All Forum Posts by: Joshua Fulenwider

@Sherrell Echols  mineral rights in my area enhance the value of properties but we don't typically appraise for them separately or figure them into the loan or lending decision.  What have you been told by the banks you've talked to?

Private money or hard money may be the quickest/surest way to get it done.  Bringing on a partner may be good idea as well.  Especially since they've got the cash and you've got the deal.

You could talk to a commercial lender.  However any bank that's good will want a down payment or attach to equity in something else you own.

Some hurdles I see with any option are appraisals/valuations and/or title insurance.  With this many properties you could be looking at getting hit for a few hundred dollars for each one for the appraisal and again for the title insurance.  Private money, hard money, or a partner may get you around these costs

My quick hack that I've used to get leases is to go to an apartment complex in the area and act as if I am going to get a unit but I want to review their lease first.  Get a copy of their lease , change the header, and copy it.  A well run apartment complex should have leases that comply with laws in your area.  

Some landlords may be stingy about giving this out so you may have to try a couple of places.

@Account Closed check with the condo's HOA regarding renters. They may have special rules regarding it.

There are some hard money lenders out there that have more favorable terms for buy and hold strategies.  Ask around and you may be able to get financing for more than 12 months.

As @Tom S. pointed out, without credit how are you going to refinance it.  HMLs do not typically report to credit bureaus so you are not establishing credit.  While you are doing all of this you should look into some credit building strategies to build up your credit score and history.  Have you checked your credit?  If you have any sort of credit cards or auto loans you may be in better (or worse) shape than you think. 

Unfortunately this is fairly typical.  This is a special use property which requires larger down payment and the bank doing the construction financing will want to see you with skin in the game, even after the refinance to permanent financing.

You can get around this by refinancing with a different bank for the permanent financing.  But they will probably want to see a year's worth of performance before a cash-out.

At least this is the way I would treat it.  

Can you get your own appraisal ordered?  I know that they can be costly for commercial appraisals but this may cover your butt.

Another thought, insert a clause into the seller-carry-back note that at the end of 5 years when it balloons, if the property does not appraise for high enough to be reasonably refinanced, the seller agrees to carry the note for an additional 5 years (maybe give them an interest rate bump option at this point if they balk at the clause).  If this is the route you go make sure you polish the language with an attorney

Chances are you are going to be waiting that 6-12 months. I have not heard of anyone going over 85% LTV either on a cash-out or a HELOC but that 85% was on a non-owner-occupied so you may be able to find better.

I personally prefer the HELOC option just because of the flexibility it allows.

Short sales are still occurring for a variety of reasons.  Sometimes a lender attaches to a persons home to help prop up the persons struggling business and the loan exceeds the value of the house.  The house may have gone down in value from when the lender made the loan.  Or any other number of possibilities.

If you seek out the high net worth individual you could be running afoul of SEC stuff.  If this person magically appears and you establish a relationship and he approached you about investing with you and then you propose your strategy it may work.  But a lot of things have to fall into place correctly.  Do your homework on attracting investors before your pursue this strategy.  

You had a lot of questions.  I think I touched on all of them.  Let me know if I can be of further help.

A straight cash-out refinance with a commercial lender (maybe a jumbo mortgage loan if it is 1-4 family but I don't know the rules on that).  A commercial lender should be able to refinance the first mortgage and then give you cash over and above that.  Loan-to-Value limits are going to vary from bank to bank.  On a cash-out refinance I typically will not exceed 75% of the appraised value.  Talk to multiple lenders in order to find the best terms that fir what you are looking for.

Given what you have stated I would assume you could find a lender willing to lend you enough for you to pursue the purchase of the second property.  They may be willing to finance that for you as well with a down payment from the funds out of your refinance.  That was you can roll into more.

How well do you know the contractor?  If you are comfortable with him, this may work.  But you should prepare an iron-clad partnership agreement.

Don't be surprised if he wants more than 35%.  If he is covering materials and labor of his subcontractors on your deal this is going to impact the cash flow he has available for his business.  

I am very timid about partnerships.  Have you explored all the options for financing it yourself?  Such as construction loans or hard money?  

On the opposite end, my thought is that the 35% he is injecting is almost irrelevant and his value to you may be more that he will provide you with a ton of knowledge, experience, and connections.

Float the idea past him but if you get a funny feeling about it figure out something else.  If he is interested and you are comfortable with it make sure you do that partnership agreement.  You may want to structure it in a way that he gets gradually increasing ownership percentages as the job progresses.

Sorry if a lot of my thoughts seem disjointed.  I'm just trying to think about this from a couple of different angles.