All Forum Posts by: Andy Webb

@Hunter Peterson - we buy and hold, typically following the BRRRR strategy and are still buying in DFW. We just picked up a great deal over in the mid-cities near Ft. Worth in fact (too far for your purposes). Why not use the financing advantage you have as an owner-occupant and pick up a deal as @Kenneth McKeown mentioned in CFB (Carrollton-Farmers Branch).  Live in it for a while during your acclimation period, then move on to your preferred area and rent it out.  I live in Carrollton and have rentals in both cities and can tell you that you will have no problem selling or renting the house on the back-end!

Andy

Hi Jerry - I just keep my reserves in cash at an online bank that pays 1% or so interest.  I want the funds ready to go quickly if I find a smoking deal that has a short timeline.

Andy

If it is turnkey, you are better off getting a straight-conventional loan and skipping the two rounds of closing and financing costs.  

@John Miranda - Builders Risk is what you want. I checked with my wife, who works for a local hard-money lender here in Texas, and that is what they require on flips. We follow the BRRRR strategy on our rentals and typically do some pretty big rehabs (for example, contracted on one that will be around $45k in rehab coming up), and during our heavier rehabs we also have to get Builders Risk. We use an insurance broker to shop multiple lines, but typically we seem to wind up with TAPCO.

My advice: find a broker that will shop multiple lines, not a captive agent that is dedicated to one line/company, and see what Builders Risk policies they can find for you.

Andy

Awesome! I did not even notice the date on your original post...Will try to pay attention next time!

Absolutely - if there is no additional fee to use a CC with a vendor, then we put it on the card.  It defers the payment, we earn (marginal) interest on our funds, and we get 1% cash back on the card we use for business - just paying the insurance on our rental portfolio each year yields a decent return (and we self-escrow the funds for insurance, so the money is there to make the payments).  Same for personal, but 1.5% cash back.  But we pay them off fully each month without fail.

As @Bill Gulley said, you do want to watch your balance on any given card and on your portfolio of cards because it can impact your credit score and your ability to take loans if you let the balance to total credit line ratio get too high.  We strive to stay below 10% of our total credit line on the portfolio of cards.  If I see we are getting too high, I go ahead and make a payment a little earlier.

Andy

If you are just starting out, Finishing Touches (based in Ft. Worth off of 820 near Handley-Ederville Rd.) has been working with investors for nearly 20 years and the process will be very hands-off for you (great if you have a day job).  You can find cheaper guys out there for sure, but these guys are a good bet if you are just learning the ropes.

Andy

Agree with @James Wise that you ultimately want to wind up in a 30-year FNMA conforming loan if you can, given the better rates. That said you can get there different ways. If you find a house with a significant spread between purchase, repairs and ARV it may make sense to buy with private or hard money, do the repairs and then refi into the long-term loan. You can have less out of pocket that way.

Sometimes we have to buy this way to address the condition of the house first (e.g. foundation, roof, HVAC or other issues will keep it from qualifying for a FNMA loan), but we have bought deals that could have gone straight to FNMA.  In the latter we were able to leverage the spread as well as the appreciating market to have less cash in the deal than had we plopped 20% down (the spread really has to be there to cover two closing and two rounds of financing costs).

To your primary concern about debt, etc: talk to a long-term lender about your debt position, income, goals etc and see what they can tell you.  @Andrew Postell is one of those guys in our area, I think out your way in North Ft. Worth somewhere.  Go grab some time with him.

Andy

I have not flipped a house in the sense that you are, but we do nicer finish outs as part of the BRRRR strategy, essentially flipping the house to ourselves (to get higher refi value, higher rent, better tenant, etc).

Anyhow, I always meet the refi appraiser at the house and give him a one-page summary of total rehab plus subtotals by certain groups (e.g. description of flooring improvements and rough cost, new cabinets and rough cost, etc). Under that I attach whatever bids/invoices I have from the GC or other trades - our GC is super detailed, down to the light bulb... These guys are pretty busy and appreciate the legwork. I think they typically look at the upper-level numbers (summary sheet) without digging into the detai.  One guy last year just took a picture of the summary page and left the papers all with me.

By the way, we make sure to bring our preferred sales comps as well...

Andy

To follow what @Steve Vaughan said - sell it, and redeploy the capital here in Texas. You will get much better returns. Either go the single-family route, BRRRR strategy and pick up a number of rentals with the $200k, or find one of the local multi-family syndicators and get into a couple of MF deals.

Andy