All Forum Posts by: Allen Fletcher

@Devin Pickett

If you want a good in depth guide to estimating rehab costs, try picking up a copy of J. Scott's book on estimating rehab costs. It is sold here on BP and you even get the book on flipping houses by J Scott in a bundle with it. Otherwise, you need to build some experience.

Regards,

Allen Fletcher

@Spenser Murphy

Taking out a HELOC against your own home is a little risky, but the rewards are worth it. Think of your home as a vault. The more equity you have in your home, the more money you have in that vault. The only problem with that money is that you cannot use it. A HELOC will allow you to use a portion of that vaulted money. The key to using a HELOC is to ensure that you use the money to purchase an income generating asset and as long as you do your due diligence you have lowered the risk that you will have problems. In your situation I would take out a HELOC in order to help fund a flip then when the property sells pay off the HELOC and use the profits from that flip to continue investing. This will significantly lower your risk and allow you to start investing in lower return mthods such as buy and holds.

Hope this helps,

Allen Fletcher

@Joshua Metherd

The first thing I am seeing is that you have not accounted for property management expenses in your income calculations. Sure this is free for a year, but even if you self manage you should assume you are going to pay those fees to yourself for your trouble and doing that gives you the wiggle room to have someone else manage if life down the road gets in the way.

Investing with Family - My wife and I invest on our own near where we live and also out of state where our families live. Thus far we have had no problems investing with family and actually feel safer that our family is there to keep an eye on things. The answer to your question is do you have a good relationship and level of trust with your uncle and are you willing to protect that relationship at all costs. I always tell people that are planning on investing with family that they should put EVERYTHING in writing and work all details out ahead of time. This does wonders for protecting those precious family relationships.

Valuing the Deal - When you look at a deal, take the worst possible scenario you can think of (these usually happen at some point) and see if the property cash flows when the worst case is happening. If the property cash flows, you have yourself a high valued deal. If it does not, it may still be a good deal you are just taking on more risk and need to put more effort in to make sure your investment brings in profits.

Cap Rate - No idea.

Comps - Knowledge is power in life and that is especially true with investing. The more time you spend gathering data the better your decisions and profits will be.

Financing - Rates and terms for loans depend 100% on you and your lender. Talk to everyone that loans money (i.e. banks, credit unions, private money, hard money, etc.) you will be surprised at all the ways there are to finance deals and once again you are building your knowledge base and network which will help with future deals too.

Good Luck,

Allen Fletcher

@Hunter Estess

Assuming a loan means you are purchasing the property "subject to" which means the seller transfers the title over to the buyer but the mortgage remains in the seller's name. The buyer is supposed to take over the payments and seek a refinance, fix and flip the property, or maintain the loan as is until it is paid off. If the buyer does not make a payment on the loan, the seller's credit is affected.

The basic answer to your question, it depends on the seller's situation. In many instances subject to will be exactly what the seller needs to fix their problems.

Any other questions?

Allen Fletcher

@Account Closed

I see, as my wife can tell you, I am not one to ask for anything having to do with tact. My advice is to find a friend and do a couple of role-plays with them. Each of you take turns being you and the tenant and work out what you feel comfortable saying to turn them down.

Good luck,

Allen Fletcher

@Account Closed

You have two choices, be completely honest and tell them that you do not want to rent to them or you can accept the application and then turn them down after you performed a review of the application. Both of them are you honestly turning them down and being forthright about it. It is more important to maintain integrity than not hurt feelings.

Allen Fletcher

@Account Closed

Your first step in this endeavor is to build your business credit. Just like with individuals businesses have a credit score that you have to maintain and build over a long period of time. If you want your business to be considered a good risk you need to open business credit lines and keep them current (try a Home Depot line of credit for example).

From your post, it sounds like you are asking the wrong people for loans. Every bank has a department that does small business loans. Talk to them, not mortgage officers. The downside to business loans is that they are usually due in 10 years so be prepared to refinance or pay of the remaining balance at that time.

Hope this helps,

Allen Fletcher

@Marco Jove

What @Nuhan Demirkan and @Stone Teran have said is completely true. Price your offer to the point you feel comfortable with all the things the bank is saying. If the bank says no inspections, lower your offer to mirror that. If you feel that you may have missed something lower the offer to give you a little buffer. The worst the bank can do is say no. They will probably counter your offer and that means you can negotiate with them.

Allen Fletcher

@John Welchen

Find a local buy and hold investor and ask them for their advice. I would even ask for a copy of the lease they use and use it as inspiration for one you write yourself. It is always best to write your own contracts/leases and have a lawyer look over them. Doing this is less expensive, you understand 100% of the lease (because you wrote it), and you have the intellectual rights to adjust it as you see fit (then have a lawyer look over it again). Templates are easy and getting one from another investor is too, but in doing that, what have you learned?

Allen Fletcher

@Marco Jove

Can you walk the property? If you are allowed to walk the property/take a tour take a contractor with you (make sure this contractor is a trusted friend) and both of you need to take copious notes. These notes will be essential for telling you whether or not you are willing to take the plunge. If you cannot take a tour do as much as you can with outside the home with your contractor friend. Remember the more information you have the better decision you can make.

Good luck,

Allen Fletcher