All Forum Posts by: John Cardinale

Is the property in need of a lot of work and is there a large gap between its current condition and the ARV you would need to call it successful? If so, you may be forced to get extra funds to fix it.

Quote from @Thomas Matthew:

Great questions:

1. First Mortgages 4% fixed 30 years. Second mortgages 9% floating HELOCS

2. I would like to stay in real estate if it makes sense. What could I 1031 exchange into that would do better than having a paid off five plex?

3. I would like to slow down in 5 years. But probably not consider stopping for 10 years.

1) I would be hesitant to pay down mortgages at 4 percent if I knew I would need new mortgages in the near future because the new loans will have higher interest rates.
2) 1031 exchange would allow you to delay payment of capital gains tax indefinitely. It involves you buying a new property to replace what you sold though. DYOR on the details...
3) If you're going to keep going in real estate, maybe it makes sense to sell 1 of your SFH's to pay down on the 9% heloc but not close it out so you still have the flexibility to use it..., but then hold on to the 4 % mortgages where possible since those low rates are now rarities. Any new loans you get will likely be several % higher.

I guess if you sleep better at night with zero debt on your 5plex then maybe that's the best move for your personally. Also, to your point, strike while the iron is hot. If you can double your money on the SFH's then maybe that's your best move. Sounds like you have some good options to pick from.

Here are a few questions I would answer before deciding how to move forward.
What are the current interest rates on your mortgages? What are your future investment plans and do they include getting new properties and new loans? Have you considered the tax implications of selling the 3 SFH's and would a 1031 exchange be beneficial?

It’d be a good idea to prepare for both scenarios, traditional financing and seller financing, so presenting 2 offers that work for you. Once you see the house and have a rehab budget then you’ll be ready to crunch numbers. 

I've used the same lender for acquisition, renovation and long-term DSCR loan. Finance of America in one of the companies that handles these products, but there are others for sure. Its up to you to figure out which is best but good that you have these different options. hope this helped!

you could use a DSCR lender for renovation and purchase with only a 10-15% down requirement. There are many lenders within the BP community that can help. Use your cash for the down payment and then something else, reserves, etc. Then you could refinance after you have it rented.

Quote from @Thomas Santella:

Sub to or Seller Finance - Rehab - Rent - Repeat : Whenever I hear Pace talk about this method he leaves out the "refinance" piece. I don't know if that is by mistake or on purpose, but where does the rehabber get their $ if their is no exit and the plan is a buy and hold?

There’s no way to refinance at the end while holding on to the sub to or seller financed deal. The only alternative that I’ve found is to look to private money or a personal loan to get back that access to your working capital. 

Quote from @Andrew Wilfong:

Hello,

Thanks for getting back to me!

The desire is primary residence.

seemingly wherever you could could a lot loan for eventual new construction you should be able to get a renovation loan. I've only been about to due new construction loans from local banks but other options may exist. The DSCR lenders here will want to underwrite scenarios that include renting it out only. They also do renovation and acquisition loans but for investment properties which doesn't really help you out. Do you own your current home? Have equity? Can you use this to leverage a purchase somehow? 
 

Quote from @Andrew Wilfong:

Hello,

My wife and I live in Pennsylvania.

We’re in the market for a plot of land with a home that is livable or raw land that we can later build on.

Recently we found the land that was exactly what we want, however there is a home on the property.

The home on the property isn’t livable because there’s no HVAC system, there is damage to the roof, and the foundation is not in working order, not to mention the electrical issues and water damage in the home.

The sellers are trying to accept cash only offers because of the condition and are selling as home and land, but have not received any offers and are becoming open to a buyer going through the bank.

Because the home isn’t livable, how could this property be financed so that, we as the buyers, could completely gut and renovate the home?  

Because of the HVAC alone, a traditional mortgage doesn’t seem to be an option.

Is this possible and what would the sellers/buyers need to do in order to be able to do this?

Thanks!

You will need to get a renovation loan that will include acquisition and renovation in one loan. 

Will this be your personal residence or rental ? 

Quote from @Matt Smith:

I've heard to stay off the MLS if you want to find good deals. I've also heard to research listings that have been on the MLS for more then 90 days, and see if you can do a seller finance deal. But where do you find more deals? How do I get in contact with people that have high equity or free and clear homes? Thanks for all the advice in advance

Sounds like you are looking to make contact with some wholesalers. I'd search for a local chapter of REIA (real estate investors associations) as they are all around the country. The first time I went I met 10 new wholesalers operating in my area and now I get there new deals emailed to me. You could check online forums like Craigslist as many wholesalers (at least here in new orleans) use it to post deals. Also, it wouldn't hurt to start calling their "we buy houses" signs. Tell them to put you on their investors list. Do this same thing if/when you get fliers mailed to you about buying you personal residence. Also, google "sell my home fast" or something similar and your sure to find wholesalers operating your area.