All Forum Posts by: James Alderman

@Colby Burt It depends on what you are trying to do. 

1) You could go to Bob and tell him about this great 100k house you want to buy and rent. Bob says he'll lend you the money. Now, you and Bob negotiate if he will lend you all the money, or if he wants you to have some skin in the game. Maybe you sweet talk Bob into only putting 5K of your own money into the deal, but you are holding the title. Bob may want a higher interest rate, like 7-10%, because he is taking a risk.

2) You could also go to Bob and tell him about the house, but also that you also pre-qualified for a loan for 80k. You have the 20k as well (the bank checked), but you want to save that for a rainy day. You ask Bob to give you a loan for the 20k, paid back over 5 years at 10%.

So in short, a private money lender gets paid back over time in this scenario. In a BRRRR, the private money lender (if using one) typically gets paid back in full after the refinance, within a year at most. If you screw up and the bank's LTV is less than the amount you lent, you're stuck making up the difference (or default on the private loan if you don't have the cash).

I use 10% of the max market rate for a worst-case scenario. Depends on the age of the house as well. I just fixed up a great home built in 2006, and I'd use a 5% there. For another that was built pre-1900, I'd leave it at 10% even after fixing up.

Stessa is great because it is free, intuitive, and RE-focused. I've run into some issues with documenting certain STR expenses, but otherwise it is good for self-accounting.

Sounds like it may be a win-win to sell directly to them. You could also offer a lease-option if you're familiar.

I work with my attorney (who has a title co.) when purchasing directly without agents.

@Alex Roter do you need to own the property first to qualify for those loans? If so, how many month of rental data is needed?

@Michael Baum I only mean if the rehab is so dramatic that is warrants it one time, and the poor reviews were specifically about the outdated nature (not location, safety, rodents/bugs, customer service, etc.) 

No one should ever relist just because of some new paint and sheets. Or to simply "wash away their sins" by relisting.

@Nicole Heasley I'd be interested. PM ing you

@Michael Baum why not just relist after the rehabs and gain back the SEO boost for a month while grabbing better reviews? If say, the avg review is less than 4.5.

It sounds like you need to start hiring out things like accounting and property management to truly grow without running yourself dry. I'm not at that point yet, though I'm sure you'll get some good answers here.

It sounds like you already answered your own question. 2 years of employment is what the banks want. 

Hard money loans, lease-options, seller financing are options for you.