All Forum Posts by: Andy Collins

Just make sure you can qualify for a mortgage if your buying and holding, and ask yourself if the deal went bad, could you make payments on those accounts without any cash coming in from real estate for a few months.

It could be those other owners plan on some day moving back, houses that rent for $1,300 that are worth $168k don't make sense, especially with Texas property taxes.

The most expensive house I have as a rental is worth about $125k (I have a LOT less in it) and it rents for $1,250, I have other houses that are worth around $100k that rent for $1,150,,,as you can see the rent doesn't necessarily increase relative to the value of the house.

I normally put a sign in the yard as soon as I close on the house, but I don't normally have a rehab take longer than 30, at most 45 days.

It's never caused a problem, but I don't let them pick the colors, etc,,I tell them it will be our standard colors/finishes, and show them pictures of previous houses.

I prefer not to sign a contract until I am far enough along with the rehab that I know it will be ready when the move in date comes,,,I have literally finished the rehab in the morning and have someone move in that afternoon

andy

If you have been on that job for 2 years and can show 2 years of income tax returns, they should accept it. They will probable average the income over the two years.

If you haven't been in an industry for 2 years they won't let you claim income from any job/industry (I believe the exception is if you just graduated from college and are in the industry your degree is in)

As you complete a portion of the repairs you can get a draw against those repairs, but normally they charge you every time you get a draw (they normally have someone go out and verify the items you want a draw for have been completed, also if they don't know you they may want to see receipts from the contractor that they have been paid).

The hard money lender doesn't want to let go of the funds until the money for each portion of the rehab until it is done,,they don't want to end up with no money in escrow and not all of the repairs done.

Many times you can charge many of the repairs to a credit card (or at least materials) depending on your contractors.

If you don't have any money to your name after you get the deal done, you need to save up before you take on a project, it never goes exactly as expected.

If there is a problem with a rehab and the hard money lender ends up getting the property, they either want it repaired exactly as outlined or the cash still in escrow to do the repairs

Hard money lenders don't require the same credit, income etc as a bank loan or mortgage,,they want to make sure they are covered

Jose, since the hard money lender is lending based on a percentage of the ARV (After repaired value), they want to have the purchase price, rehab cost and all closing cost together up front.

If you buy a house with an ARV of $100k, for $70k, and it needs $10k of rehab, the hard money lender will require you to bring (assuming they are doing 70%), $10k plus closing cost to the table. They aren't going to lend on ARV unless the cash for rehab is also in their hands.

Remember, they are lending on ARV, so they need to have the rehab money in escrow to make sure they are covered. Also you will normally be given the money in escrow AFTER repairs have been done and paid for (and a charge for each draw as items are finished). So you will need to have cash or credit even after you walk away from the closing table.

andy

there are lots of companies saying they can do this,,some will sell you a seasoned corporation,,,in the long run its a big waste of time and money.

That type of thing might have worked years ago when credit wasn't so tight, but today banks want to know who they are dealing with and what that person (or entity) has in the way of assets and income.

If you want business credit form an entity, establish some credit (which will require a personal guarantee),,after time the entity will build up some credit worthiness,,but it still needs assets and income to really get very far.

andy

Find a local bank or credit union, not a big national one, go in, talk to an officer and explain what your trying to do.

Secured credit cards or loans are a great start, just make sure you don't spend more than you normally would, and pay them off every month.

Debt to income could be a problem, so your going to have to build up your income so that you can afford to buy a house, it doesn't have to be a mansion, just a small house that you can rent out, that will also start the clock on your having 2 years of rental income (which helps).

Don't go crazy applying for everything, you will end up with too many inquiries. Go to www.creditboards.com and read about establishing credit, everything you read there I don't agree with but there is a lot of great information on building (or for many rebuilding) credit.

Starting out building your credit at your age is fantastic, just make sure to use responsible!

andy

The areas you mentioned are more 'blue collar' or lower income, some more so than others. South Dallas has some nice areas, and some war zones, Seagoville has some ok areas, and some war zones, etc etc.

North Dallas is generally a much nicer area,,but in those areas you won't find $100k houses.

I have never looked at properties in Grand Prairie, but the areas I am familiar with are good blue collar areas that may be good for rentals.

The difference of being two streets over and being in a different school district, or even a different school within a district, can make a large difference in how easy they are to rent and how easy to sell.

In areas like these the difference between knowing the area and not knowing the area can be the difference between a 'great deal' and a 'sucker deal'.

You need to report trade lines to D&B, contractors, plumbers, etc. The more tradelines you have reporting with good pay, the better.

I think that the "DS" rating means they don't have enough information to give a recommendation on you, and you will need I believe 3 trade lines to get a PAYDEX, which is sort of like your fico for your company.