All Forum Posts by: Jeffrey Blackman

Hi @Evan Coopersmith, I'm an investor and licensed mortgage broker here in Chicago (Oak Park). I've invested in both multi-unit properties (2-4 units), and multi-family properties (5+ units). The financing and management of each are very different. Which are you considering?

Hi @Danth Aman. Congrats on finding a property and a willing seller!

What you are describing is a "dual agent" role, where the agent represents both buyer and seller. In Illinois, when an agent does that, there are functions normally expected of the realtor that they are legally prohibited from doing. The Chicago Association of Realtors'® specifically state "When you become a Dual Agent, you owe equal fiduciary duties at that point to both parties in the transaction, and you lose the ability to negotiate for, strategize and advise either one." You can be sure they will continue to negotiate for, strategize and advise themselves.

If the laws are similar where you are, you should consider if you want someone doing those things for you, and whether you are comfortable going toe-to-toe alone with a licensed professional on a $1.25 million purchase.

Hi @Shay D'Amore. This strategy could work. With most mortgages you can move after one year without any problems. You may also want to consider purchasing multi-unit properties and live in one of the units. The rent from the other units will allow your to purchase a more expensive property than you could on your own, which could help you build the value of your portfolio (and equity) faster. 

Hi @Troy Smith. Congrats on getting across the finish line! If you used a loan to rehab your property and find yourself in a difficult position, doing a straight refi (just paying off the old mortgage) will be easier than trying to pay off the original loan and take additional cash out. You can refinance sooner and at a higher LTV.

Hi @Matt Wan. I'm a licensed mortgage broker and have closed loans with clients out of the country. In one case they used a notary at the local US consulate. In another, they used a POA (power of attorney). You should contact both your lender and your title company to understand their requirements.

Hi @Michelle Skitco, welcome to the community! You and your husband are definitely in the right place to get valuable information. Ask lots of questions, read as much as you can, and then ask even more questions. This group is full of knowledgeable people, though you may sometimes get conflicting advice. That’s okay—what’s important is understanding the "why" behind your investment decisions.

While your accountant’s suggestion is a great starting point, make sure investing aligns with your own goals and situation—not just because someone else is enthusiastic about a particular strategy. Starting with remote investing, like in Charlotte, can be an option, but it might be worth exploring local opportunities in Orange County too. You’ve got the right mindset by wanting to learn, and this community is here to help you every step of the way!

@Pranav Patel, I agree with @Sofia Komrskova. Consider house hacking where you buy a multi-unit property and rent out the others. The income from the rental units could help you buy a bigger property than you could on your own. If/when you do move, renting your vacated unit will provide even more cashflow.

Hi @Vincent Plant,

You've gotten some great advice on what to look for in a hard money loan. I'll add a few more things that can have a huge financial impact: required reserves, LTC (loan to cost), application or other upfront fees, and prepayment penalties.

As a fellow flipper, I think it's important to have reserves, but they shouldn't be required as part of your funding. This will allow you to take on bigger deals with your cash on hand.

LTC is a ratio with the potential to limit your loan amount. It's calculated as the ratio of your total loan amount (loan amount for purchase + loan amount for your rehab) to your total costs (purchase price + rehab budget). 95% is a good target.

Avoid application and other upfront/junk fees. An appraisal fee in advance for an actual appraisal is legitimate, but you can find lenders that don't require appraisals and don't charge appraisal fees. Similarly, a credit report fee upfront is reasonable, but these can often be avoided as well. Don't pay any other fees.

Fix-and-flip loans will typically last from 6-24 months, with 12 months probably being the most common. You should be able to pay off the loan anytime during that period, without any sort of penalty. And, there should not be a minimum number of payments or minimum amount of interest.

Here's a quick recap of what to look for in a hard money loan. Even first-time flippers should be able to get these terms: 

Application/Credit Report/Upfront Fee: $0

Appraisal Cost: $0

Down payment: 10% of purchase price (= 90% LTV)

Rehab funding: 100%

Interest payments: Paid only on amount drawn (non-Dutch)

Prepayment Penalty: $0

Reserve Requirement: $0

Max Funding: 80% ARV

Max Funding 95% LTC

Closing time: Measured in days, not weeks

I hope this helps. I'm happy to share my experience as both a flipper and a lender. Please DM or call me if you would like to talk.

Jeff

Hi @Rodney Howard,

I'm a real estate investor and licensed mortgage lender. We have programs that provide 90% financing of the purchase price and 100% financing of the rehab for first-time flippers. DM or call me and I can share the requirements.

Jeff

Hi @Chris Garnes,

I am an investor who has self-funded rehabs and also a licensed mortgage broker. As others have pointed out, you are actually in a great position!

Home 1 is ideal for a fix-and-flip loan to fund the remaining $90K, which I can help you evaluate options. If you qualify, you could close on the loan in days.

Home 2 could be an option for a fix-and-flip as well, but you would have to have another residence because these types of loans do not allow owner occupancy. How much do you need to complete this rehab?

If you want or need to remain in Home 2 for a while, you could consider a HELOC as has been suggested. A potential challenge with a HELOCs is they are based on the current appraised value of your home, not the improved value, so you would need to make sure you have enough accessible equity. If not, you could consider refinancing Home 2 with a rehab loan. You can get conventional, FHA or VA rehab loans. The advantage is that rehab loans are based on the value of your home after the improvements.

Since Home 1 will be the quickest to move on, please DM me the state where Home 1 is located, the purchase price and how much you have spent on rehabs to-date. Then let's set up a call to discuss your options and figure out a strategy for Home 2.

Jeff