All Forum Posts by: Rebecca Belnap

Welcome to bigger pockets. Utah county is a good place for rentals and there are plenty of biggerpockets members in the area to help out with boots on the ground if you don't plan to move back anytime soon.  I have rentals in Orem and Lehi and never have trouble keeping them fully rented. Good luck and let me know if you have any questions.

Josh is right, we have a lot of great groups in the area.  You can find most of them either here or message me for links.

If you want to use the BRRRR method, you should have plenty of down payment money from your 2 rentals (you didn't mention if you own your own home) to get a good start. Partnering is a good way to get deals, but more expensive than your own money if you have it.

As far as what to buy, the market is a little uncertain and a bit inflated.  If you keep to flip homes that can cash flow if you can't sell them, you should be fine.  Even in 2008, rents were rising in areas that were close to the freeways or main work hubs.  Remember gas was $4 per gallon, so rural areas like Eagle Mountain were a hopeless mess.  

I went and checked the rules of the double appraisal and discovered that what I told you was wrong.  Sorry, I had merged 2 programs in my head.  There are a lot of them.  The double appraisal is required when you  are buying a flip that has less than 3 months of seasoning.  They require it because the banks need to prove that they are being diligent about not letting over inflated values push up bubbles in the market.  With two appraisals, they use the lower valued one and there is less chance of a default for the bank.

So, in the refinance, you can do a refinance with no seasoning period at all.  The day after closing with the first lender is fine as long as it is not a cash out refinance.  They will use the appraisal for the value, but be a little careful here, because if you bought the property off the mls, the appraiser may use your property as a comp for itself.  

For a standard FNMA limited cash out refi, your LTV can be 97% for a single family (80% if it is a multi-unit) if owner occupied, or 75% for non-owner occupied any size from 1 unit to 4 plex.

So here is an example:

You purchase a duplex for $150,000 using a hard money lender who finances 100% of the purchase price.  Your closing costs wrapped into the loan were $15,000.  You spend $35,000 using contractors with contracts to repair it, It then appraises for $250,000.  

The loan would say you can borrow a maximum of $187,500. ($250,000 x 75%)  They would pay off the $165,000 to the hard money lender, and then they would give you a check for $22,500 - $5625 (minus about 3% loan closing costs)  not as a cashout, but as a reimbursement of expenses.  If you did all of the work yourself and provide no receipts for materials, they will let you finance the $5625 in closing costs and $2000 cash back (Which is why they call it a limited cash out.)

But suppose the duplex appraises for $300,000?

Loan is now $225,000  with closing costs of 3% = $6750 

This gives you a maximum loan potential cash out of $218,500

$165,000 pays off the Hard Money Lender

$35,000 pays off the contractors

You can get up to $2000 limited cash out.

New loan is about $202,000 plus new closing costs of about $6060 = $208,060 if you want your cash in less than 6 months.

If you wait the full 6 months, you would get the loan Maximum loan and cash out the full $18,500.

I hope this is clear, I have a lot of fun with numbers.  Please note that I am talking in general about a program that is possible but this is for education purposes and you may or may not qualify.  

A few other things to keep in mind.  All of this assumes reasonably good credit, at least 620 FICO scores.  32/43 Debt to income.  75% of gross rents can be used for qualifying.  You will need 6 months of rents in a seasoned account to qualify.

1. Technically no, you don't have to wait to refinance.  The reason he is saying 6 to 12 months is because banks won't give you a cash out refinance for 6 to 12 months depending on what programs that you qualify for.  This means you can refinance and it can pay off the hardmoney lender and whatever payments you can prove you paid (bank statements and receipts) but everything will be based on original purchase price, not the new appraisal.  A few programs will do it in 3 to 6 months, but you have to pay for 2 appraisals.  After 6 months they may require either a 2nd appraisal to do a cash out or a desk review.

2.  One time upfront, but some will require more points to extend if you don't pay off by the deadline.

3.  I used Private Money Utah on a house I flipped in Eagle Mountain.  The only fee they charged before closing was about $400 to pay someone to come out to my house (basically an appraisal).  They do have some 100% financing options, but we didn't use them because it was too expensive.  I haven't personally used any others.

4.  The rates are rising FAST.  The more people have to pay in interest, the less the purchase price can be.  We are seeing the normal winter slowdown.  No one likes to move in the snow if they can help it, and the kids are in school.  I wish I knew how much the change in rates will affect things, but my crystal ball is pretty cloudy right now.  My personal plan is to only buy properties that would rent easily to families just in case prices drop and I need to hold long term.

5. To find out values that I can sell for, I have a Realtor who does a CMA for me on the MLS. The utah county recorders office is free online and it can give you all sorts of good info like name of owner and what the taxes are. If the owner's address and the property address are different, you know you have an absentee owner. I don't do very well at negotiating with sellers, so I'm liking the wholesalers meetup groups. Other than that, bigger pockets.

My favorite parade of homes house was in vineyard and it is a very hot market.  The only thing that kept it from being seriously developed before was Geneva. Now that it's gone, most people see it as prime lake front property.

The 2 concerns I see is that it still is dirty and will be for a while.  The toxic algie last summer didn't help its reputation at all.  Each year it is improving though.  The other thought is if you can get it to cashflow. Last I looked they were asking over $700,000 for a 4plex and rising.

Welcome to bigger pockets.  It's great to see Realtors who are actually investors.  So many are out of their league if you even start talking about anything other than a single family home.  

Your bio doesn't say much, but I did notice you are interested in low and no money down investing.  I'm working on that as well, and would be happy to compare strategies.

Welcome to Bigger pockets, it's a good place to learn how to get started.  Your bio doesn't say anything about if you already own your own home.  If not, have you considered a duplex. Low down payment to get into and you can count 75% of the rent from the other side towards your income to qualify.

Or if you are set on single families, buy with no money down, live in it a year and turn it into a rental while you buy another with low or even no money down (a little tricky since you can only have 1 FHA loan at a time unless you move more than 100 miles away).

It's a great way to start.

Great to have you here.  Short sales used to be my favorite way to get my flips.  With the rates going up we may see more of them again.

You'd look long and hard to find 1% for single family homes.  It's a bit better with multi-family, the plus is the 0% vacancy.

Utah is a great place to invest in.  I started with flipping my first home back in 1999 but have converted over to loving rentals.  That monthly income, appreciation, tax benefits, and debt payoff by someone else is hard to beat.  It's hard to find great deals at the moment since the market has been so hot, but with the Fed raising the rates in Dec (current futures say a 100% probability) things are likely to slow down.  When sellers start to see a slight drop, we will see more deals that have good cash flow again.