All Forum Posts by: Rob Beeman

@Kwame Essieh If the property is deeded in an entity (LLC), or will be transferred into one during the refi, you should search for a lender that offers 30 year financing supplied to the LLC (either fixed or adjustable) that will probably offer up to 75% LTV for cash out refinancing or 80% LTV for rate & term refinancing (no cash out - just paying off current liens). However, normally the lender will want to have the members of the LLC (the additional guarantors) have a mid-FICO of at least 700. Currently rates are pretty good and this style of loan will probably be around 4.9% - 5.5% rate. When you Google for "rental property financing", smart to include Oregon in the keyword search as not all lenders that offer this will lend there. Good luck.

This for SEASONED Real Estate Investors ONLY.

Sorry, but it is not designed for Newbies.

So many real estate investors and builders seem to hit a plateau. They have grown well, but desire more. They want to get to the next level. However, something is preventing that from happening. Maybe it’s:

• Money
• Inventory
• The RIGHT people
• The BEST connections
• Fear

Could be one or more of these (or something else). Bottom line is, they want to scale for more growth, and need assistance.

Now what they seek can be found. Why? They aren't alone, others have been there too............and they figured out how to show those seeking how to gain what they seek, and help them obtain it.

This isn't a get rich quick pitch event. It's not a bunch of guys in fancy sports cars flashing copies of checks (although most could if they wanted to). It’s not sales pitches for services or products.

It's an invitation only event attended by roughly only 60 seasoned real estate investment operators that have built or rehabbed 1000's of properties, own 10,000+ multifamily units and are learning how to better manage and grow their business from leaders that have built businesses of 300+ employees with sales of $120MM+ and $1 Billion+ in assets (in the same industry).

It's serious info and awesome real player contacts packed into 3 days, and it's amazing what you can take away from it! No newbies or tire kickers there........just serious operators hungry to get to the next level.....and beyond. When was the last time you were able to sit next to (and network with) a person who has flipped 1000 properties or owns 10,000+ rental units, and is willing to share how they got there?

If you are a seasoned real estate investor desiring to get to the next level, email me your contact info to discuss receiving an invitation to this event taking place in North Carolina July 7th to the 11th. My email: [email protected].

@Kevin Mcilnay Pretty much agree with all the comments. However, having been on both sides of the table (flipper and lender to flippers), let me add that you should work your rehab to your satisfaction and protection. Do not let contractors or lenders run your business. There are plenty of both that you can choose the businesses that you want to do business with. 

Even if the lender doesn't ask for sign-off's from contractors against mechanic liens, in my opinion, you should get them anyway. It protects your business and adds professionalism. The best time to get this is when paying the contractor. Actually the best time to get anything from a contractor (or get them to agree to something) is when you owe them money.

Develop a game plan and scope of work (SOW) for each rehab and pace it accordingly. Using other people's money as leverage can be beneficial, however comes at a cost (that needs to be factored in). If you are borrowing funds, make sure to actually take the draws as you may be paying interest on the money whether used or not. Having a very detailed scope of work can be a good idea when it comes to getting partially paid for line items as you will get paid for only what is accomplished. This way you do not get a different percentage of that line item than what you had hoped for. My SOWs are extremely detailed, as are my agreements with contractors. Good luck!

@Rueben Pacheco  Totally agree with the comment of having ample cash! Most business fail due to under-capitalization, and real estate related business are no different. Cash reserves are key, regardless of the business model (flipping or holding).

If you are going to borrower money - local money will be cheaper than non-local. Local banks or credit unions are good resources if they offer financing on properties in need of updates and can supply the loan in the name of an entity (LLC), hopefully keeping it off your credit report. If local money isn't available (not all will lend to an LLC, or on properties in need of work), then non-local may be an option, however will typically cost more and may have larger minimum loan amounts.

Don't be surprised to find out that the lender wants to loan on portions of the purchase as well as the rehab (improvements). This makes them feel more comfortable that the asset WILL be improved, as that is part of their equation when determining the loan figures. Using other people's money (either in place of your or along with yours) serves the purpose of leverage. Leverage can make it possible to: do more projects; do larger - more costly projects; keep more of your cash for reserves; all of the above. Leverage can be a powerful tool, however it comes at a cost that needs to be considered.

@Shawn Gardner - For starters - wise move to always buy assets in an entity (LLC), not personally (your name).

Stephanie was dead on with her list. However, if the property that you are buying is in a different state than where your LLC was formed, you will probably need to file a "doing business as a foreign entity" form with the state where the property is located (a way of them getting a few tax dollars). This will be required typically if you are gaining any financing on the property (lender might require it)(whether short-term loan or long-term loan, like on the BRRRR method). If you need help on either flip or hold financing to the LLC - PM me.

@Eli B. COVID created a mess in the lending world. Our short-term loans never missed a beat, however the long-term loans came to a screeching halt. We now have re-done our long-term loan for rental properties (1-4 unit) and offer 30 year financing with the property deeded in an LLC (members are the guarantors). We service 25 states. If we can help: leave me a PM.

We are a direct short-term lender to real estate investors and have borrowers seeking either a portfolio pack of SFR's (1-4 units)(prefer min. of 20 props in portfolio - bigger is better)(OK if they need updates) and/or Value add MFR (60+ unit). Areas will consider: parts of FL, GA, NC, SC, parts of TX. We will be the funder of the purchase/rehabs. My email: [email protected]

@Kevin Marquez

I have always tried to tie my deals to the use of 3 figures:

1.) Try to have the purchase price be no more than 50% of the ARV (ex: PP$50k, ARV = $100K+)(the purpose of this is so that you have room left in the calculation for rehab cost, carrying cost, exit cost, etc. whether flipping or refinancing to hold)

2.) Try to have the purchase price & rehab cost (these combined = cost) be no more than 70% of the ARV (the purpose of this is so that you have room left in the calculation for carrying cost, exit cost, etc. whether flipping and taking a profit or refinancing to hold and need the value spread)

3.) Assume that you will need to have roughly 35% of the costs (purchase price + rehab costs) in liquidity

These are not easy to accomplish - especially if buying from the MLS. Easier if buying off market properties. When I stick to these figures, the deal seems to work. So, using your liquidity of $70K with this formula you could target a purchase & rehab cost of up to $200K ($70K liquidity divided by .35 = $200K max). Try your best to accomplish figures #1 & #2, so that you have the room to earn a profit or to be able to refinance when the rehab is done and lease in hand.

Note: if refinancing, the long-term rental loan lender might want to see 6 months title seasoning (that 6 months has passed since you purchased it) in order to use the ARV as the value in their calculations. If less than 6 months title seasoning, then the lender may only use the purchase price and rehab costs to equate the value............that usually will not make the deal work. NOT ALL lenders have this stipulation, so ask your rental loan lender if they do (in advance) so you are prepared accordingly. The lease becomes very important in the refi process, as this determines the rental income to cover the mortgage and expenses, plus. Good luck!

@John Hilyard John, why not just start buying the properties in entities (LLC's)? The lenders will no longer use your personal income in determining the income underwriting. Instead they will use the rental income (lease) of the property being underwritten. Typically they will not even ask for personal tax returns, as the loan is supplied to the entity and you, as the member, are the guarantor. The rate might be a little higher, but nothing will appear on personal credit and you can have as many open loans as needed. Time to think about approaching commercial rental loan lenders and taking title in LLC's.

@Cale Delaney I have never had a second position note go down the right road. Not saying that it couldn't, just hasn't worked for me. The worst part is, in order to recover the funds, I had to buy out the first position! My take - only do the loan if you can live with the outcome if it goes wrong - or be able to buy out the first position if needed.