All Forum Posts by: Greg Scott

Jeff:

The answer to your question is both yes and no.

Most people try to get out of hard money loans quickly. Once the property is stabilized, you can do a rate & term refi (no cash out) and get out of the hard money loan. If you are willing to wait until the loan seasons, you can then do a cash-out refi. I'm not up on the latest cash-out refi terms, but typically you aren't going to get as good an LTV as a rate & term refi.

Adam:

Congratulations on being so fiscally responsible.  That is a key start.  Those without cash or credit are at a disadvantage.  That said, I am going to challenge your premises here.

WIth $150K, you have had ample cash to buy several SFRs, yet you are stuck in analysis paralysis.   How are you going to feel  when you have to plunk all $150K down for an apartment?   Do you need the partner to help you acquire the property or overcome your fears?   I suspect more the latter because at one time I was in a similar position.

I recommend surrounding yourself with successful investors.   After you talk to 10 people, all who have done what you want to do, but who don't seem any smarter or more motivated, it will give you the confidence that you can do it too.

As I was writing this, I also just put 2 and 2 together.  Consider going to the Lifestyles Unlimited event in your area.  They are the premier real estate education and mentoring company in both SF and MF with thousands of members.   There are two events coming up in Tampa.  One is next weekend.  Check out meetdel.com and givemetotalfreedom.com for dates.   

I have been a Lifestyles member since 2011.  (I am not an employee nor do I get any compensation for posting this) Until recently Lifestyles was a Texas-only organization.  My wife and I had been flying down to Texas 3-4 times per year to meet people and take their classes.   If you get involved, no only will they give you the education you need to move forward, you will meet like-minded people.  I GUARANTEE they will also expand your thinking and instead of buying a $1M property with you and a partner, you will soon be thinking about a $5M property syndicated by you with a bunch of passive member-investors.

Good luck.

Feel free to private message me if you have any questions about Lifestyles

Property auctions are filled with sharks that can smell blood of a newbie in the water.

The first few times you go, do not bring cash or any other way to purchase a property.  Just bring your eyes and ears and watch what happens.

Kory:

It appears you have a good opportunity here, it is hard to tell if it is an opportunity now.

Given that the owner has been to the property once and the tenant has been in place a long time, this owner is getting great mailbox money for no headaches.   She probably thinks it is great.  Why would she sell?

Now, hopefully at some point the roof needs replacing or the AC goes out an the handyman can't fix it.  He'll go to the owner and say, "you need to pay $ thousands to get this fixed", that is when she is going to start to get motivated and think about selling, but probably not before.

I would start by just building a relationship with the owner.  (Who knows, she might want to sell today.)  Let her know you are interested and touch base with her from time to time.  It would also be a good idea to build a relationship with the tenant.  Talk to him about the condition of the property and let him know you are interested in buying too, and would put money into fixing it up.

At the moment she decides she wants to sell, you can come in with the easy solution.

In the United States, wholesaling is completely legal.   Wholesaling is effectively selling a property (or contract to buy a property), in which you do not intend to live, to an investor.   

How you go about executing your transaction is the key.  You have to learn what you can and cannot do in your municipality.

Kevin:

Congratulations on taking the first step.  You are well on your way.

I have never used a home warranty, but found that my long-term repair and capital improvement costs were about $150/mo per property.  Of course, it is worth noting that my properties were in excellent condition at time of purchase or shortly after acquisition.

I think the key question to answer is, do you have enough cash on hand so that you could fund expensive repairs?   If your roof wears out or your HVAC goes down, those are things you can't wait to fix.   Do you have enough cash?  The budget question really becomes more important as a plug number on the cost side when you are looking to acquire new properties.

Good luck

Jay:

There isn't enough information hear to evaluate the deal. You need to know both the full revenue side and expense side of the income statement to calculate NOI. $208K sounds pretty cheap for 8 units but you can't tell until you see the NOI.

If those partners would be giving you money and you are doing all the work, then you have created a security.  You will want to have an SEC attorney write up a PPM for you.  For a small deal, you are looking at about $10K.

Zachary:

While it is possible, I think it is unlikely you have a deal here.  Still see what you can find out.

My first reaction is that "Historic Structures" often come with prohibitively difficult rules regarding rehab.     A historic structure that is being demolished is either getting destroyed because it is so beyond repair that nobody wants it or someone is going to the trouble to get it rezoned so they can redevelop the place.

It doesn't hurt to track down the owner.  But, if he is interested in selling, find out from your contacts at City Hall what restrictions and rules "historic structures" have.

Eric:

The answer depends on what you mean by MFR.

Anything with 4 or fewer units, is financed as a single family property. That means houses, duplexes, triplexes, and quads all can use conventional financing and would follow the same BRRRR strategy as single family.

Apartments, at 5 units or above, get commercial loans. It is actually easier to do the BRRRR on apartments because the financing is easier. Cash out refinance is a regular and normal occurrence in apartments. To cash-out refi in apartments, you need to demonstrate you have improved the value of the property by improving NOI.