All Forum Posts by: Andrew Postell

@Judd Nutting thanks so much for the post!  Very happy that this strategy worked out for you.  It's been around for many years at this point and it has certainly helped many people.

Now, as far as profitability - there are THOUSANDS of businesses that don't show a profit.  So, showing a profit isn't a problem.  Are you required to generate income though?  I have a feeling I need to defer on that part of the question though.  Certainly recommend speaking with a CPA on it or maybe just posting that question by itself in the Tax Forum.  Probably a few people in there that can help with it.

Thanks again!

@Johana Villamil yeah, I'm confused too...why are we talking to them about how long you will own a property?  We are just inquiring about being a GC, right?  If you have other questions about different things...please don't ask them.  They aren't a legal department.  They aren't title.  They aren't lending.  Yes, there are OTHER things to home ownership but we just want you to be a GC...right?  GC's work on all sorts of properties.  Not just their own homes. Try it from just that angle.  If you are still getting stuck, reach out to some San Antonio Real Estate groups and get with another GC or something.

And I want to be clear on what I am saying - I'm not saying what you want to do is the best way to do it.  I'm just answering your question - how to be a GC.  

Hope that makes sense. 

@Jamie Warcken well, I was going to ask why you didn't go the renovation loan route or get a HELOC but if you are unemployed then you wouldn't be able to get those. Unless you find a lender that would give you a loan with no income then you would be limited to friends/family/or current resources.

@Don White thanks for the post. @Kyle Mccaw have any contacts down there?

@Johana Villamil thanks for the post!  Always great to hear from a fellow Texan. 

Now, in Texas, you don't need a license to be a General Contractor.  You can just be one right now.  Congratulations!  You did it!  Now that you are a GC...you'll need to learn how to apply for permits and insurance.  This is where your costs will come into play.  In San Antonio, contractors are required to register with Development Services and obtain liability insurance.

So, just reach out to the agency and see what they say.  You can also reach out to some real estate investment groups or contractor groups on San Antonio Facebook pages. There are several and many have hundreds of members.  

Hope some of that helps!

@Arjun P. thanks for posting!  Always great to hear from a fellow Texan.  

Building homes is very different than rehabbing homes.  For financing a new build, every lender will require experience building new homes.  Until you have that, you won't be able to receive a new construction loan.  However, with rehabbing loans...experience is suggested but not a hard requirement. 

Hope that helps in some way but feel free to reach out if you want to talk anything through. 

@Colleen Barone this has so many layers on it but read this post on seasoning HERE and this post (at least the first section) HERE. 

@Simran Rihal thanks for the post here.  I'm one of Bigger Pockets top contributors and been a real estate investor for over 20 years.  Reach out any time.

@Michael Myers thanks for the mention sir.  Greatly appreciated!

@Danielle Ronquillo thanks for the post.  I'll answer your questions first here and then expand on a few things as well.

1. would a duplex by a cemetery make for a good rehab and rental? - a home ANYWHERE could be a potential good BRRRR Property...if the numbers work on it. (more on that in a moment)

2. would the cemetery just detract its value and drive away potential renters/buyers? - Yes, it would detract from buyers/renters and affect the sales price.  There are numerous studies that support that graveyards/cemeteries affect a home's resale value/desirability.

So, how can I say in one sentence that it could be a good deal and in the next sentence state that the location will affect the value? This is because we make our money when we purchase a home. Meaning, when we purchase it for a good price. A price that allows me to repair it fully and still get value after I have repaired it. There are specific math formulas to know here. And there are general rules that we follow as well (like not buying off the MLS). There's probably so much to this that it would be hard to summarize everything you need to know in a post like this...but here's some basic things I think you should know about:

BRRRR SKILLS NEEDED

Generally speaking you will need several things to successfully complete a BRRRR:

1. ARV - being able to calculate the Value on your own (meaning, without the wholesaler telling you the value) is really important.
2. Repairs - You will likely need to know how to budget the repairs as well. Getting a contractor can be extremely frustrating especially if you need to make an offer without even looking at the property. How do you calculate repairs without a contractor? You may need to lean on other local real estate investors in the beginning. Or maybe even just focus on properties with a very light rehab?
3. Lenders - You will need a lender on your BUY step and on your REFINANCE step. And I would HIGHLY recommend to read this article I wrote for Bigger Pockets on how to find good lenders that you can find HERE. If they are good, they should be absolutely definitive on rate, terms, costs, etc. Trust me, many lenders will tell you they can do this...but it's very rare to find. When I first started BRRRR'ing my properties lenders would tell me "That's illegal"....it's not, they just didn't know anything about it.
4. Finding Properties - and this is the absolute hardest step of anything right now. So network like crazy and find some good resources. It's going to be hard...but if it were easy then anyone could do it.

@Sean A Lewis the only way to know if you can get your money back from a loan is by talking with a loan officer.  Now, it is possible that someone else might be right...but I would still say to confirm with a Loan Officer.  I'm saying this because later someone might give you tax advice - get with a CPA.  Or legal advice - get with an attorney.  It's impossible for us to keep up with EVERY industry out there.  So, even if you hear "something"...having a good network will allow you to verify what's possible.

Here's what you need to know based on what you asked above:

1. Refinancing - There's isn't enough information for me to provide specifics...so, I'll address it both ways. First, you won't be able to refinance with a traditional loan with multiple ADU's on your primary home. Traditional loans through Fannie/Freddie/Jumbo lenders won't allow multiple ADU's on a property. Their guidelines actually prohibit this. Which means you would need a "non-traditional" loan to even consider refinancing. That means a higher rate and less favorable terms. But finding such a loan on a primary home would be extremely challenging. It might even be impossible. Secondly though, if this is an investment property then you would have more options. Same types of rules apply in that this would not be a "traditional" style loan. It may not even be a 30 year, fixed rate loan. This might fall into the 20 year, ARM products. But you could find those on an investment property as opposed to not finding them on a primary home. There's over 8,000 lenders in the US...I can't speak for them all but this is what you should expect. Multiple ADU's on primary home - big challenges. On investment property - options, but less favorable terms. If you just have 1 ADU, then your options will be SIGNIFICANTLY more plentiful.

2. Value - How do we know what your value will be here? We must consult our comps. How many triplexes have ADU's in your neighborhood? And this goes for ANY renovation that we do. What will my value be if I finish a basement? What do your comps show? What about with adding granite countertops? What do the comps say? Adding a pool? Comps! We MUST analyze comparable properties with determining future value. So, if no comps have pools...then adding one may carry ZERO value. That doesn't mean we shouldn't add a pool though. If adding a pool provides a happier family...what's that worth? That's priceless. There might be reasons for us to do these types of renovations still but you need to know that your comps determine the value. And if there aren't any comps, then no value might be something that occurs. Maybe adding the ADU's will give us more rental income and that's good enough. But keep in mind that resale in the future. So, just like it might be hard for you to get financing...same for any future buyer too. Keep the current market in mind but also consider the future too.

Hope all of that makes sense.