All Forum Posts by: Aseel Yerunkar

@Evan Polaski

Agreed. Knowing what to defer and what to pay attention to because it will kill you on the inspection is a fine art. 

@Kathleen Alonso

To add to the point above I would take a look at your initial inspection and fix the items that REALLY stand out and are being given critical warnings by the inspector.

@Kathleen Alonso

Paying more than you need to in terms of interest and lender fees or purchase price? Are you using a hard money lender? If so, my biggest tip would be to really explore your options. Some hard money lenders can be a pain to work with and some are a breeze. For example, my lender does not require an appraisal before closing to determine ARV as they have an in house valuation team. If they are funding rehab, all they require are pics and video proof of progress before they release funds. Where as I know there are some other lenders who require an appraisal to determine ARV, and they require an inspector to go out and inspect the property for progress before they release funds which can be a major time hindrance.

Check with other investors to see which lender they use and what kind of experience they have had with them. 

Where are you investing? I might be able to recommend someone.

@Kathleen Alonso

My biggest mistake on my first property which was a flip was buying wrong (paying too much). My second biggest mistake was not having a solid team in place. And from what I've seen this is a pretty consistent trend amongst most people who are just starting out. You make ALL of your money when you buy. So for someone who is starting out I would say two biggest things are to 

1. learn how to properly analyze a deal and if you are new to the flipping game BE EXTREMELY CONSERVATIVE WITH YOUR NUMBERS. Whatever you are calculating your rehab to be I'd tack on another 5-10k in the form of unexpected expenses.

2. have a solid team that you trust in place.

3. pay attention to the design and finishes. Assess the area where you are selling and do finishes that would suit your target customer.

4. this one is a bit controversial but if you are flipping don't spend money on unnecessary stuff that doesn't add value. Fixing up driveways, Installing new cabinets when the old ones could be reused, unnecessarily replacing the HVAC and water heater just to claim that your house has "new mechanicals", etc. You could easily use those funds towards more cosmetic based upgrades that will make your house way more appealing to the buyer. Owner occupant buyers are emotional buyers who don't really care as much for the under the hood stuff as long as its all functional. 

Luckily your rehab seems to be pretty small and cosmetic, so you should be fine. Just again budget to run into unexpected things. Hope that helps. Hit me up if you have other questions!

@David Chappell Thank you! Best of luck to you in your journey.

@David Chappell Turns out it was indeed too good to be true. The entire foundation was sagging and the house would have had to been bulldozed. So I passed on that one! But no worries, ended up doing two successful out of state flips this year :)

@David Chappell Good on you for taking action so swiftly. You seem to have it under control!

I would however be weary of the no closing costs thing. Lenders are very good at sneaking in fees so I would just double check that. Second thing is to check and make sure that your hard money lender doesn't have any prepayment penalties. Many have them specifically to prevent people from doing what you are. If both of those things aren't an issue, go for it!

Another tip: If you have enough equity in your investments you can open a HELOC on them as well!

@Brandon Gee Congrats on hitting that savings milestone.

As others have mentioned I highly suggest looking into house hacking via a low down payment loan. 

HOWEVER one thing I have not seen others mention is to make sure that IF this is your only form of savings -- keep an emergency fund. The rest you can invest. But you should figure out how big that fund needs to be based off your lifestyle. Maybe it needs to be 5k? Maybe it needs to be 10k? In which case I would keep on doing what you're doing and save up another 10k and then invest it. 

Hope that helps man. Hit me up if you have questions!

@Indra H. I see, well in that case I don't think youll be able to get a loan on 150k. You're going to have to shop for a good 30 yr fixed rate commercial loan which you will get based of purchase price, then opening up a HELOC to see if you have any more equity that you can utilize. Hope it goes well.

@Indra H. I would talk to your hard money lender and explain the plan. If you're doing improvements you might be able to get a loan on 150k as long as the HML is fine with what you are doing and agrees with you on your projected ARV. Just remember that regardless once you get a hard money loan on 150k you're going to have to refi that into a 30 yr. commercial loan and pray that the appraisal comes out to your projected ARV so you can pay off your HML or else you'll be in a bit of a pickle. Prepare an appraisal packet with your improvements and comps that justify that ARV and present that to the appraiser when he does the appraisal walk through.

 Also I would explore some more lenders.I feel like you might be able to find something better than 7.75 even for commercial.

Couple questions..

1. Are you planning on making improvements to the house?

2. What is going to be your exit strategy to get out of what I am assuming is a high interest hard money loan? Sell? Refi?

The only way you will get a loan based on 150k (ARV) price is if you get a hard money loan. And the only way they will give you that loan is if you have plans to make improvements that will raise the houses value to the ARV. Maybe there's options where they will give you a loan based on 150k ARV without any improvements made to the property, but I personally have never heard of something like this happening. Maybe someone else can chime in here.

If you are saying that the houses value is 150k AS IS and you are acquiring it for 109k, then I think your best option would be to get a 30 year commercial fixed rate loan since you said conventional is not an option, and then open a HELOC to attempt you to use the equity that you claim to have because of your below market value purchase price.