All Forum Posts by: John Cardinale

from my experience, the best title attorneys who are used to working with investors have all the documents you will need ready to go. Maybe there are some here that can help you. I found a great one through my local REIA branch.

HI there, I got a an owner who's willing to owner finance the sale of his property to me. The property needs significant renovations that would normally make me want to BRRRR it. Other factors are preventing this. Its a strange property.

There a way to do this where I don't lock up too much of my own money? A loan product that doesn't require using the property as collateral perhaps? Then at the end, I could possibly refinance with an official lender, and then the owner could get in second position with his mortgage? 

Not sure if this would work. Anyone every try something similar?

Quote from @Matt Devincenzo:

Quote from @Nick Camizzi:

Quote from @John Cardinale:

have you considered a HELOC instead of a cash out mortgage? That's what I've used in the past and the flexibility of it is really nice.

The HELOC is 11% I’m not doing that 

Look at your 'blended rate' before you make that decision. When I analyzed for my own situation a cash out on my home would result in an effective 7% rate but my blended HELOC rate is 5.5%. Obviously it is much more beneficial for me to go with the 10%+ HELOC because my actual blended rate is lower.

good point.. HELOC allows you to keep your original low rate (like mine :) 3.5) instead of trading it up to a much higher current interest rate.

Quote from @Nick Camizzi:

Quote from @John Cardinale:

have you considered a HELOC instead of a cash out mortgage? That's what I've used in the past and the flexibility of it is really nice.

The HELOC is 11% I’m not doing that 

The thing to consider is your opportunity cost. What do you plan to do with your $150,000 once you get it, because you'll be paying $1400/month having borrowed it all at once. If you just want access to your equity and will figure out where to invest it later, the HELOC allows for this. You only owe on what you have borrowed at that time. 

If I see a property I want, I use it. Also the interest is simple interest only so its not so hard on your cashflow. I.E. if you need $50,000 to close quickly on a renovation opportunity, you can do so. The cost to you at 11% would be $458/month in interest only payments. You can pay back the loan principle when you have exit the project via Cash out refi or flip.

have you considered a HELOC instead of a cash out mortgage? That's what I've used in the past and the flexibility of it is really nice.

Hello, I'm looking for a commercial lender who could do a cash-out loan for small multifam (12 units), with a seasoning period of less than 12 months. Thanks!
 

Be sure your ARV is as accurate as possible then work backwards. Get contractors in to give quotes on labor and material if possible. Use BP calculators to determine if property will likely cashflow after completion.

You will have no extra tax to pay from BRRRR. You likely will have larger expenses and will reduce your tax owed.

You could buy the property outright with your own funds but then do a renovation loan to not lock up as much of your own money. 

I would say that waiting is likely not the best idea simply because its the most comfortable. Push through the discomfort, with a positive mindset, and I think you'll be glad you did. I wish I would have started 10 years earlier. 

I'm sending out positive vibes to any of yall out there feeling frustrated with market conditions. Its hard to keep focused sometimes. We should all sit back and take a moment to feel gratitude about our situations no matter how much or little real estate we own...lol.. I'm small peanuts in here and I'm thankful. I'm in Colombia on vacation, my rentals are earning me money. I'm able to work and learn while on vacation due to the blessing and curse of technology. I've been listening to Joe Dispenza, doing meditation everyday, and focusing on the constructive use of my imagination that being me being the owner of 200-300 rental units.

I'm in an apartment complex with 14 floors. I'm walking 5-6 flights of stairs per day for exercise. When I get to the top of the 14th floor I use the elevator to go back down to the first. It hit me that this is a metaphor for my 13 door rental portfolio. I'll close on a duplex promptly when I get back and bust through my "14th floor ceiling."

Quote from @Scott Scialabba:

What are the terms, and how favorable is the owner financing compared to what you can get on the open market? And how hot is this market, and this property specifically? You might be able to take owner financing initially, but yeah.. once you rehab and you want to pull cash out, you'll probably have to refi.

terms: $160,000 price, with 10% down, 5 percent amortized interest payments for 7 years with balloon due afterward. The 160,000 is pushing but if the mortgage could be held for 7 years at 5 percent instead of 7.5 or so, it may be worth it. The issue is the unknown future appraisal amount of the ADU since where I'm located, its not zoned for ADU's and so the appraisers only will give you a small bump in value and not the corresponding price per square foot. Unfortunately, the ADU is where most of the repairs are needed, but it would generate an extra $800-900/month easily. The repairs back there would be around $15,000 to get it going. The front main house has a tenant in place which for my normal system isn't ideal. She's at $1000/month which is under market rent by $200.

I think to get into a long term mortgage I'd be at 7-8% or so....depending on how I got there, either by cash out refi with DSCR loan or a more standard path may be a little lower but harder to do and justify.

I'm still stuck trying not to lock up too much money here and every way I spin in, I need to use about $35,000-$40,000 of my own cash and without any assurance that it would appraise appropriately, it seems a little risky. 

Hi, is there a way to mix owner financing with BRRRRing on the same deal? On the surface it seems like there isn't because of the cash-out Refinance allowing you to get all capital out. Is there a way to capitalize on seller's willingness to provide long term financing on a renovation opportunity, while at the same time sticking with the BRRRR strategy to grow a portfolio while not locking up capital in loan down payments? In this case, 10 % down is what the seller wants to provide financing. When I add renovation costs, it could turn into a decent sum of money locked up.