All Forum Posts by: Derek Sperzel

I recently began interviewing local credit unions after learning they require lower or no seasoning period, versus a traditional lender, for a cash-out refi on investment properties.  The issue I am finding is that they will only loan against the amount I paid for the property (purchase price + rehab cost), and not the appraised value.  This is my first time attempting to work with a credit union and I would like to know if this is standard practice?

I can always go back to the traditional lender and get a loan based on appraised value, but they require a 6 month seasoning period.  I originally started speaking with credit unions thinking they could help my money grow faster, and therefore allow my business to scale faster.  

It appears to me that you are being excessively conservative in your time periods per capital expense. I am all for erring on the conservative side regarding REI, but it looks like you've killed your deal on paper. For example:

ROOF - Asphalt shingles should last 20-25 years.

HVAC - I usually plan for a lifespan of 15-20 years, but your dollar amount looks accurate. I usually pay $4k for all new HVAC on my SFR.

PLUMBING - $12,000 seems quite high to me. I would need more info regarding the property, but you likely wouldn't need that much saved up for plumbing unless you anticipate complete failure of that system.

STRUCTURE - If you think you need to invest that much in foundation and structure, you may want to rethink purchasing this property.

I would recommend you speak with some local contractors to dial in your expected costs, and life expectancies of the respective home systems.  Best of luck!

We buy all cash so that is good to know, thank you Harjeet!

I livein Southern Indiana just North of Louisville, IT.  I've got a local mortgage company that will perform a cash out refi after a six-month seasoning period, but I've also heard some local credit unions will offer a cash out refi with no seasoning. I'm wondering if anyone has ever dealt with one?  I don't have a relationship with any credit unions and would potentially be looking for a referral if the lower or no seasoning period is accurate.

We pull permits for everything, and always do things the right way.  I treat our investments as a business, because that is exactly what they are.  Thank you all for the feedback.  

I agree with Jack Edgar Jr, and the con of advertising probably outweighs the advantages.  Drawing attention to a vacant house is probably not in my best interest.  

I'm primarily a flipper, and I am always trying to find more off-market deals.  My brother suggested we place our company sign in the front yard of active flips in hopes of getting leads from our neighbors, and the general public.  The sign would read something like: "want to sell an ugly house? We will buy it!  Call us at........"  We already place a "for sale" sign in the yard prior to the projects completion, but this would be a different and separate marketing tool.

I'm curious if anyone else has tried this, and if so, were they successful.  I would also be interested to hear any suggested messages to use on the sign. Thanks

We inherited a warehouse in Central Ohio, and the roof is failing.  The building is over 120 years old, but is not considered a historical landmark, and is not nearing condemnation yet.  I contacted a deconstruction company, but they determined the buildings materials are not valuable enough for them to deconstruct at a profit.  

The warehouse is 16,254 sq ft over five floors.  The internal structure is sound and supported by wood pillars, wood floor joists, and wood beams(unfortunately they are coated in lead-based paint).  The building has about 15,000 sq ft of of original unfinished oak flooring.  The exterior of the building is clad in painted red brick, and was deemed unsalable by the deconstruction company.  

I am not arguing the deconstruction companies stance, but I am trying to find a solution to our dilemma.  Fortunately the property is in a part of town that is being revitalized, and the land is worth more than the structure.  From my research, I expect the cost of demolition would approach $80,000, but the value of the land would not cover the expense.  

We would appreciate any thoughts the BP community has.  

Thanks Paul, I am already pre-approved and have made offers with a letter of credit from my bank.  Appreciate the feedback.

I have been searching for my first rental property, and I am getting beat to the punch on the good deals. IE, the pros are making cash offers as soon as a deal hits the MLS and scooping them up. I don't want to tie up all my cash, but couldn't I pay all cash to secure the property and then refi 80%? Is this a common practice?