All Forum Posts by: Ben V.

Ben V. has started 2 posts and replied 54 times.

Hi,

Is there any sort of calculator for a house hack deal? Rules of thumbs? Based of market analysis?

For example I'm going to look at a 2 family in Southern New Hampshire that I would plan to buy with a FHA loan. The house is listed for 419,000. The house has two 2 bedroom units and a detached garage. Lender is figuring around 7% interest. Disclosure shows one unit is currently rented for $1300 a month, seems low to me but I'm still checking comps. Seems as though I'd still be left paying a good part of the mortgage. Ideally I'd like have rent cover a good part of the mortgage but seems nearly impossible in the current market situations i my area with high property cost and high interest rates?

Hey Patrick,

What is the total mortgage payment? PITI?

That would help us help you deciding whether or not to purchase. I do like what Sean said "So provide a nice product so you can charge a premium on rents." The principle here is that you keep the home tip top shape, you can charge a higher rent. You can also always raise the rent to the market value. I would be very very careful in doing that as you don't want to lose good paying tenets.

Generally speaking right now if you purchase a duplex anywhere you'll be paying some or even a good portion of the mortgage being that rates, taxes and homes are higher. But rates hopefully wont always be in the 7s, so perhaps a refi is in your future.

Cheers!

0 Votes

Oof...That is either a super tight deal or a loss.... chances to refi and then rent?

Good luck!

1 Vote

Quote from @Amir Mohammed:

Hello All,

I need some expert advice.

I am a rental property investor and I am looking to buy a 8 unit multifamily property in Michigan. I had approached the seller to owner finance the property and my terms where 80 % from the bank and 20 % down payment from seller to escrow so I can close the property and pay him for the down payment in a monthly installment. The owner owns the property outright and I was giving him the price what he was asking for. The house was listed for $ 545 K and 20 % was $109 K. The bank was paying him $ 436 K. So, technically I had two loans . One to the mortgage company and one to the seller. Strategy was to use seller financing with no money down from my side.

But the seller got back to me and said, he is willing to reduce the price by $80 k. But he said get your own down payment and buy the house once the closing is completed and he gets paid he would write me a check of 80 K. The contract can be written by the lawyers. My LLC is relatively new and no bank or credit union is willing to offer me $ 110 K and I cannot even pull that kind of money on a personal loan. Technically I need the $110 K for a week and I can pay back the $80 K immediately and pending balance in installments. I have a rental property and don't have $110 K of equity to use as a collateral.

Can you sell the rental property in full? Would that get you the 110K? Might be worth it to get an 8 unit property. Just a thought.

There is not a DSCR with no skin in the game. You'll need 20%.

Cheers!

0 Votes

Oakland, California

Quote from @Joseph Michael Sutton:

Hey everyone! So I have a decent amount of equity in my current rental and I want some input as to whether or not it would be an intelligent decision to cash out refi in order to put a down payment on a new investment property.

I have refinanced the first house once to a 2.25% Apr and I am not sure if a second refi would be a smart decision considering it would increase my interest rate and Principal. But if I am able to still net some cash flow on the first rental, would it make sense?

HELOC all the way. No reason to refinance at the moment. Let me know if you want a suggestion on who to use.

Cheers!

1 Vote

Quote from @Joshua Carter:

Hey folks! Big time fan of the community, first time posting here.

I'm hoping to purchase my first investment property by the end of the year and hope to implement the BRRRR strategy. I am looking for insight/advice about qualifying for a cash out refinance loan. I have a pretty nice nest egg of cash available that I plan to buy and rehab a property with (approx. $100k), however I'm curious/concerned I won't qualify for the refi loan. As it stands, I only make $50k/yr. but am also considering leaving my current w-2 job and going back to being self employed in the trades as I've done in the past.

Does anyone have insight around what I'll need to qualify for the refi loan in general, and if a recent career change will be hurt my approval odds? Or any general tips given the situation Ive laid out in? I just purchased my first home 2 years ago, so I'm pretty novice to the whole loan process in general. I'm doing my best to do my due diligence before I start making big moves.

Thanks in advance!

Hey Josh,

so to answer your question about the refi...changing your career does hurt your chances of getting approved for a refinance. Going self employed generally means you need 2 years of tax returns showing company growth, not a loss. You could do a bank statement loan which typically yields a higher interest rate. Nearly all loans that do not require income carry a higher interest rate. You may find yourself paying through the nose on that one.

However the DSCR loan is very attractive to investors like yourself. Most lenders offer up to to 70% LTV but I do offer 80%LTV with good credit. It's a tricky scenario when trying to make sure you're doing the best thing for your business. Feel free to reach out should you need more help! Always willing to chat :)

Cheers!

1 Vote

Quote from @Amir Mohammed:

I am looking to purchase a 8 unit property. i need assistance with down payment how do i raise the capital for down payment. Any suggestions would be highly appreciated.

Have you done your research on the property? What I mean is have you done comps, have you run numbers for ROI, have you studied your pitch to investors, are you going to be able to answer their questions carefully and explain in detail how they are going to make their money back, the risks associated with giving you thousands of dollars? Just thoughts.

You can raise capital from friends, family, real estate agents you know, even loan originators can jump in the game if things make sense.

0 Votes

Oakland, California

Quote from @AJ Satcher:

AMAZING response! Thank you for this! Theres a lot that can be picked from this... I've been reading a ton and I think my biggest concerns are with the Rehab part.

The buy is fairly simple to understand to me, the ARV can be somewhat complicated but reasonable enough to understand (basically know your comps).... but when it comes to rehabbing.... quite frankly I have not the slightest on what that entails, how to estimate, etc. I am a software developer with 0 hands on experience with rehabbing or even being remotely involved in one.

Yeah that one is a tough one. I would say the only real way to get expertise is to throw some gloves on and get to work. My first BRRRR I did all the work myself with my brother. We did not use a single contractor for anything. We redid the floors, gutted the bathrooms and replaced toilets, sinks, cabinets and retiled the shower from scratch. We rehabbed the entire home except for the garage which is just a normal garage I guess. But we used Youtube as our teacher. Literally Youtube was our manual. It was fun and now I understand so much more and am ready for another deal!

That unfortunately is the only real way to learn in this game. Experience!

Cheers!

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Atlanta, Georgia

The first thing I thought of was compliance with the law....I have no idea what laws there are if you are to open a 55+ living space. Probably worth looking into. It's always nice when you get sued that you did everything by the book ;)

Cheers!

0 Votes

Ann Arbor, Michigan

I'm a Loan Originator in Central Florida. It is true that lending is tightening up. BUT....

Because we don't know the future, that doesn't mean we can't invest. Obviously you're starting with a great set of questions here on BP.

1. Use and get familiar with the calculators on BP. They are a great way to examine the market and get a feel for numbers. Since this is a numbers game, it is imperative you understand how to calculate a good deal from a bad deal. Notice I didn't say "feel" a good deal from a bad deal. It's about numbers and if they make sense. If they do, pull the trigger.

2. Be aware of the "Too Much" rule. (I'm coining this... :) The Too Much Rule is simply purchasing a home that is out of your league. Meaning the cost of repair is too great, the scope of work is out of your expertise. You'll ideally need to find a home that doesn't need structural repairs, foundation repairs and large costs associated with long term repairs or replacements. Find a home that has good bones but needs TLC. Getting in over your head on your first or even second deal is not the best idea. Play conservatively.

3. I would highly agree with @Eliott Elias when he says to knock off 20% from your ARV. Hope for the best, plan for the worst.

4. Lastly I would have an exit strategy, or plan B ready to be enacted if things go south with your property.

That's it...

Hope that helps,

Cheers!

1 Vote

Atlanta, Georgia

Quote from @Jason Wray:

Paul,

When you buy a property using "All Cash" there is no seasoning you can take cash out same week. It's called a delayed financing or DSCR. You cannot use an appraisal until the (6 month) mark but if you do any renovations/rehab you can show proof of receipts and the bank will use the purchase price and the total rehab/repair cost total and allow up to 75% cash out.

Some lenders will not allow the repairs/renovations to be added into the cash purchase so make sure you ask those questions up front!

I don't understand how delayed financing and DSCR are the same thing? Debt Service Coverage Ratio has to do with the 1007 rent schedule ordered on it

@Paul C. Interest rates on a cashout refinance are higher than a R/T to answer your question.

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All Forum Posts by: Ben V.

Ben V. has started 2 posts and replied 54 times.

Post: How to analyze a house hack deal?

Post: Fix and Flip with new roof

Post: Creative Financing Options

Post: Should I refinance for future investment?

Post: Qualifying for a Cash Out Refi ?

Post: How to raise capital

Post: Getting Prepped for BRRRR!!

Post: RENTING ROOMS TO 55+ INDEPENDENT LIVING IN SFH

Post: Getting Prepped for BRRRR!!

Post: Buy with funds from HELOC, then get mortgage/cash out refi