All Forum Posts by: Bob Woelfel

I agree with what @Nick Rutkowski said.  I would approach a number of local banks in your area.  Explain what you are trying to do and look for a bank that wants to build a relationship with you.  Good luck.

@Evan Smeenge your "profit" comes from the equity you have in the property when you refinance and pay your lender off.  It also comes from acquiring a cash flowing asset without using any of your own money providing you with an infinite return.  If you want "profit" as in a lump sum of cash in your pocket today then you need to just sell it once it's done.  

I'm sure you know much of this, but the reason the BRRR strategy is so popular is as follows. Let's say you had 20k to invest. You want to buy rentals, but your 20k will really only allow you to buy a 75k house. 15k would be your down payment and you would have another 2-3k in closing costs. So in order for you to buy another property you would have to save up another 20k.

With the BRRR strategy you could use your 20k and go get a private or hard money loan. Let's say you found a property for 50k and it needed 20k in work, but would be worth 100k when it's done. You could use your 20k for monthly interest payments and maybe even a portion of the rehab expenses if needed. Once your property is done and it appraises at 100k, you can then refinance out and pay off your lender the 70k. You now have a property with 20-30k in equity, it cash flows (hopefully) and you are back with the same 20k that you started with allowing you to do this multiple times. BRRR, when done right, allows the average investor an opportunity to grow exponentially.

To do this though in the manner I described you must find properties that need work and you can force appreciation.  I would not want to try this strategy on a turnkey property or even something that needs minimal work, unless you are getting a great deal where the numbers would allow it.  Best of luck.

@Nick Broce some HML offer no down payment options as long as the purchase/rehab costs are below a certain ARV so you could in theory get into a rehab without any of your own money to start. You will however need to have some reserves for monthly interest payments and some cash to start the rehab before you get your first reimbursement, which is why I said your 23k should be able to get you a house in a better neighborhood.

@Alexander Woyte...you actually have most of this down pretty well.  I agree in that double closings are the best way to go for a number of reasons that I won't go into here. 

 - Title company will make sure the title is clear and will handle your transaction.  You transactional funding will actually require you to get title insurance.

- Transactional lender will get all their docs to the title company for your A to B side closing.  It's best to have a title company that is familiar with this type of transaction, or use one that your hard money lender recommends.  It will help the deal go much smoother.

- I can't really advise you on the contract part.  I've seen investors use very basic one page contracts and I've seen some use the standard realtor contract for their state as well as everything in between.  Since I'm a licensed agent we use the standard state docs for everything we do. 

@Terence Brown I was actually able to get the LOC I mentioned in my first post before I talked to these other banks. The point of going into these other banks was to establish another relationship with a different bank because I was investing in different areas. Plus, I wanted to have more options.

I will say though, when you find a good bank and you have a good relationship with them don't make it difficult for them to earn your business.  It's a mutually beneficial relationship.  I stopped rate chasing a few years ago and I've been able to get much further because of it.  My bank values what I bring and they have moved a few things around for me multiple times when I needed to make transactions happen.  If they don't know you or have a history of doing business with you then it's hard to go ask a new bank for a bunch of favors.  Good luck.

Hi @Yusuf Abdi...welcome to BP.  Just for clarification, househacking is what you want to do with the duplex, not what you are currently doing with your parents.  It's when someone pays you to live in your place.  Essentially, right now your parents are the househackers...not you:). 

Yes, I do think your plan is a good one.  Househacking can be a great way of getting started.  The loans are favorable (3.5% down) and reducing or eliminating your living expenses can be a huge way of getting ahead.  I would start looking at what duplexes cost in your area and then see how much you need to save to put a down payment on one you want to buy.  Start analyzing duplex deals and see how much of your mortgage will be covered by your tenant.  Whatever is left is what you would be responsible for.  Check with your lender, but you could even take a money gift from your parents to be able to afford the DP.  You can sell your parents on the idea by saying it's the fastest and easiest way of getting you out of their house.  Ha.  Best of luck.

I haven't heard this site talked about in quite some time. From what I remember they were mostly just hard money lenders. If that's the route you want to go, I would highly recommend working with a HML in your local market as opposed to just some random HML you find on the internet.

@Jason Thomas I have a similar small building with a dumpster setup.  If this were happening to me I would consult with my tenants and see if they have seen anything.  Ask them to keep an eye out for you and write down any license plates that are seen dumping, etc.  Nobody wants to live with an overflowing trash bin by their unit and people definitely don't want unauthorized people coming onto the property.  Hopefully they will want to help.  Best of luck

Hi @Taylor Baehr...I did not look at the numbers for this deal.  I only responded to let you know to be aware of the financing issues that can sometimes come with two properties on one lot.  I have had to pass on deals before because of this.  I know that financing these is certainly possible, but you will get told no more than yes from lenders.  Just wanted you to be aware.  Best of luck.

Hey @Dustin Thoms....what type of agreement do you guys have?  I just bought a partner out in 2018 and I'd be happy to discuss how we did it.  We just followed our operating agreement and were able to come to an agreement on price so no attorneys needed.