All Forum Posts by: William Collins

1) Yes the property eligibility is affected. Fannie and Freddy loan to individuals and not LLC's.

2) Varying by bank, 3 months to a year on non commercial- as soon as same month as rent on commercial. 

3) Yes, but you need to talk to the commercial department.

4) That's what I do.

Welcome to BP @Carmelo Lazu Connecticut has potential especially if your intentions are to boot-strap or house hack your way into the business. Being in East Hartford (where I own a business), there definitely are better neighborhoods. Start looking for meet ups (there are ones in Rocky Hill and Manchester near to you), and find an agent who will set you up with MLS feeds.

Back to my original statement- House Hack.  As a first time home buyer you could lock in a really nice house in your market or ones nearby.  I would recommend at least a duplex.  Preferably a duplex you could straight up rent one side, and have a friend help you with the other. 

Cheers

Welcome @Jose Bernard ,  get out there and start looking remember driving for dollars works well in this state for targetted letters to landlords looking to exit the game.

The other way you can refinance is through a commercial lender.  Some lenders will have portfolio loans available on the small multi side.  Rates are slightly higher, with a more aggressive amortization schedule- but it is something which is possible.   This is what I am using to refinance out after getting renters in.

Here is the situation.  Older (1900) duplex, over under- where the 1st floor had a significant expansion (300 sq feet).  The property is currently a 2 br 1 bath per floor unit, but due to size the first floor would net 1100, and the second floor 900 (assuming the renovations occur).  My net renovation budget is $30,000 for fixing the house as it stands.

The other option is to expand the 2nd floor to add the additional 300 sq feet.  This would allow me to take both apartments and switch them to 3 BR units, and due to the neighborhood- they would rent for 1300/ unit.   

As this is a BRRRR here this would end with a win in either case:

70k purchase +30k reno= ARV $160k able to fully finance out all funds

70k purchase +60k reno= ARV $200k able to fully finance out all funds

The big factor is time, where the larger project would run 4 months knowing the town and timing.  

What are your thoughts?

@Fabio A Becker watch the MLS like a hawk, and drive for dollars in New Britain. Also make sure sure you know what neighborhood you are in.

@Charles Wiegert I partnered with private money (my cousin) for the initial nest egg which we are reusing.  It is based off of a home equity line of credit.  We then are refinancing on commercial paper through a regional bank.  @Gilberto Rodriguez  By doing it this way not Fannie Mae/ Freddie Mac- we are estimating we can get to about $2 million financed through this bank before having to find another source (which could be Fannie/Freddy)

Today I closed on my 6th BRRR deal. All of my properties are in Connecticut.

So far:

Triplex in New Britain- BRRRR complete and fully operational.

2625 Rent Roll 100,000 acquisition  50,000 renovation, 140,000 refinance out 190,000 valuation

Duplex in Manchester- BRRRR complete

2500 Rent Roll 60,000 acquisition  60,000 renovation, 140,000 refinance out 190,000 valuation.

Duplex in New Britain- Auction.com buy at the refinance stage.

2475 rent roll  75,000 acquisition  20,000 renovation,  looking to refinance out 120,000 for a 160,000 valuation

Duplex in New Britain- bad foundation renovation done this month

2400 rent estimation 85,000 acquisition 20,000 renovation, looking to refinance out 120,000 for a 160,000 valuation

Duplex in Manchester- acquired from wholesaler half rented and in renovation

2300 rent estimation 77,000 acquisition 20,000 renovation,looking to refinance out 120,000 for a 160,000 valuation

Brand new acquisition:

2300 rent estimation 70,000 acquisition  30,00 renovation, looking to refinance out 120,000 for a 160,000 valuation

I will be documenting everything I can about the 6th deal as we go.

One key thing is all 401k plans are not created equal.  My plan for instance consistently has nothing above a morning start 3 rated mutual fund.  If you take a loan against your 401k and consider it as your "bond" portion of allocations- I think this is the best way to frame it.  Yes, you loose some market gains, but bonds have been flat.  If you have a real estate deal which is 12-20% cash on cash return on the loan this is a healthy return which allows you to diversify.  The big issue comes in with the repayment clause on the loan if you lost the job, as it would put you in a cash call type position.

Ideally you would use the money on a down payment on a BRRRR scenario- and then when you refinance you repay the loan balance. You then minimize the risk.

All you can do is a politely worded letter.  Here is the letter I used successfully to readjust my appraisal:

Good morning Mike,

I really appreciate working with BANK XYZ on this to sort through what is a low appraisal. There are some key discrepancies in the report I would like to point out.

The first item on the report to discuss is the roof condition. When we started working on through the appraisal of the property we disclosed that we were fully re-roofing (strip and re-sheathing) the roof. We delayed the appraiser coming out to the property to reflect, this but due to the weather they came out during the middle of the re-roof not at the completion. I am attaching the signed contract and a picture of the completed re-roof. This was discussed with the appraiser, but apparently the on site person was only taking pictures, not completing the full appraisal.

The second item for your consideration is the comparables which were used- which were all from the July of 2015. I worked with my realtor: Michael of xxxxxxl Realty to pull more recent comparable properties (). The first is 21 Lyons Street which was a short sale for $169,000 on a $185,000 bank appraised value. This house is in worse condition than 171 Bassett and in need of renovation. The second house is 88 Garden Street, which sold for $194,600. This house is very comparable condition wise with each unit having a separated laundry, and full refurbishment of the interior of the units. The third house is 95 Columbia, which sold for $199,000. The discrepancy with this house is that it currently has 1 electric heating unit, and 2 gas heat. We have 2 gas furnaces and 1 gas boiler- two of which are brand new in 2015. The fourth and final comparable is 191 Hart Street, which sold for $205,000. This house is the best side by side comparable to 171 Bassett. I have attached sales cards for each of these housing units to this email.

The last comment in the appraisal report I would like to bring to your attention is that the zoning is R2, but this is a functional tri-plex. All of the units which I have provided as comparables are all in identical zoning, where they have legal tri-plexes in an R2 zoning.

Thank you for considering this information, and I look forward to your response.

Bill

Looks pretty good,  what is the cashflow on this?  What is your assumptions on overhead costs?   Also is the apartment in the basement per the local zoning codes?