All Forum Posts by: Jenn A.

Hey BP....we have our first BRRRR house under contract, yay! It's out of state and California apparently has a strange way of closing from the rest of the country. Can any of you from the middle and the east share with me the best (least expensive) way to close a cash purchase? Details are appreciated!! In South Dakota it seems I have the option of having a closing attorney, escrow agent or Title Rep do it for me. Also looking for a great portfolio lender in Sioux Falls with no seasoning, no prepay penalty, who will lend on ARV of finished home not % of purchase price.

@Mark Stone does your Home8 system require an outlet and a router in the house? 

I have had 2 great experiences with Guaranteed Rate, one loan amount was  $48,800. They were quick and responsive and everything was easy and closed right on time. Rate was at going market for IP and fees are required to be under a certain amount anyway to stay in compliance.

It's owner occupied and it's currently standard sale, not short sale and not in foreclosure. I've purchased short sale before but this property isn't in that position yet. I had heard of an investor who had contacted a bank and was able to get more favorable terms on a 2nd trust deed to get the deal to work. This was awhile ago though. 

I'm looking for input on negotiating with a lender. I've found a major project that most investors have passed on because there's not enough equity for the owners to sell at that low of a price. Roof sagging, code issues, plumbing problems and cracked hvac, among other stuff. Has anyone had any success contacting the lender on the property about the scope of work and getting them to accept less than what is owed? I've never done this before but I've heard about it. I'm not sure what legalities come into play on this either. Any input is appreciated!

Thanks @Ryan Dossey that's great input! You are right about California (at least most areas). It's impossible to find decent projects with good markets and impossible if you're looking to make the 1-2% needed for buy and hold deals. I'm out of state investing for now. 

I'm looking at properties that are specifically marketing to investors, flippers, rehabbers, etc. or mention TLC needed and that kind of stuff. For the project to be worth the risk I have to get a good deal. I'm using ARV and backing out closing costs, a rehab estimate for the TLC part and a cushion to protect against surprises.

So I'm actively searching for our next deal....planning to BRRRR....my calculations are coming up with some seriously LOWBALL offers, like half what they are asking. For some reason it's a bit scary to submit such low offers but I've always read and heard on podcasts "don't be afraid to make that ridiculous offer". Does anyone have success stories or input for some needed encouragement? Is it easier to get an agent to call ahead and feel them out if it's even worth writing it up? Being able to buy cash and offer a quick close is a great incentive for some, right?

Super exciting! The hardest part is getting the guts to get into that first project and you did it! My first rehab was a nightmare, leaky roof, termite damage, full gut in kitchen and both baths, rats in the attic with urine soaked insulation, new hvac, 4 - 40' tall trees to remove, a burst in the main line, not to mention roaches running up my arm. Looking back it's the best thing I ever did!! No matter what you encounter you will deal with it and thank yourself later! Love that quote about fear and excitement! 

You mentioned something about doing the inspection when you get the keys...can you do that before the close? With your contractor? That's the most important piece of the whole puzzle. The sooner you have that figured the better. 

If your calculations and estimations of value are all correct I would agree with your strategy to rehab and hold it (BRRR method). If it doesn't end up being a major overhaul, calculating $25/sf would be a $30K rehab. Add an overage budget, holding costs, etc. In six months cash out refi for $135K (75% of your $180K value). You get every dime back and maybe then some. On top of that if you hold the property, with your figures on rents and taxes (I added in property management because you'll be too busy looking for your next project to manage this one) you'd have a cash flow of $4K per year ($336 per month).

I strongly agree with the poster who said to look into adding a bedroom or bath. 

You're on your way! Great job!

Everyone has their own strategy that applies to their own situation. With that said you misinterpreted several points. CA recognizes out of state LLC but not without registering and paying the same CA fees. There is no escaping it...I don't know any attorney that would advise not to protect assets either. It's all perspective, levels of coverage, balanced with levels of risk. I've been in the rental game for 19 years. Our attorney knows our 'ins and outs' and I'm very confident in his advice. He doesn't look at things like LLC's and believe one size fits all. He also believes LLC's are a bit oversold. I agree. Necessary in many cases, absolutely! But people hear lawsuit and panic without thinking about the case that would actually be required to get that far. It's like going into the rain bundled in jacket, beanie and mittens worried you're going to get cold. You have to think about your situation and make sure it makes sense not just do what everyone else is doing because everyone else is doing it.