All Forum Posts by: Jason Eyerly

Hello All,

Being that I have little to no capital and I'm as eager as can be to get my first flip completed, I was wondering if someone could advise me on financing. I have to use HML to obtain a property, but if my HML doesn't allow for the covering of repairs, then I also have to finance the rehabs somehow. That being said, is there a way to finance the purchase and rehabs without having a proof of income? I have good credit, but without the income it's almost entirely useless.

I'm planning on wholesaling as much as I can as often as I can to build up some cash for flips, and am planning some ads for Facebook, Google, and direct mail, as well as looking through the newspaper for foreclosures, pre-foreclosure, and foreclosure auctions for some leads. My business partner and I are hoping on having some cash to invest for repairs soon, but I'm not sure we could cover anything in excess of $20,000.

Thanks in advance.

-Jason Eyerly

Jacob,

How did you finance the rehab assuming you used HELOC for the purchase? Do you mind sharing the details of the loan? The reason I ask is because I'm a young investor and do not have a home yet, I'm stuck with HML and do not have a home until I complete an FHA deal so I'd like to learn as much about these as possible before I get to that point.

Also, how did you find the property? I'd guess it was a foreclosure. I'm looking to do my first flip, hopefully not having to fix everything like you did, but have no idea where to start looking for deals and properties at the right price.

Regards,

Jason Eyerly

I won't be using conventional financing for awhile, because of having good credit and no personal income. All H

ML for me, I was just wondering if can out refinance would be a viable exit strategy for me with my personal situation.

Sounds like it'll be easier to just do it as my name. But then I feel personally open to a lot of responsibility, or rather liability from any possible tenants and what not. I just don't want any deals that fall through and such falling back on my personal credit.

If they will be reluctant against a new LLC, isn't that all the reason to get it started now as opposed to later? I'd like to use my general investing LLC thats in the process of forming in the state of Indiana and was originally purposed to hold and deal with any investments I make. Financial markets included.

Wow! So much more information than I had expected. Now I have a question about this as an exit strategy. Being that I'm a full time student and my income cannot be proven because it's all from trading, would it be reasonable for me to take out a HML for 6/12 months, and either come up with the rehab capital myself or use another investors help for rehab, and as an exit strategy tell my HML I plan to rehab and then cash out refinance to pay them off as my other investor and then rent out the property for the cash flow a use any excess funds for further investment?

Also, would it make more sense for me to do all business as an LLC? This way banks and such will look at the businesses credit and income versus my own?

@Albert Bui @Jeff Rabinowitz Would they not do this deal if it were a lien and they knew the loan would be paying off the initial investor. I don't see the downside for them knowing the lien will be cleared and the property has a cashflow.

Does anyone have an opinion on remote home management? Like having a thermostat that could be connected to your smartphone so you could control climate during work hours, or even go as far as lock/unlock doors for showings, contractors, etc? All you'd need is a mobile hotspot and a power outlet to keep it running!

Or in the near future you sell the property for more than $120,000 to pay the mortgage and also profit any excess of $120,000.

Hello Everyone,

So I've just learned about the cash out refinance option while perusing bigger pockets forums, but I don't understand why you would want to do it. Using the following scenario I was hoping someone could explain it.

Home A has an ARV of $150,000 after looking at MLS and comps I feel comfy at that number. I've got the property under contract and using a private investor secure the $65,000 I need, with $45,000 going into the home, and $20,000 into repairs. Therefore I have no initial mortgage on the property. Let's assume I held the property for a year with a tenant on a twelve month lease after renovations were completed.

Now everything is all said and done, and I want to do a cash out refinance, and I have two options.

A) Traditional bank that I was lucky enough to find who will do 80% LTV. ($120,000)

B) Fannie Mae DFE who will do "The loan amount will be limited to the lesser of: (a) 70-75% of ARV and (b) your original purchase price plus total closing costs and prepaids on the new loan."

(45,000+3,000 closing+1,200=$49,200)

This leaves me with two questions:

1) Why would anybody go with B and only take out $49,200? At best you pay back the investor the purchase price but are still in the hole for renovation costs. This leaves you with a cash flow but a debt of $20,000 on the property. Doesn't sound like a cash out!

2)In option two if you take $120,000 and pay your investor back his $65,000 and say an additional 20% of profit on $120,000-$65,000($55,000) giving him $11,000 of that and leaving you with $45,000. Now you have $45,000 in cash, but you're $120,000 in the hole on the loan you just took from the bank, and a property with a mortgage on it now that you're required to make payments on. Why would you do this? It'll be on your credit now and weigh you down on future loan requests, will it not? The only scenario I have is to get a chunk of change and just rent out the property to cover mortgage and expenses.

Any and all help is always appreciated.

Best Regards,

Jason Eyerly