend chatting a couple of each of these of lenders/brokers to see which is the best option for your situation.

I've used 5% down conventional loans for primary residence several times to house hack, 15% down for conventional investment loans multiple times, 10% vacation home loans that allow you to rent as AirBnB/VRBO a couple of times, and have found DSCR loans through lenders/brokers as well.

Hopefully this helps and I’m in the Pensacola, FL area and would love to stay in touch to hear about your RE investing journey!

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Mike Klarman
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Mike Klarman
  • Specialist
  • New Jersey
Replied Dec 18 2023, 08:22

Kyle, welcome to the game.

Let me make you aware of a few things that will help you at the start of your journey:

1) Open an LLC

Even if you do go conventional and close in your personal name for the better rates, open up an LLC and be ready. Holding property in the LLC shields your personal assets in any lawsuit.

2) Check your credit.  Check your b.g.  The lender will so you may as well see what they will see right from the start.  You want your credit as far up into the 700s as possible.  People will offer bridge loans for those with less credit, but how do you exit?  You can't refi cause of your credit and so you have to sell but it's not moving and your maturity is coming due and you keep lowering your price and lowering your price until you're wiling to just break even to get out or even lose a little.  That's why credit is important.  You have a whole other exit door to the deal in a refinance.

3) No matter how you slice it, you need some capital and the amount of capital you have will determine where you can play.  If you have 25k, you can't go buy in NY or FLA or Cali.  You're restricted as to your entry point.  You'd wanna stay between 75k - 90k.  So you need to know where you can work and you gotta get set up there.  Strong boots on the ground offsets the risk of being afar.  A strong relationship is a beneficial relationship.  Your boots on the ground - your contractor, agent, wholesaler, appraiser, whoever is on your team they are making money in your transactions and you show them that you are a real investor and always want to be in a project.  I lined a dozen projects in Pittsburgh the last 5 months.  The agent has already sold a home and he's been on 8 contracts as the buyer's agent and is planning to sell those homes in 2024.  He's tinkled pink and works hard for me.  My projects are having 400k/month in draws coming into the contractors account, I've 5x'd his business and now he is expanding, he goes and sees any house I ask him to and gives me free walkthroughs and bids and good prices.  When people see they can make money with you, they'll work hard for you.

3) Costs: The costs will be more than your downpayment and closing costs.  There's holding costs like loan payments, utility bills, taxes, etc.  And then you need to front 15% of the budget, most are 20% - 25% my guy works with me cause of the volume.  You get that back at the end of the rehab once the draw account is emptied.  Draws can be applied for once work is finished so the way it works is: You front 15%, contractor takes that as far as he can, when he runs out he applies for a draw based off what he did - that draw sends more money his way and keeps him/her working - when draw money runs out - apply for another draw - do this until he applies for the last draw for the final product which goes back to you as a refund of your first in money.  So to see a project through its lifecycle you'd need 25k even in the small markets and that's with ZERO unforseen costs or longer holding times.

4) The sweet spot for a marriage and between a lender and a new investor. If you are new, the projects you come in with are important. Hey, if you have money then you can do what you want. If you wanna buy a 400k house and put 200k into it and sell it for 875k the lender is going to see your zero and ask to see some money to show you can afford this deal. You send them in a statement with 500k in liquid reserves. They'll let you do it if your credit is good and you'r working with a licensed GC. But how many of us have 500k to show around? If you have one bullet, meaning enough to see one project through its lifecycle and exit and hopefully make a 100% Cash On Cash return - that is if you float out 25k in the lifecycle, I like to see 25k return in profit in 120 - 150 days. Once you can be in a program like that, at that it is about scale. Can you get five of those done in a year? One a quarter plus an extra in quarter 3. Creating these 3x, 4x, and 5x environments is what I do for my clients. If you have 25k, come in with the right project. 80k purchase, 50k rehab, 190k ARV. Lenders will let you start there all day long. You are showing them that you are doing it right and in a way that's affordable and not too much too fast.

5). Don't be afraid to jump in, just be smart about where and how you jump in.  Gotta take your shot.  If you bomb out, that 25k you lost will be neither here nor there in deciding how you do in the long run.  I got 7 BP members started this year in deal 1.  They all wanna do 3 - 5 next year.

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Jayson Cain
  • Lender
  • Manhattan Beach, CA
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Jayson Cain
  • Lender
  • Manhattan Beach, CA
Replied Dec 19 2023, 09:39

Hi @Kyle Moreau,

I'm based in Southern California, but I have started my out-of-state real estate journey in Indianapolis. Now, I have a portfolio of Short Term Rentals and Long Term Rentals.

I've also helped other investors with their DSCR loans and flip projects. Happy to share my experiences and chat with you more if you're interested.