All Forum Posts by: Jon Kelly

Marc Estepa, reach out to Ashton Levarek. He owns dozens of units in Fayetteville, NC and as a bonus he is a 20+ year veteran. 

My "@" doesn't seem to be working, but you can find him on biggerpockets, or his company's website:  https://www.valkeregroup.com/

The standard is 6 months, but you can find lenders that do not require seasoning. Call as many local lenders as possible. Where in PA? Most of my properties are near the Lehigh Valley and I can share lenders if you need. 

@Karl McGarvey Use the money for a rental property. 

1. The interest rate is so low. If you can buy a rental property >2.5% CoC return, that's a win.

2. What is an extra $400 in cash flow going to buy you? Nothing, except tempt you to spend it on something other than a rental property. It will take 2 years to save up $12k again ($12,000 breaks down to: $9,000 loan pay off = $400/mo for 23 months + $3,000).

@Cody Bradley, Have you spoken to a commercial loan officer? A commercial loan is slightly more expensive, but it focuses less on the individual and more on the property/investment. 

PDF your financial overview from the BP calculator and use that as part of the package you send to a lender.  

Can't get ANY financing? ANY?  Surely, there are lenders out there willing to lend... Call every lender on this list: 

https://www.yellowpages.com/sidney-oh/mortgage-broker

@Shawn Thomas A few general comments: 

1. Appears to be a solid deal 

2. You may want to be more conservative in your estimates. For example, 5% each for Vacancy, CapEx and Maintenance may be a bit light. At 5%, that's $1,800/yr for these expenses. Doesn't give you much buffer if a few things go wrong.

3. Closing cost of $700 seems light. Some states require a 1% sales tax, which is $820. Add in other fees from the title company ~$500. Assuming you are waiving an inspection and appraisal. 

4. Did you get a quote for the insurance? $33/mo seems light. For a $100k rental property, I typically spend $65/mo 

Someone commented saying buying a pre-leased property is a no-brainer. From experience, I would disagree. Make sure you do your own due diligence on the current tenant(s). Especially during COVID, verify they have been paying rent. One of my earliest purchases was a 3-unit property. The seller filled the remaining unit 1-month prior to close. It turns out, the lease was not legitimate and the tenant refused to pay rent. It took ~3 months to evict and had to pay to freshen up the unit. Don't copy my mistakes! 

So many questions here. I'll be waiting for additional updates 

@Bryan Lee You are paying the 3% either way, so it shouldn't matter who it goes to. It also could be a positive both agents work in the same office. That may make the process smoother and have less surprises. As long as you are happy with the price, you shouldn't have any issues. 

@Guillermo Triana, I've done that before and I plan to do it currently on 2 properties I just got under contract. Three potential pitfalls to look out for: 

1. Some lenders will only allow financing for 70-75% LTV based on purchase price + rehab costs. This becomes a problem if your rehab costs are minimal. Make sure you find a lender(s) that offer 70-75% LTV based on a 3rd party appraisal.

2. You want to make sure you refinance out of the hard money as quickly as possible. It's more expensive than a conventional loan. I've also seen interest rates increase based on how long you hold the hard money for. For example, months 0-9 the rate is 10%, but months 9-12 the rate is 12% and months 12+ the rate is 12%. 

3. Lenders have different "seasoning" guidelines. The standard seasoning period is 6 months, but some lenders require 9-12 months and others don't require any seasoning. Do your homework here and reach out to as many local lenders as possible. 

@Odie Ayaga Two reasons to do this approach: 1) You can make an all cash offer, instead of contingent on financing. Cash is always a preferred offer for a seller. 2) If you buy the property under market value and then refinance based on its true ARV, you have less cash in the deal. If you go the conventional approach your 20-25% down payment is in the deal. If you refinance with a higher ARV than the purchase price you can pull out cash and you may have somewhere between 0-20% cash left in the deal.

@Brian Miller If those are truly the numbers of the deal, I would try to push the envelope because it seems to be a great deal. I would try to reach out to friends and family for $14k. If that doesn't work, continue to post of BP and see if you can find someone to partner with. 

You can consider a commercial loan for the refi. The interest rate is higher, but the closing process is much easier (in my experience) because the loan is more contingent on the quality of the investment as opposed to the investor. 

If the ARV is $270k, you should be able to pull out 75% or $202k. If you're only committing $190k for the purchase and rehab, seems like a great deal to me

@Paul Fagot, @Kyle J. is spot on. I'll add, you should not be afraid to overpay for lending on your first couple of properties. It's better to go with a qualified and reputable PML that may be a little more expensive than "some guy on Craigslist." Especially if you are able to find a property with a purchase price $175k needs $60k and ARV is $325k. You have plenty of room for very strong profits in that deal.