All Forum Posts by: Jarred Sleeth

@Sebastian E. brings up a great point. The refinance can often be the trickier part of the equation with lower valued properties. They tend to throw off a lot of cash flow, but getting your money out is tough. Some lenders, if you have a good relationship, may allow you to bundle up multiple properties together to increase the loan amount. This isn't something I have seen much lately, though. 

Then you start to get into the complexities of managing units in these troubled areas... 

Yes!! Can't wait! Thanks for putting this together, guys!  @Russell Brazil @Kevin Leahy

@Russell Brazil I'll be there!

Hey @Patrick Reisinger,

Financing these cheaper properties can be difficult. There are options, however, you just have to look a bit harder, and they tend to be more expensive.

1. Hard Money- You'll need to find a lender that will do smaller loan amounts, this is probably easier to find than a bank that will do smaller loan amounts. You may also potentially find a hard money lender who will fully amortize this kind of loan. I know a few in Baltimore that do it this way, and at the end of the short term you have a paid off property. Could be an option.

2. If you acquire with HM you'll likely need a bank to refinance you out. This could be difficult if you continue to go the conventional way you've been going for two reasons. A, you'll likely have this in an LLC and will have to put it back into your own name, and B, you'll be looking at smaller loans which are hard to get. Sometimes you can package these up, sometimes you can't. Depends on the bank. I've had luck by promising continued business if the bank will refinance me out under their limits. Can't hurt to ask.
3. Private financing- Buy with friends/family money and hold for a short period of time and then the refinance may be easier for you. 

Whichever way you decide to go, I would recommend trying to improve the property when you purchase. This will allow you to build in equity up front, and it will make things easier on your refinance. If the values are over 75k for rehabbed properties, you will be in much better shape to get your refinance. 

Thanks for the mention,  @Russell!

Very kind of you, Russell. And great points, too. This is a business built on relationships and having the right lending team on your side can help solve a lot of problems. Andrew and I work tirelessly to ensure our borrowers are treated fairly and are successful in their deals so that they can grow as investors and do bigger and better deals. When you work with the right lender, they should be adding more value than just the funding.  

@Dillon Lopez Some really great advice in this thread. I don't have a ton to add as most of the really important points seem to have been hit. However, I do believe in this business it is important to scale reasonably. Sometimes it is hard not to compare yourself to others who may have started sooner, or even started later, and have exploded businesses. Forget about them, learn what you can but focus on YOUR story. Play the long game, take care of your finances, and you're going to do well.

Ned brings up some great points. What kind of lender were you talking to?  You should make sure they are familiar with loaning on investment properties.

With that said, assuming you are talking to the right lenders, you may ask them not to pull credit until you're ready to move forward with a deal.  I usually tell my borrowers if they have concerns about the pulls, we can wait until they have a deal in place to pull.  Hard inquiries affect your score, but they don't affect them nearly as much as other factors do.

Hey @Seth Alexander.  Welcome to the forum.

Ned had some great suggestions, especially going to the Friday lunch.  The nice thing about Baltimore is that most people here are willing to share knowledge and help each other out. 

Zack,

It has been such a pleasure working with you and I am very excited for your future in real estate!  Congrats on your well earned success here, and I look forward to hearing more about what you have going on soon!  Let's try to get connected with a lunch here soon.

Thanks for sharing your story, very inspiring. 

Jarred