All Forum Posts by: Jay Thomas

Hello fellow investing,
I am currently in the process of buy a property for flip. I have enough cash on hand to buy and close the property. I prefer to do cash closing as it allows me to close faster and save $$$ on some of the closing cost. The issue now is that I dont have enough cash on hand to finance the renovation. My estimated renovation budget is a~$20 - $30k. I plan on self-performing all work that doesn't require permit and sub out work requiring permit.

The property is mostly cosmetic fixes. The only work that might need permits are opening kitchen/living room wall, updating HVAC and water heater.

How can I go about about and secure the $30k to fund the renovations. Can I get hard money loan for renovation only? How would this be different from getting hard money for the entire deal? I know I could use a hard money lender to finance the entire deal but would add lots of $$$ to my project cost. Banks wont let me self perform anything and this could really inflate my renovation budget.

I am a first time landlord. I listed my first property for rent more than a week ago. So many people showed interest in the property but only one person has actually applied. I have shown the property to at least 15 people, sometimes I showed to multiple people at the same time. Majority of them liked the place, some told me they are still shopping around and will get back to me after making their decisions. Other told me they loved it and they will go home to apply but I never hear from them again. The only person that applied wasn't qualified (Poor credit and low-fixed income). I am using Cozy.co for the rental application. I provide them with the application link and inform them that Cozy charges $39.99 application fee for background and credit check. Is the online application scaring them away or what is going on?

I showed the placed yesterday to 3 different people and they all wanted it. I told the 3 of them to apply but I told the last 2 to hold-off on paying for the background check until I'm done screening the 1st candidate. None of them have applied. I reached out to the first candidate if she is having trouble with the application link. She said she hasn't gotten home yet but she would apply when she get home last night. I woke up this morning, still no application. I dont want to lose out on the other 2 if the 1st candidate is taking too long.

I am kind of freaking out right now why I am getting so many interests but no one is applying. Is it the online application freaking them out or the $39.99 application fee. Can anyone relate to this? 

@ Jd Martin, I usually pre-screen them over the phone or when touring the property about the pre-qualifications which are: (1) Make at least 3x rent (2) decent credit score (3) Clean background and  no prior evictions. 

I will try your approach. I will just bring a paper copy of the rental application and let them fill it out at the property then contact them later for the credit and background check.

I am a first time landlord. I listed my first property for rent more than a week ago. So many people showed interest in the property but only one person has actually applied. I have shown the property to at least 15 people, sometimes I showed to multiple people at the same time. Majority of them liked the place, some told me they are still shopping around and will get back to me after making their decisions. Other told me they loved it and they will go home to apply but I never hear from them again. The only person that applied wasn't qualified (Poor credit and low-fixed income). I am using Cozy.co for the rental application. I provide them with the application link and inform them that Cozy charges $39.99 application fee for background and credit check. Is the online application scaring them away or what is going on?

I showed the placed yesterday to 3 different people and they all wanted it. I told the 3 of them to apply but I told the last 2 to hold-off on paying for the background check until I'm done screening the 1st candidate. None of them have applied. I reached out to the first candidate if she is having trouble with the application link. She said she hasn't gotten home yet but she would apply when she get home last night. I woke up this morning, still no application. I dont want to lose out on the other 2 if the 1st candidate is taking too long.

I am kind of freaking out right now why I am getting so many interests but no one is applying. Is it the online application freaking them out or the $39.99 application fee. Can anyone relate to this? 

Thanks Matt. The is supposed to be a rental property. I don't personally know anyone that can fork out that cash. I thought of HML but the transaction cost and cost of closing twice for refinance is too expensive for this deal.

Hello Fellow Investors,

I am in the process of buy my first rental property in Chicago area.. It is a HUD (insured) home that only need cosmetic update. HUD PCR report reveals that everything is in working order. I have also done an inspection. The house needs new interior painting and new flooring. HUD has stripped the current flooring leaving an exposed concrete slab. I planned on self-performing all the cosmetic update and I estimated this to be about $3,000. I have the $3,000 cash on hand.

Prior to making an offer on this property, I spoke to my bank and made them aware of the condition of the property. My banker spoke to his underwriter and they gave me a go ahead to bid on the property. I was told that they would only do an "As-Is" appraisal which would allow me to close on the property before doing renovations.

After putting $1000 earnest money, $600 appraisal fee and $200 inspection fee, the appraisal report came negating what the underwriter said. The appraiser gave the property a C5 rating requested that we paint the walls and install new flooring prior to closing. My bank disagrees with the report and is fighting it with the appraiser. The appraiser rejected my banks request to remove “fix before closing” clause in the report. My bank has escalated the issue with the appraiser and we are now hoping for a better outcome else it looks like I might lose out on this deal.

HUD is not very nice to investor when it comes to returning earnest money. I have already sunk $1,800 into this deal. I don't want to lose all that money. I have started calling other bank if they would finance this deal if the first bank denies my loan. None of them is willing to finance a C5 property. I found a bank willing to finance it as a portfolio mortgage but they are asking for 2% fee, 5ARM, Prime + 2% interest rate, another appraisal fee and put $4,500 into repair escrow.

I’m already putting 20% down. I don’t want to spend to much money towards closing this deal. What other options do I have on the table? The idea of losing $1,800 lives a very bitter taste in my mouth.

UPDATE: Now the bank is telling me the only way I can close on this deal is to get a renovation loan from them. The appraiser estimated repair cost to be $3500. This is to repaint and replace flooring. I have the cash on hand for the repair and I will be self performing the repair. My banker said I have to use a contractor and the minimum renovation loan they have is $5000. Also I will have to pay for another appraisal. There is no way I can ever find a licensed contractor to replace all flooring and repaint a 1000sf property. Using a contractor will probably eat all profit margin.

I am not familiar with how renovation loan works. What will happen if I get the renovation loan but self perform the work. I don't want the bank to disburse the loan to anyone as the cost will be coming directly out of my pocket. I was only interested in the property because I knew I could DIY all the cosmetic update needed. Using a contractor will it a bad deal.

UPDATE: Now the bank is telling me the only way I can close on this deal is to get a renovation loan from them. The appraiser estimated repair cost to be $3500. This is to repaint and replace flooring. I have the cash on hand for the repair and I will be self performing the repair. My banker said I have to use a contractor and the minimum renovation loan they have is $5000. Also I will have to pay for another appraisal. There is no way I can ever find a licensed contractor to replace all flooring and repaint a 1000sf property. Using a contractor will probably eat all profit margin. 

I am not familiar with how renovation loan works. What will happen if I get the renovation loan but self perform the work. I don't want the bank to disburse the loan to anyone as the cost will be coming directly out of my pocket. I was only interested in the property because I knew I could DIY all the cosmetic update needed. Using a contractor will it a bad deal.

Hello John,

I see you are in in Chicago and I am assuming you are buying in Chicago area as well. A lot of the older building in Chicago don't have duct-work. Just like Jim Adrian said, most of them have radiant heater.  If you didnt see the radiant heater as well it could be a heated floor. Landlord in chicagoland require by law to provide temperature above 68 degree in winter. For AC in summer, your cheapest option is window or wall AC. 

That is a good start. Also, I will advice you to stay away from houses built prior 1978. It brings additional sets of EPA headache that you wont want to deal with as a starter.

Hello Fernando,

Do you currently own your primary residence? If not, a good way to start is to buy a duplex or a multi-family property as an owner occupied. Live in it for at least one year then repeat the process. 35k is more than enough to get start in real estate investment. As owner occupied you get multiple loan options with as low as 3.5% down payment. Owner occupancy also allows you to directly manage your property and it will give you a good track record when securing loans in the future.

I do suggest you pay off the 7k debt first as you will get better financing with a higher credit score. I won’t advice you to put all your 35k into real estate business at this early stage. Can you afford to lose all that money if a deal goes bad? My best advice for you is the get into the business as an owner occupied landlord. Owner occupied landlord gets you the lowest down payment deals and Uncle Sam will be nicer to you at tax time.