All Forum Posts by: Aaron W.

You can definitely refinance if you are not living in it. If it is a rental property, you can refinance it using an investment property loan.

Best of luck!

@James A Spear Congrats on purchasing this duplex. 

Since you purchased this in cash, you can do delayed financing on the property to get back the cash you put in. However, there are caveats to it. You are limited to the LOWER of the the total cost to purchase the property as found on the closing statement (HUD-1) or 75% of the appraised value. I've done this with a few property we purchased with cash.

If you want the higher appraised value, then you'll need to wait for the property to season (typically around 6 months) before starting the financing process. This will also allow you to make any needed rehab to force appreciate the property.

Best of luck!

@Jason Malabute It will make life much easier if you find a KP early or before you need one. It really can be someone with experience, balance sheet, or net worth, etc. depending on what you need of them. Depending on the amount of work you need the KP to do, then they will request more equity. 

When speaking with the KP, you will need to know what their experience level is and balance sheet/net worth if they are signing on the loan. 

There is no length on how long to "date" the KP before moving into a deal. You'll want to find one that you can get along with and who brings value to the partnership.

You can find potential KPs almost anywhere including the places you listed. Many experienced RE professionals are willing to jump on as KP if they know, like, and trust you, and you bring a good deal.

Best of luck!

 You are likely still going to run into a guarantor issue when you refinance into a permanent loan. The lender wants to know someone is responsible should the loan go into default. It's a risk mitigation strategy by the banks. It could be you need to bring on a partner who can sign on the loan with you, which means giving up a portion of the equity. Not the end of the world as you are able to get a deal done. 

Best of luck!

@Billy Daniel Depending on the size of the raise and the number of investors, you might be stepping into syndication territory. 

You should ensure each partner will have some sort of "role" in the deal if you want to maintain a JV structure.

As far as partnership structure, there's no one right way to get it done. It must seem fair and equitable to all parties involved. You must have that open and honest discussion with all partners. It may be uncomfortable, but it is necessary for a successful partnership.

Whatever you decide, you will want to put it in writing and have a partnership agreement written up by an attorney to ensure it is legally binding. Don't skip this step.

Best of luck!

@Solome Ejigu The the rent caps you are facing, this makes things difficult. Are any of the units vacant or can become vacant soon? One method is to not renew the lease of a tenant then once they move out, you renovate that unit. You can do this one-by-one until all the units are renovated. This takes time, however.

Another method is once a renovated unit is done, you move a current tenant into a renovated unit, then renovate the newly vacated unit. This can speed up the renovations so you can get up to market rents, but you also need to have willing tenants. You may need to provide some sort of an incentive to make the move.

Best of luck!

@Chris Duffy You will always need a guarantor on a loan. In commercial loans, they look for the sponsorship team to have a net worth equal to the loan amount. So, if you are borrowing $1M, then your combined net worth must be at least $1M. 

They also look for liquidity which varies on the amount. Most I've dealt with need at least $1M in liquid funds/assets. For smaller deals, it is likely going to be less.

If you are unable to meet the financial criteria, it is not uncommon to partner or offer one of your investors shares in the GP/sponsor team for providing this.

There's no one right way to do this and you can get creative as long as the lender is okay with it.

Best of luck!

@Asha Daniel Excited you are ready to take this journey.

Before you begin, however, you should know what is your why in investing in real estate? What goals do you need to set to accomplish the why? Are you interested in cash flow or appreciation? Do you need cash flow now or can it wait? What is your appetite for rehab? 

By answering the questions above, this will help to start to understand the type of investments you should be looking for. It may even take you outside of your local area.

Best of luck! 

"There are opportunities in every segment and sector". You just have to look and be diligent. They definitely don't come easy.

IRR is basically a return where the timing of cash flow is taken into consideration in its calculation. It is extremely difficult to do by hand. Excel has a very formula to get it done quickly as long as you have cash returns for each year and amount invested handy.

You really can't calculate IRR until everything is said and done. They are all projections of estimated returns.

A couple of good BP articles on IRR are below:

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

Best of luck!