All Forum Posts by: Arpan Patel

Agreed, there is no best way really. Find a way that will work and move forward. We use a lot of Hard Money and Private Money but never banks (but that may be changing soon) but as long as you know what the costs are and you treat them like any other expense (you account for it in your calculations to see if the deal is right or not) then you are all good. Lender expenses should never be a surprise - rehab is another story...

also some small input (rule of thumb) - 50% of gross rents towards expense and another 40% of gross rents towards mortgage payments. If you do this, then you will always have 10% profit also a 1.25 debt coverage ratio that banks like a lot. Bankers like when people know this term as it makes you seem more credible. Good luck!!

There are many depending on terms. This is 5 units (if I added that correctly) so you will need a commercial lender but yea local portfolio lenders or credit unions seem like good idea. There are also hard money people that will do interest only for a year until it is seasoned (if you are doing repairs) and then refinance later. Many options but first, talk to some bankers to see what their normal lending guidelines are for this type of deal then you have something to put numbers against. Happy Hunting!

for sure, let me know if there is anything else you were wondering about. it is exciting and nerve racking to jump into any new venture but especially a business as old as this (house has been around for... ever) and there are lot of nuances and facets due to that age. Let me know!

@Fin Johnston: Where at? We heavily invest in the Flossmoor/Homewood greater area. Let me know when you are in town again and of course let me know about anything else you'd like an opinion on. Happy Hunting!

If the numbers line up then I'd check out the neighborhood and see it is a place you want to do business in. Then I'd take a look at comps as far as what type of finish and materials they put in the home that your home will have to compare against. Numbers first, then neighborhood, and finally level of renovation/product. That is how we evaluate new areas at our office.

One house a month is not realistic starting out. I would say try to flip two houses for the year is a good first year goal unless you have a ton of management background or you take on a partner who has done this before. I have been in the business for quite some time and even we are just trying to get to the point now that we can do one a month. Also, you should probably look at making more per deal because 10k can get swallowed up very quickly if anything small comes up. We aim for 40 and usually get 30 or so. I also wouldn't purchase properties outright because it diminishes your cash on cash return, limits your tax deductions, and make you a larger target for more lawsuits because of the high equity positions; additionally, I think you should take advantage of the interest rate environment now while they are lower. Who knows where they will end up in 5 years especially as Yellen seeks to raise rates this year. I hope that helps

Yea, you don't buy cash. That is a normal business rule of thumb - namely the 50% rule. Of that remaining 1000, if your cash in was 120,000 then you would make those numbers. Also, what about 3-4 units? You will need to play with numbers, areas, and types of property but it can and does work. Have you tried running deals through the BP calc?

You will need to pay for a prelim title report. That should have everything you need in it, If you are putting a lot of homes under contract and closing with this title company, they may waive some of that prelim cost in hopes of doing more business with you. Just a thought.

Start reading and listening to the podcasts. Get Educated First. Then maybe try a house hack and build your skills with management and small (emphasis on small) repairs. Then start taking on bigger projects but start small and roll forward. I wish I had done that when I first started.