All Forum Posts by: Aidan Mulligan

@Clinton Omiwade

Buy Rehab Rent Refinance Repeat.

Buy: Purchase the property (typically on a short term loan)

Rehab: Fix up the property to raise the value

Rent: Place a tenant to start your cashflow

Refinance: This one is longer of an explanation. With a cash out refinance the bank will typically lend on 80% of the homes value. Meaning that you'll be able to get a loan for more than you put into the house because of the rise in value due to the rehab. You'll have enough money to pay back the short term loan and then some money to put into your next deal

Repeat

In terms of wholesale, it's about the finding of a deal property and the marketing to an investor. Find a property that has a good potential for value appreciation due to rehab then find an investor who enjoys rehab projects and market the deal showcasing the BRRR formula.

@Josh Fernandez

A few schools of thought that I've seen. 1) The day they miss their payment serve a notice. The reason being is that people usually have about 10 days (depending on where you are) to resolve before you can take the next step. If you wait a week then serve, that'll be 17 days after they missed their payment before the process really starts. 2) Talk to the tenant and see what's going on. If it's a good reason and verifiable, their car engine just gave out, their parent just died etc. create a payment plan. As soon as they miss their payment plan, serve the notice. 3) Case by case, if they're consistently 5 days late but they pay every month then it might not be an issue. Might even be worth it to wait the extra few days if a late fee is applicable (per your laws) and you get to collect a few more dollars every month. 

Depends on your patience, time, and risk tolerance.

@Tyler Battaglia

Lawyer: Depends on your state, town, city, county etc. Some places require a real estate lawyer be involved to complete a real estate transaction. As far as a lawyer for partner agreements, I would suggest getting something written up. They might be your best buddy but things get sticky fast when you disagree and there's no official agreement.

Expect: to spend money. Closing costs can rack up quick. Be open and honest with your lender so they can give you the most accurate prediction for costs. Expect time, you aren't going to find a house, apartment etc in your first week. Visit a lot of homes before you make a decision to buy one. Example, I ALMOST gave up looking to settle on a house I wasn't enthusiastic about because I was tired of looking. One week later I found a killer deal that would've made me look dumb if I gave up and bought the first place. (Three months looking). 

Always get an inspection and termite inspection.

Lease: Yes and no. No do not draft your own up from scratch. But I don't see an issue with finding your states generic lease agreement (lots of states have them, just look up standard state rental agreement). After you're done amending the agreement to fit your needs (changing the word apartment to house or taking out the section about community pool if there isn't one) you can get a lawyer to look it over.

Stuff you won't be thinking of: Something is always going to sneak up on you that you didn't think of so just be prepared to adapt.

@Loren Perez It might be a very specific rule to your county, town, city, whatever. In general, that's not a thing. Bedroom rules: Two points of egress, a closet(sometimes), HVAC, electricity, typically 70 SF minimum.

@Serenity Ji I have no idea about the legality of it but no one will lend you on it.

@Felix Torres

Anything Boston and south is expensive driving the average way up. I don't know what data you're looking at but I'm assuming they're doing price per square foot. Boston, south shore, cape and islands are all very expensive per square foot in both sale and rental markets compared to other areas of the US. 

My guess is that MA is a more dense area. While California has several cities that are expensive, it is a large state so there are many smaller towns that bring the average for the state as a whole down. Just a guess.

@Jason Switherspoon

932 SF

1920 Built

No relationship to seller

Purchase: $49,900

Attorney: $909.20

Title search and document write up

Bank: $2,027.57

Fees, appraisal, credit check, tax report, flood report etc.

Insurance, taxes, town fees: $1,611.55

Total close: $4,548.32

@Matthew Wright Simply put, legal protection. If set up correctly, an LLC will leave your personal assets out of the courts if a tenant takes you to court. There's also some tax benefits and other stuff but the legal aspect is the biggest reason people create an LLC.

@Anthony Gayden this is not uncommon or unethical. The point of an inspection is to give you a better idea about what your asking price should be as well as what you're getting yourself into. I wouldn't deduct the full price of repairs from your offer but you can definitely lower your initial offer.

I would write a letter explaining your reasoning like "After review of the inspection I have decided the make an offer in the amount of _____ due to ____, ____, and ____." If you've already signed a purchase contract I would make sure you know what it states in terms of recouping your deposit. If you make an new offer, they decline, and you back out you could lose your deposit.

@Tyler Harris Congrats on getting the ball rolling, its always best to start early

Depends on your credit history. If you have a credit history with more than just the intro student credit card (ie Discover Student Card) then you should be good to get a loan. Some things about banks and loans

Downpayment 15%-20%, for you it will probably be 20% required as you have no history

Loan costs will be about 3%-7% of the total loan

They will analyze every aspect of your financial history including past residences, employment, reserves, spending over the last 6 months, tax returns over the past 2 years, all bank accounts with your name attached to them, income statements.

For a $100,000 home expect the bank to want to see $30,000 in your account (20% down, 5% loan cost, then an extra $5,000 for reserves)

So while it is possible for your to get a loan, expect to jump through a lot of hoops. The best idea is to go to a bank and tell them what you are trying to do and get pre-approved. This will tell you what the bank is prepared to lend to you based on the information that you verbally tell them. Once you find a home you'll put in an offer and tell the bank that you put in an offer and they'll start the evaluation process which takes between 30-60 days. If you'd like I can send you the loan packets so you can see some of the associated costs.