All Forum Posts by: Rob Beeman

@Caleb Smith Caleb, as mentioned in other posts here, when the loan is supplied to an entity (LLC), commonly called a DSCR loan, the income underwriting that is used is the lease of the property. The income from the property must cover its bills, PLUS earn positive cash flow.

As for LTV, typically the LTV is driven by the additional guarantor's (you) FICO scoring. The rate is typically driven by the LTV. The better the FICO, the higher the LTV options. The higher the LTV chosen, the higher the rate. Hope that helps, Rob.

2023 May provide awesome opportunities!

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May each of your completed deals in 2023 be a profitable ones,

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WOW! What an awesome time last night at the December 2022 free VIRTAUL Real Estate Investing Knowledge & Networking Event hosted by REIknowledge.com!

A copy of the Knowledge Presentation (What the Heck is DSCR) has been uploaded to the REIknowledge.com YouTube Channel and can be watched here: www.youtube.com/@reiknowledge007

The January 2023 free VIRTUAL Real Estate Investing Knowledge & Networking Event is Tuesday, January 10, 2023 @ 7PM EST. The short Knowledge Presentation will be The Current State of the Market.

Register here please: https://hopin.com/events/knowledge-networking-january-2023

REIknowledge.com presents the Real Estate Investing Knowledge & Networking FREE VIRTUAL Event. The Knowledge portion will cover the CURRENT STATE OF THE MARKET.

Capitalize on the opportunity to gain knowledge and awesome networking in multiple ways at this FREE VIRTUAL Knowledge & Networking Event on Tuesday January 10th at 7PM EST!

The meeting is totally VIRTUAL, so you can attend it from anywhere!

MUST register with this link: https://hopin.com/events/knowledge-networking-january-2023

You won’t want to miss it!

@Nicole Johnson Nicole, in reading the heading of your post, I am not certain if this is your FIRST FLIP ever, or the First Flip in DFW area. If its your first ever, my suggestion is to NOT flip too far from home, and do not do a gut rehab. If however you are a seasoned flipper/rehabber and this is the first in that market, then you may be comfortable with the location/distance from home and the heavy lift on the rehab.

Not certain on DFW rehab pricing, but the Northeast where I am at, a rehab to the studs would be much larger than your budget shared. As for ARV, like others have mentioned, you should allow for reductions. In the Philly market (and other also I am told) I have seen as much as a 25% decline in SFR values in the last 6 months. So investors here are adjusting their anticipated ARV accordingly.

As for the 100% financing, it can be gained depending on the ARV and the borrower's track record over the last 3 years.

REIknowledge.com presents the Real Estate Investing Knowledge & Networking FREE VIRTUAL Event. The Knowledge portion will cover the CURRENT STATE OF THE MARKET.

Capitalize on the opportunity to gain knowledge and awesome networking in multiple ways at this FREE VIRTUAL Knowledge & Networking Event on Tuesday January 10th at 7PM EST!

The meeting is totally VIRTUAL, so you can attend it from anywhere!

MUST register with this link: https://hopin.com/events/knowledge-networking-january-2023

You won’t want to miss it!

Real Estate Investing Knowledge & Networking VIRTUAL Event.

Capitalize on the opportunity to gain knowledge and awesome networking in multiple ways at this FREE VIRTUAL Knowledge & Networking Event on Tuesday December 13th at 7PM EST!

The meeting is totally VIRTUAL, so you can attend it from anywhere!

There will be a 15 minute Knowledge segment (knowledge gained from hands-on, in the trenches, deals done experience) and then AWESOME networking with real estate investors of every level from all parts of the country.

FREE to attend, great resource for group networking, One-on-One networking, Speed Networking & Chatting sharing what you offer, or what you need, as well as learning.

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You won’t want to miss it! Register today!

@John T.  When I was flipping it became an advantage to gain a GC license to control the rehabs. This also supplied me leverage to fire a contractor if I chose to without losing the permit (since I pulled the permit(s) I wasn't held hostage by the contractor). Not suggesting that you take this route, but the reason for mentioning was that many of the investors that I networked with discovered that I had the GC license and "hired" me as a consultant to run their rehabs. Some of which I agreed to do.

I did what your contact suggested. I had the investor that owned the property pay me, then I paid the cost of labor & supplies, and charged a fee for my "management" of the rehab. This produced 2 issues:

1.) I never went back to the property owner to ask for more than the original budget of the rehab (not my style). So, if the project came in over-budget, I ate it. Trust me when I tell you that I do not waste money, so there was extreme focus placed on being within budget! 

2.) Since technically my company was being paid the cost of the rehab & management fee, although I had deductions for labor & materials for federal taxation, the LOCAL government charged a 2% tax on the GROSS revenue. So, I was being hit with 2% of the rehab total (that's $1600 on every $80K rehab). This didn't sit well with me, so I changed it up and had the property owner pay the contractors/supply houses directly and then pay my management fee to me separately.

This seemed to be much more streamlined and the property owners seemed to be comfortable with it.

If I were to do it again, I would do it that way - pay the contractors directly. Plus what was already mentioned, this way you can verify (with paid invoices & lien releases signed as proof) that each contractor was paid as agreed, in writing to help alleviate any mechanic's liens (I have stories about those too).

@Jose Mora  Jose, pay heed to the comments of hiring a qualified accounting professional. It may not actually be a CPA, as an EA (Enrolled Agent) might better fit your business, and typically come at lower hourly fees. Wise to interview a few (even if over the phone or virtually) before choosing one, and I found it best to use the services of one that is very experienced in working with real estate investors, and easy for you to get a hold of. Good luck sir.

@Sebastian Hernandez Interestingly enough I recently published an article on this in our newsletter. As a former flipper that made a ton of mistakes I lose my patience with flippers that refuse to get aggressive on the purchase price as well as locating off-market deals so they can gain them with less bidding wars, and instead take the easy way out of buying from the MLS and over-paying. Then being forced to cut in other areas, where they should NOT be cutting.

As for the comment of knowing the ARV (Thanks!), I am a big believer in knowing the numbers of your business (every business has numbers), and if you do not know your numbers, then you do not know your business! The ARV, in my opinion is the STARTING point of the calculations for the project (as you have NO control over this figure) and the calculations should be worked backwards in order to secure the proper purchase price and target the profit (which I plugged in as a cost, that way I secured it on projects). When I flipped heavily there were no software programs to work deals, it was done old school on the fly with a hand calculator. Technology has hopefully positively impacted the business.